Work on boat yard stopped

Yachts investor says tough economy puts project on hold

Hugh G. Willett, knoxvillebiz.com

A little more than a year after Christensen Yachts began construction of a $20 million Loudon County boat yard to build "super-yachts" on Tellico Lake, work on the facility has come to a stop.

According to Henry Luken, lead investor in the Christensen project, changes to the facility combined with a decline in the stock market and a shift in his own investment priorities have put the project on hold.

Work had stopped while the decision was being made on whether to expand the 400,000-square-foot facility, Luken said. The facility was originally designed to build boats up to 225 feet in length.

"We couldn't put the doors on the building until we made the decision," he said, adding that holding off completion of the facility will ultimately save $1 million.

The stock market decline late last year also added to the decision to stop work, he said.

"In the meantime, the market collapsed on the very wealthy people who buy these boats," he said. "I had three guys (customers) who lost a half a billion in one week."

Luken also said he recently invested $30 million in a digital television network, which provides programming to 90 television stations. Its local affiliate is WMAK in Knoxville.

The investment in the television network tied up capital resources, according to Luken.

"I'm spending my own money, none of it is borrowed, so I have to be careful how I use it," he said.

Luken said he expects work to begin again at the shipyard before the end of the year.

"We will finish the project. Most of the money has been spent. There is only about $3 million more," he said.

News of the delay comes as a blow to many job-seekers in the local boat-building community. It is hoped the Christensen project could create as many as 1,200 jobs.

Cobalt Yachts and Sea Ray, which is located in the same area, have eliminated hundreds of boat-building jobs over the past two years.

Pat Phillips, president of the Loudon County Economic Development Agency told the Loudon County Commission earlier this week that on his recent visit to the shipyard, the superintendent was the only person on the site.

"We thought the Christensen project was recession-proof," Phillips said. "Apparently it was not."

When the project was launched, Christensen said it choose the East Tennessee location for its deep harbor, low taxes and skilled work force.