This is of concern for a new build sector heavily focused on domestic clients, but for Killian, this trend is unlikely to change until the government does. “The six wealthiest counties in America surround Washington DC”, he says. “These guys are politically correct with their wealth and they’re very careful about how they exhibit money, even though they’re raking in tax dollars.”
The Obama administration he says, is guilty of cronyism, both at home and abroad, and this is limiting the opportunities or the creation of the new wealth that could boost domestic spending and reinvigorate domestic industries.
Of course the ‘Made in America’ marketing strategy is only likely to resonate with Americans, and if Americans are unlikely to spend then American builders are on a quandary. “The types of guys who buy yachts are self-made new money. But guess what? There’s no new money here. And when the White House calls our clients ‘Fat Cats’, they’re not going to spend 10 or 20 million on a yacht.”
When he talks specifics Killian references Obama’s retrenchment of the ‘bonus depreciation’ scheme, an initiative introduced by the previous administration to reduce the tax liability of HNWIs and kick-start a faltering economy in the wake of 9/11. This was, according to Killian, one of the direct causes for the boom in superyacht purchases in the early- to mid-2000s. “Right after 9/11 was when the heydays really came, and this had a lot to do with the bonus depreciation on offer”, he explains. “This was to make business owners to buy equipment and reinvest in the economy, but now, that’s going to disappear because of this Collectivist sentiment.”
And fortune favours Obama’s favourites, says Killian. While certain industries have enjoyed tax breaks and other favourable macro-economic mechanisms, others have been marginalised, and this is exactly what has happened to the US superyacht market.
However, this is where Killian says the superyacht industry is its own worst enemy. The industry has wholly failed in its duty to communicate the economic impact of yachtbuilding. Builders, motivated by short-term interests, he says, are reluctant to divulge information that shows the sheer magnitude of a new build project and the number of salaries its construction pays. “All of the people that create these yachts are not rich people – they’re people that pay college tuitions and mortgages and are trying to make a living – but the reality has been completely missed. You’ve never heard of anyone throwing rocks at art collectors or someone who donated $100 million to the Metropolitan Opera, but what is yachting if not art?”