FREELAND — In the foyer, offices and hallways, pictures of boats hang on the walls. There are fishing vessels, fireboats spraying impressive jets of water, tugboats, sleek catamaran ferries, tour boats, paddle-wheelers and the X-Craft, which looks like it came straight from a Hollywood production studio.
Whidbey Island’s largest private employer, Nichols Brothers Boat Builders Inc., has carved itself a niche by building diverse, innovative vessels and by ratcheting up its experience with aluminum and modular fabrication into larger and larger contracts.
This year, company officials launched their largest-ever project, a 360-foot fully documented oceangoing paddle-wheel cruise ship, the Empress of the North, which plies Alaskan waters during the summer and the Columbia River the rest of the year.
The boatbuilder is already busy constructing an all-aluminum experimental ship for the U.S. Navy that is expected to reach speeds of almost 60 miles per hour. Last year, Nichols delivered the world’s most powerful fireboat to the city of Los Angeles. The business is made up of 40 percent aluminum boats, 40 percent steel vessels and 20 percent conversions and repairs.
Nichols’ CEO and chairman of the board, Matt Nichols, the company’s leader since 1971, said the firm hasn’t suffered a recessionary downturn. During the past five years, it’s posted an annual growth rate of between 7 percent and 9 percent.
What’s the secret to its success?
During the 1980s, Nichols saw the fishing industry decline and began looking for new markets suitable to the company’s medium-sized yard and shallow launch location on Holmes Harbor.
"We ventured off. We packed our suitcase and our briefcase and we went off worldwide to find out what the product line was," Nichols said.
The result was an exclusive U.S. license to build high-speed, all-aluminum passenger catamarans, which can reach 35 miles per hour, designed by International Catamaran Designs of Sydney, Australia. Nichols delivered the first cat in 1984 and has built 32 others. Gladding-Hearn Shipbuilding of Massachusetts obtained the only other U.S. license in 1988.
Nichols’ catamarans are used by the U.S. Army in the Marshall Islands, by commuters in the San Francisco Bay Area and by tour operators in Alaska. Nichols said the U.S. Coast Guard was "ecstatic" about the safety features of the twin-hulled craft, with its duplicated engines and propulsion systems in each hull.
But catamarans weren’t the only answer. Diversification was one of Nichols Brothers’ keys to success.
"There’s not just one industry that will stay strong long enough to bet everything on," Nichols said. "A lot of people have brought new product lines to us to build because we are willing to take on the challenge."
Nichols explained that his yard builds single boats as competitively as it can produce half a dozen because of the company’s construction strategies and use of technology.
Its boats are built in a modular system that was devised at the University of Washington and was developed in a $1.2 million cost-sharing project with the U.S. National Marine Resource and Education Center, Nichols Brothers and Gladding-Hearn, according to David Heller, an architect with the Navy agency.
Panels are cut by a computer-driven system and then spot-welded by computer-guided welding machines. They are finish-welded by yard workers. Each unit’s systems, such as electrical and hydraulics, are installed before the final assembly of the units. According to the Navy research center, the techniques have allowed Nichols to increase its production by 30 percent with only a 15 percent increase in employees.
Doing most of the work on modules inside the shop also provides better lighting, more access to tools and a better working environment for the crew, Nichols said.
A shallow launch area has posed some environmental problems for the company. In preparation for the stern-wheeler launch, for example, Nichols ran afoul of federal, state and local environmental regulations and was fined nearly $100,000. It’s now working with the agencies on mitigation and prevention of future problems.
About 340 employees work at the boatyard. Many, Nichols said, have been there more than 15 years; several are approaching 30 years with the company, which began its Whidbey operations in 1964. Nichols is proud of his employee-retention record, crediting the skilled workforce as a major factor in the company’s ability to innovate.
Matt Nichols’ grandfather, Mark, founded the company in 1939 in Hood River, Ore., and the fourth generation has recently assumed the roles of co-presidents. Sons Bryan and Justin will run the day-to-day operations, Bryan as president of business and Justin as president of production, leaving Matt Nichols more time to direct the company’s future.
He recently moved his office from the busy yard to a modest remodeled house on the waterfront. The comfortable, nautical-themed office and adjoining conference room are where upcoming opportunities and challenges will be evaluated in light of company tradition.
Nichols believes that he has successfully combined the company’s innovation with conservative business values such as using company-generated capital to build the business — rather than taking on debt — and taking one step at a time in growth. Each new type of boat is built using the knowledge and systems of previous contracts, he said, noting that the 360-foot paddle-wheel cruise ship was a larger version of a boat built several years ago.
Satisfaction of customers, such as the Los Angeles Fire Department, is also important. Assistant Chief David Cathey said the Nichols fireboat has far exceeded department expectations.
"They were among several bidders that we conducted pre-qualifying meetings with, and due to their responsiveness, their reputation, experience, financial status and delivery track record, were our first choice," Cathey said.
Nichols said the company will stick to the methods that have brought it success.
"We were conservative going into (the economic downturn), and through it and coming out of it, still conservative," he said. "We set our goals early, years ago, and stayed with it. We’re down-to-earth; we do the basics right."
Sue Ellen White is a student in the University of Washington School of Communications News Laboratory.
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