Crisis and consequences
In autumn 1995, three candidates emerge to take over the large Vendée-based yard Jeanneau. They are all quite different from one another. However, all three submit relatively similar bids: an acquisition for around €7.6 million, a capital injection for the same amount, a revolving credit line of around €15.2 million, and a commitment to take on 550 to 590 of the 690 staff still employed by the company.
At the forefront of the potential buyers is a global leader. Zodiac, the champion for both aircraft seats and inflatable boats, based in Rochefort, has revenues of €533 million and a profit of €76 million. Its boss is Jean-Louis Gérondeau. This 52-year-old Polytechnique graduate has a strong network in both economic and political spheres. His older brother Christian, also an X graduate like him, had been the road safety delegate under the presidencies of Georges Pompidou and Valéry Giscard d’Estaing.
Behind Zodiac is Dufour, another key boat industry name, but significantly smaller. Coming from Kirié, and at the helm of the famous La Rochelle yard for seven years, its boss is 40 years old and is not afraid of anything. A Sup Aéro and HEC graduate, Olivier Poncin managed to steer Dufour out of the doldrums in the 1980s. He took the historic builder of the Arpège up to third place on the market for liveaboard sailboats, behind Bénéteau and… Jeanneau. But, like all its competitors, it fell victim to the crisis in the early 1990s, only able to report a modest profit of €3.8 million, with revenues of €30.5 million. To further strengthen its credibility, the Charente-based yard links up with an investment fund.
There is also a third, short-lived contender, Amoretti from Genoa. This builder of large motor yachts is believed to be backed by the Italian government.
So, the La Roche-sur-Yon commercial court holds Jeanneau’s fate in its hands. Europe’s second-largest recreational boat builder, the company from Les Herbiers filed for bankruptcy at the end of October 1995. It went into court-ordered receivership. Its troubles on their own symbolize the depression facing the entire boat industry since the start of the decade.
War in the middle east and recession
When Iraq invades its neighbor Kuwait in the midst of the summer torpor of 1990, the world instantly forgets the blissful optimism inspired by the end of the Cold War, the reunification of Germany, the end of Apartheid and the opening up of the Chinese economy. A few weeks later, as the international coalition’s first bombardments are unleashed on Baghdad, a recession sets in.
The French economy experiences a sudden downturn. Growth falls below 2% in 1992 and 1993, and even becomes negative in 1994. Unemployment soars to nearly 3 million people. Industrial employment, already in significant decline, contracts by more than 12% over the course of the decade. Growing numbers of businesses file for bankruptcy. The social security deficit exceeds €4.5 billion. To reduce it, the government creates a new tax in 1990, the CSG general social contribution. At the worst possible time. This is compounded by a deep real estate crisis. The increase in stamp duty, which had not changed since 1984, from 25% to 30% in 1991 would have been only a minor incident. But once again, this increase comes at a bad time.
For French boat builders, the international crisis marks the end of the expansion seen from 1985 to 1990. Orders are canceled and clients fade away. In 1991, the yards’ sales collapse and the Americas region drops 20%, with a 50% decline for the Pacific region and 40% for Europe.
Yacht registrations contract by 22% – and even 50% for units from 6 to 8m – between 1991 and 1995, with motorboats dropping 14%. The revenue figures for the overall industry fall by 25% between 1990 and 1995.
Jeanneau in distress
Jeanneau sees a sharp decline in its orders and sales, even before the end of 1990. This economic downturn immediately puts the Les Herbiers yard in jeopardy. At the time of the employee buyout in 1987, when Jeanneau’s staff took on debt to acquire 40% of the holding company created for this occasion, their chairman Michel Richard clearly set out that an economic downturn would put the company in great financial jeopardy. However, at this time, the 1,500 members of staff were not concerned: revenues were up 17% to €93.8 million, with the net profit climbing +100% to €3.6 million.
As soon as the Gulf war breaks out, the company finds itself on the verge of sinking. Its debt soars to €22.9 million, with revenues of €114.3 million. At the helm of an industrial holding company that has just bought out the equipment manufacturer Goïot, Félix Chatellier snaps up the employees’ shares and acquires 51% of the capital for just under €11.4 million, while the company was valued at €25.9 million at the time of the employee buyout. In the wake of this, looking to establish a sufficiently large boat division, Chatellier acquires the Arcachon-based motorboat manufacturer Arcoa. And immediately embarks on a restructuring plan for Jeanneau. He announces that 376 jobs will be cut immediately, followed by a further 328 in the future. In 1993, he lays off 270 staff, which leads to the departure of Michel Richard.
But the crisis continues. Some erratic and even questionable strategic decisions, such as relocating certain production activities to Poland, do not prevent Jeanneau from sinking further. In autumn 1995, URSSAF – the French social security authority – asks for the Vendée-based company to be placed into court-ordered receivership for failure to pay €1.5 million of contributions. Despite the CEO’s promises that he has a €27.4 million order book, the banks withdraw their support, sealing the fate of the listing ship.
A sector under threat
Jeanneau’s woes encapsulate the serious threats looming over the French boat industry, whose stars are fading one by one. In three years, Gibert Marine reduces its teams from 350 to 150 staff. In 1993, Kirié files for bankruptcy. ACX, the manufacturer of carbon masts for large ocean prototypes, is in receivership. Dynamique Yachts, the builder of large units founded by the Jeanneau family, is in liquidation, while Jeantot Marine is on the brink of bankruptcy.
In San Diego, in spring 1995, the French challenge in the America’s Cup fails. A sad symbol of a sector that has lost its magic. Then Rocca succumbs as well. The legendary motorboat builder, which produced more than 100,000 units in the 1980s, had been bought out by a British group. Rocca closes its doors permanently.
And yet, in this autumn of 1995, some daring believers are convinced that after the storm will come the calm. Jean-Louis Gérondeau and Olivier Poncin are two of them. They pull out all the stops to appear as the most credible candidates to take over Jeanneau. When suddenly, a fourth candidate comes forward at the last moment.
Bénéteau’s surprise
To everyone’s surprise, Bénéteau announces that it has submitted a proposal to acquire its Vendée-based rival. The Italians have pulled out a long time ago. But the heads of Zodiac and Dufour try by all means to counter this offensive. The first looks to shed light on exactly how determined Annette Roux really is. The second strives to dissuade the 50-year-old, whose husband passed away the previous year, from taking on such risks. He even dares to insinuate that she does not have what it takes.
However, Poncin should have been a better judge of character. While he may be ambitious, she is as intrepid as she is tenacious. In 1992, at the heart of the crisis, the company from Saint-Gilles dares to take on a majority stake in the capital of CNB, the new yard operating out of Bordeaux and specialized in building large luxury sailing yachts. And soon afterwards, true to its roots, it acquires a longstanding fishing boat yard based in Noirmoutier. Like everyone else, Bénéteau experienced a decline in both revenues and profits, but the group weathered the headwinds and endured three years of losses without putting itself in danger. It once again records a slight profit.
Mistrusting, and even hostile towards their longstanding rival, Jeanneau’s staff express their preference for Zodiac or, failing that, Dufour. Only 5% of them vote for their close rival. However, Annette Roux promises to preserve the identity of both brands, to bring back the production operations relocated to Poland, and to retain almost all of the staff. Lastly, she declares that Crédit Lyonnais – although struggling itself – and Crédit Industriel de l’Ouest will open a dedicated €16.7 million credit line to get the company back on track.
Between Christmas and New Year’s Day, the commercial court makes its decision. The judges award Jeanneau… to Bénéteau! Solidarity around Vendée? Confidence in a family-led company that has successfully become a market leader without ever denying its roots or weakening itself? Credibility of the recovery plan? Annette Roux’s personality? All of these were certainly factors. One thing is certain: the new Bénéteau-Jeanneau group is now the world leader for recreational boats.
Horizon clearing following the storm
Olivier Poncin consoles himself by acquiring Gibert Marine the following year. Bénéteau responds a few months later by taking over the prestigious Wauquiez, which was in receivership. And by developing the Lagoon catamarans, Jeanneau’s booming products, with their production relocated to the CNB site in Bordeaux.
Like a rainbow after a storm, the recovery is on the horizon. And it is vigorous. The restructuring operations continue moving forward. In Les Sables d’Olonne, Alubat, which builds long-distance aluminum sailing models, bails out its neighbors Kirié and J Composite, before selling these two yards to SGGR, the holding company that acquired Jeantot Marine in 1996 and renamed it Alliaura. The catamaran builder from Les Sables d’Olonne had taken a severe hit when Jet Sea, its main client, went bankrupt.
In terms of equipment manufacturers, the market stabilizes. Plastimo multiplies its revenues by 10 in 10 years. Despite the bankruptcies of some independent ship chandlers, such as Petit-Breton Nautique from La Baule, major networks like UShip and Accastillage Diffusion are expanding and strengthening. Their revenues continue to climb.
In 1998, the crisis is over and growth is spectacular: Dufour, which rightfully claims to be France’s second-largest yard, joins a group of investors attracted by the rapid development of cruising catamarans and launches the Nautitech brand. At the Grand Pavois in La Rochelle, an autumn in-water show, sales of liveaboard multihulls take off. Lagoon, Catana, Privilège, Fountaine Pajot and Nautitech present models ranging from 12 to 14m, which form the core of this new market focused primarily on charters.
Thanks in part to the tax incentive laws, this sector never experienced the crisis: charter companies continue to see revenue growth throughout the decade, climbing from €26.1 million in 1990 to €87.6 million in 2000, with a remarkable increase of nearly 300% in 10 years.
At the dawn of the 21st century, the comeback made by the entire recreational boat industry is so strong that it completely erases the recession from the early 1990s. Builders see their revenues grow by 92% over 10 years. For the entire boat sector, up to €3,425.3 billion, this growth reaches 61% overall. The 5,936 companies operating in this sector employ 40,829 people, compared with 31,192 in 1990.
By overcoming one of the most severe crises in its history, the French recreational boat industry has strengthened its solid foundations. By restructuring itself, sometimes painfully, it has shown its maturity. Now firmly positioned as the world number one, it can look to the horizon with confidence.