SAFE Boats Regains Small-Business Status with Employee Ownership

COURTESY SBI

In one of its large shops, SAFE Boats International (SBI) builds numerous boats simultaneously at different workstations. The company produces upward of 70 boats a year.

More than 20 years ago, Professional BoatBuilder ran a feature titled “God, Country and Fast Boats” (No. 85, page 64) about SAFE Boats International (SBI), a Bremerton, Washington–based manufacturer of aluminum boats. In the aftermath of 9/11, it won a U.S. Coast Guard contract to build 700 Defender class 25 (7.6m) harbor-patrol boats, then valued at $145 million. Since that pivotal moment in company history, the basic boat type—welded aluminum with solid closed-cell-polyurethane-foam collars, and mostly powered by outboards—and the client base of law enforcement, military agencies, and first responders show little change, but the company hasn’t been standing still.SBI now builds 70–90 boats per year, with just two or three of them for recreational customers. Since inception, the firm has delivered about 2,600 vessels to 70 countries and added a production facility to build 85 (26m) patrol boats in Tacoma. In addition, it recently licensed a builder in South America and expanded international business into areas of armed conflict like North Africa, the Middle East, and Ukraine.

Since last we checked in with SBI in 2003 the company has parted ways with founder Bill Hansen (who subsequently started Life Proof Boats in the same business park) and now is run by Richard Schwarz, 59, the firm’s former chief financial officer. Perhaps most significantly, in 2023 SBI emerged as an employee-owned company after a decade under ownership of private-equity firm McCarthy Capital.

For years SBI, co-founded by Hansen and Scott Peterson in 1996, built individual boats or a few units of the same design for state and local law enforcement and first responders, and for international clients through foreign military sales contracts. The post-9/11 boom necessitated changes in production to meet demand, and there were some unintended consequences of that growth, especially when McCarthy bought the company. Schwarz: “That kind of volume-repetitive production is very attractive for many obvious reasons, but when we lost our status as a small business due to the change of ownership, we ended up being ineligible to compete for those large multiyear federal agency contracts. Almost all federal programs—Coast Guard, Customs and Border Patrol (CBP), and Navy—for small aluminum boats are required to be set aside for small businesses of under 1,000 employees, because there are more than enough competitors in that space to credibly respond to and fulfill those requirements.” When SBI was acquired by a private equity group, all companies under common control and ownership had their headcount aggregated, which put SBI in a category of more than 1,000 employees, although it has a payroll of only approximately 265 workers. When SBI became an employee-owned company earlier this year it was re-certified as a small business.

Dieter Loibner | Professional BoatBuilder Magazine

While producing custom aluminum boats has not changed dramatically over the years, it requires skilled labor, especially welders. SBI invested in this large CNC table to cut aluminum plates on-site.

“Over the last six or seven years, we really had to focus on one-off boats, and that limited our ability to leverage technology and ways of really becoming a lot more efficient. So the industry and SAFE Boats as well have remained in a state where boatbuilding technology has not advanced, even though the technology associated with propulsion and systems and electronics has evolved. That’s where being a small business again is going to help us, because it does give us some opportunities to reengage in that federal market and hopefully pursue some of these larger multi­year contracts.”

In 2019 McCarthy Capital wanted out and initiated the sale of SBI. Then COVID hit, and supply chain issues, and inflation—circumstances that conspired against a sale. Schwarz, who once worked for Science Applications International Corporation Inc. (SAIC), the country’s largest employee-owned company at the time, proposed the same ownership model for SBI. “I saw how ownership changed the mindset of [SAIC] employees and how that model created incredible value, a lot of opportunity, and a culture that was very different from most companies,” he said. “I thought that was a good and potentially beneficial model for SAFE Boats, because we’re already a company founded on and focused on a mission, a purpose, and have a loyal workforce with a lot of folks who have been with us for 20-plus years. And we were fortunate that one of our cofounders and original investors, Scott Peterson, along with Bill Hoagland, helped make this happen…to make sure that SAFE Boats had a stable future.”

Subsequently SBI installed two military officers on its board: retired Vice Admiral William Lee, who served in the U.S. Coast Guard for more than 36 years, including as the Commander, Atlantic Area (LANTAREA), responsible for all operations from the Rocky Mountains to the Arabian Gulf; and Tom Norton, a veteran of the U.S. Marine Corps and U.S. Army, where he served as a flight mechanic and aviator, and had subsequent private-sector careers with CBP, FLIR Systems, and HeliNet Aviation. Norton and Lee have long histories with SAFE Boats “from the acquisition side,” Schwarz said. “They are passionate about the company, employee ownership, and helping navigate this transition. Having a knowledgeable, experienced, and actively engaged board is part and parcel of employee ownership now.”

COURTESY SBI

SBI drafted a licensing agreement for COTECMAR, a Columbian state-owned defense and engineering company and the country’s largest shipbuilder, to build two of these 65′ (19.8m) patrol boats for the Columbian coast guard.

SBI partners with companies like Diverse Marine in the U.K. to build SAFE Boats designs as the occasion demands, but the firm also explores new ways of doing business internationally. Several years ago, it started cultivating relationships in Columbia, specifically with COTECMAR (Corporación de Ciencia y Tecnología para el Desarrollo de la Industria Naval Marítimay Fluvial), a state-owned defense and engineering company and the country’s largest shipbuilder. “That relationship gave us the opportunity to reach into the coast guard and navy, starting out as basic coproduction,” Schwarz explained. Initially, SBI would handle fabrication and the lion’s share of the integration, while the Columbians were responsible for final integration including engine installation.

About three years ago, SBI drafted a licensing agreement for COTECMAR to build two 65 (19.8m) patrol boats for the Columbian coast guard that had to be constructed entirely in Columbia. “That was really our first foray into licensing a SAFE Boats design. We provided them with a license, a materials list and a partial materials kit, and technical assistance to help them through the production of that boat.”

Dieter Loibner

Representatives of Vita Power and SBI’s CEO, Richard Schwarz (second from left), go on a demo-ride on a fully electric RIB. The companies are partnering to develop electric workboats for public agencies that must decarbonize their fleets in the coming years.

It’s not SBI’s primary business model, and, according to Schwarz, it likely never will be. “As an employee-owned company, we’re primarily concerned with creating a flow of business, an opportunity for our team here in Washington, so a true full licensing agreement will be a path that we take when it’s complimentary to the business.” And that business has been making forays into autonomous boats with a purpose-built Porter 78S workboat (under an exclusive license agreement with Stormer Work Boats of The Netherlands), which was designed for integration with the Mythos AI self-driving and autonomous hydrographic survey control system. Concurrently, the firm is looking at low- or zero-emission propulsion options, from hydrogen to hybrid and fully electric systems. At time of writing, SBI and U.K.-based electric propulsion company Vita Power had announced the 223e, a 23 (7m) battery-electric center-console for agencies required to take steps toward decarbonization. “Initially we see applications in harbor, port, and marina operations as well as law enforcement in contained environments like lakes, rivers, and [other] protected waterways. There is growing political and social pressure to decarbonize these operations, focusing on environmental benefits which counterbalance the higher initial costs,” Schwarz concluded.

SAFE Boats International, 8800 SW Barney White Rd., Bremerton, WA 98312 USA, tel. +1–360–674–7161

—D.L.