Nekton (Bad News)

[cappyjon431]

Cappy,

When the dot.com economy tanked, followed by later bank collapses, companies needed to be especially well run. One of Nekton's selling points was 'US Flag' for some people; obviously from what you shared in your recollections this had an enormous cost. When the economy starts to tank, good business people adjust. Most of Nekton's new itineraries were taking them out of the US. Even the puerto Rico trip crossed international waters and we all needed our passports to re-enter PR. It seems to me that in additon to diluting thire customer base, they also had WAY more fixed costs.

By the way the mechanic had mostly a full time job on the Rorqual. He took me around and explained the mechanical systems on board, he also discussed with me the inherent design flaws that kept the boat moldy. When the generator acted up on the aggressor, the captain fixed it in about 30 minutes; the Nekton had a full time mechanic who had to have very specialized skills.

My point is that the Nekton probably should have re-evaluated EVERYTHING when they started to have cash issues. They could have dropped the US flag, they could have sold a boat, they could have found a different crew profile (part of dropping the US flag)

I am an internet person and I always found their web site to be very funny. I sent it to some of my friends and asked them what they thought this company did. Most thought it was a boat builder of SWARTH technology; only a few realized it was a live-aboard. This was obviously not a strength.

Good business leaders have the guts to stop a business before it cycles down the drain and don't have to steal future reciepts to pay current bills; so when you fail this way you hurt innocent customers the most.

Your point is well taken. There were enormous costs to carrying a US Flag. In addition to the financial costs, after 911 there were also huge logistical considerations involving security, crew training, and paperwork. Running out of Port Everglades for the Bahamas itineraries got much more expensive because of increased port security.

Nekton could have dropped their US Flag, moved to a different base of operations (Blackbeard's moved from Watson Island in Miami to Nassau shortly after 911) and cut costs considerably. The question is, how would it affect the customer base? I know many Nekton guests who went out specifically because the boats left from Ft. Lauderdale. It was cheap for the guests to fly into Lauderdale and hop a boat to the Bahamas. I also know that occupancy rates were always significantly higher when the boats ran out of Ft. Lauderdale (as opposed to Belize, Cayman, and Puerto Rico).

A certain segment of the guests felt reassured that the boats carried the US Flag, because it assured that the crew and boats met USCG regulations--the crew was properly trained and certified by the USCG, the boats had to undergo USCG inspection annually, night watches were required (to me this is basic maritime safety, but other liveaboards that I have been on let the crew sleep through the night). I believe that they kept the flag because it symbolized safety and that appealed to a large segment of the diving public. In that respect, it was a business decision. It might not have been the correct decision based on economic factors, but it certainly emphasized dedication to safety.

The consensus of most posters who have been on the boat the last few years is that the boats were not well maintained. I shudder to think what may have happened had the company reflagged and not had the oversight of the USCG.

 

[Wookie]

The US Flag is expensive, but it isn't what killed Nekton. There are plenty of US flagged liveaboards running in the US. What killed Nekton was too much debt, and not enough customers, which led to the maintenance and crew issues. Nekton, in it's heyday, ran a luxury class liveaboard at a budget liveaboard price. Management failure to anticipate changing markets, and boats that were built for a single purpose doomed the company. John did see the market change, and jumped to cover that change, but (in hindsight) he jumped the wrong way. Instead of closing down operations during his slow season, he moved his boats to other markets. I tried that too, although on a smaller scale, and it ate my lunch. I never made any money outside of my primary market because of the cost of moving the boat, and doing business in 2 places (licensing, taxes, etc.).

In the end, what has kept a lot of the US based liveaboards alive is to be a vessel of opportunity for research, natural disaster, and military. The Nekton boats were too specialized for that, and couldn't adapt to the changing market. Someone will get a heck of a deal on those boats at auction, far less than the 6 million they cost to build, and I predict you will see them again.

 

[mike_s]

what's the "asking price" for them now as they are for sale?


just curious... not like I'm trying to put together a group buy or anything.

 

[Shasta_man]

Still don't understand the point of coming into this thread of people who got directly screwed for thousands of dollars through no fault of their own and in fact are the people who DID invest their money in the company to say what a wonderful human being the owner is. Multiple posts about how they're not getting their money back. And then they are to blame. People who went 20+ times on the boat! Unbelieveable.

I can appreciate the difficulties of running a business, but that has zero to do with giving people a poor product. No posters venom was the reason for the company's downfall. Actually just the opposite. That company was a victim of economics. First, apparently, after 2001, then, after destroying the loyal following through providing a poor product. Simple as that. The first was not of their making, but there were years of control over the second and over the way it finally expired. People spend their money on value. You have to give people value or they will take their money elsewhere. Not everyone is willing to overlook problems to save a few bucks and that quality of product won't sell itself. Being unable to capitalize on the what other businesses strive for, a loyal following who will go on the same trip 20+ times is pretty amazing. What I've learned on this board and through posts on this subject is the value of giving customers what they want. Whether widgets or liveaboard trips, the business proposition is the same.

but, you knew this....

 

[Brown Mermaid]

First of all, let me say that I've known Nekton's owner personally for nearly 30 years, and there are very few people with his integrity. He's always been an impeccably honest, kind, and generous family man, and I'd trust him with my own kids. As far as what challenges there are to running the Nekton business, they are numerous and unique. He started this business from nothing but a vision, and designed these ships himself (together with his early partner Pete). With great admiration and a touch of envy, I watched him build this business from nothing but an idea. The risks are huge, and the capital investment is enormous. The operating and maintenance costs are as unpredictable as the weather and sea-conditions that they encounter. But even more difficult, has been the general economics of ALL "hospitality" businesses since 9/11 2001. Nekton's business model is like the hotel business on sterioids. THey are just as dependent upon occupancy rate, and the discretionary spending, but with NO business traveler as a source of income. They are solely dependent upon TOURISM, and with all of the additional risks that go along with conducting a diving operation, sometimes conducted in foreign waters who impose their own onerous regulations upon the operator. Belize for example, requires hiring only Belizean crew; who once aboard act like a bunch of tenured union school teachers who know they can't be fired, even if they just work 3 hours per day.

Unfortunately, Nekton has had to struggle with these challenges for many years, going as far back as the virtual stoppage of tourism for many months following the attack on the World Trade Center. These economic dynamics are ALL beyond the control of Nekton's management, and in fact, they did a remarkable job of sustaining the business model as long as they did after 9-11. This financial melt-down which started in 2008, and which is being exacerbated by the FDR-style economic INCOMPETENCE of this current president and his administration, is a situation that any knowledgeable business person can see is unmanageable. I currently run a manufacturing company with 400 employees and I for one think that the economy is no where near to starting any kind of recovery. This will be a sustained, and protracted contraction of American economic prosperity the likes of which hasn't been experienced since the 1930's. Just wait till the health care TAX kicks in...and you will see unemployment spike up another notch. Lower employment = Fewer Tourists. Nekton management did a spectacular job keeping the company afloat for the past 9 years in spite of these challenges, but seeing the writing on the wall now, the only good business decision was to shut down. When JD writes "It is with heavy heart and deep regret that we cease operations.."... you can be sure that this was probably one of the most painful decisions he's made in his life.

So JD, to you my friend, I send you and your lovely family my kindest and best wishes, and my sincerest gratitude for the wonderful experiences and memories I enjoyed aboard the Pilot, which would never have happened had you not had the cojones and entrepreneurial spirit to take on such a risk. You have my deepest respect.

DD we were lied to and taken for our money when JD knew he was going under. So please don't blame our present President for JD's demise, because this is not political and it is not his fault about the economy. That's what he walked into.

Second, where do you get off by saying the Belizean crew gave bad service? One person does not define the whole crew if that's an experience you had.

Another thing, you didn't loose your hard earned vacation money, I did and so did my friends. When my cruise went out we were stranded most of the time. We had to be towed in by a tug boat, which took a very long time. Our dives sucked big time. Our rooms sucked BIG TIME. Our trip was so bad that John met us at the dock. Not only did he apologize, he offered us not one but 2 trips on the Nekton free of charge, instead of a refund, which we should have gotten. I thought "this is tooo good to be true." And you know the rule of thumb is "if it's too good to be true, it usually isn't".....true that is. So now, the insurance does not cover us (and it didn't before since the cruise went out) because we took a credit. So instead of blaming everything and everyone else, it still rests on JD. He made a promise to us that he knew he could not keep. He knew in 2008 when he lost his main charter, that paid most of the bills.

You might want to try a little diversity training and tolerance or a little updating and educating of your skills and experience with people of a different race, culture.

 

[Brown Mermaid]

A few years ago we were booked on teh Nekton in Belize and got fogged in in Chicago. The travel insurance (the same that just denied us) paid a hotel in Houston, dinner, $1,600 to a water taxi to ferry us out to the Pilot and 1/7th of the cost of the trip because we missed a day. To say they cover nothing is an over statement.

Was on the Sun Dancer last month doing the Belize itinerary. We asked what would happen if we had missed the boat. He said the a company would ferry us out to the Sun Dancer at $700 each way.

 

[donhealy]

Wow, I can't believe that this thread is still going on. I just got caught up on the recent activity. Doug, We've traded some very cogent replies, so don't take this the wrong way. I think you were a little harsh on JD's friend of 30 years. Maybe accurate but still... Cappy, its good to see your comments. If I'm ever down there I will make sure to hook up with your dive shop!

I confess that I still think often of Nekton's management practices and style and how I can learn from them. I head the operations group for a division of a large medical device manufacturer. If I maintained my manufacturing floor and distribution system the way JD did his boats, I would be in real trouble with the FDA. Certainly my customer base would seek a better product. I would have high turnover and my quality would continue to deteriorate. Ultimately I would be replaced and should be!

I don't pretend to understand JD's management problems or decision making and I'm sure our economy had something to do with it. Most people that worked for him describe him as a dedicated and loyal person who cared deeply for his business. however, A savvy owner would have found wisdom in turning the day to day operation over to someone else with the requisite skills. Often the entrepreneur who has the vision and ability to get a business started does not have the same skills to operate the business as it moves to the next phase. Its a testament to his determination that he made it 16 years.

He entered into a tough business with a great idea and the boats offered opportunities not found with mono hulls. The model worked for a while then he got caught caught in cash flow issues and made decisions that ultimately did not work out. He's not the first owner to have this problem and won't be the last.

I will never see my money from the canceled trip and am just glad that Clay and Explorer Ventures was kind (and smart) enough to offer the compensation packages. They have found a new loyal customer!

 

[diverdoug1]

Sorry Don, I know I should be nice, but anyone that comes on a thread like this, and starts expounding the virtues of the proprietor, calling the customers whiners, and misrepresenting the facts , deserves no quarter, and will be given none by me.

 

[scubamurr]

I have avoided posting on this thread for as long as I can.........I was a frequent traveler on the Nekton boats. I have heard enough of how great JD was....I agree at one time he was an honorable person, that stopped being the case for how I saw him when I found out that the tips I paid for with a credit card for the CREW ON THE BOAT were not paid to the crew but kept by JOHN DIXON for the operation of the business. There is no excuse for this practice! NONE period.

I also lost all respect for JD the man when HIS company at the direction of him continued to take deposits and full payment of charters when the company had no way of ever fulfilling the obligations to the passengers. If that does not make sense I am sorry. He took the money and knew he could not provide the service that those payments represented.

I have spoken personally to two people that have defended him throughout this ordeal and the arguments made always go back to what a great family man he is. Well that may be, so but as far as am concerned that has nothing to do with his business practices, NOTHING.

I am out real dollars and that is my bottom line along with hundreds of other hard working people. It is a shame that people would still defend this man under any circumstances. I would love to speak to him personally. Clearly he does not have the BALLS to talk to any of the passengers that he cheated out of their hard earned money, by evidence of the fact that NO communication was ever forthcoming by him or his company to any individuals that paid him for services that he knew he never had any hope of providing.

I challenge him to reply to this posting privately and I will provide him a phone number to contact me so we can have a conversation about this issue.

 

[scubamurr]

Doug I agree with most things you have stated, we dove together on Nekton.