Silver Ships’ Strategy in the Military and Workboat Industry
Executive Summary
Silver Ships, Inc. was founded by Mike McCarty in 1985 after a successful career in the
commercial fishing industry. Although McCarty originally intended the company to be
smaller in scale, the operation grew over the years. In 1988, Silver Ships began using
computer automated design (CAD), which expanded its capabilities as a boat design
company. In 1990, Silver Ships built its first aluminum rigid hulled inflatable boat. Six
years later, McCarty moved operations to Theodore, Alabama, where it is currently
located.
After moving into a 15,000 square foot building in 1996, they soon expanded a second
time. In 1997, Silver Ships began contracting for Ambar Marine, with which it is currently
associated. In 2000, Silver Ships purchased the company but declined to change the
well-recognized name. In 2002, Silver Ships added 12,000 square feet of space to support
increased production.
All aspects of the vessel construction, from the custom design to the final assembly, are
conducted in an enclosed production facilities and the location gives the company
convenient access to Mobile Bay, where it conducts extensive sea trials. Silver Ships uses
state of the art welding equipment and laser cut parts in the construction of our aluminum
boats.
Between 1985 and 2010, Silver Ships produced over 1,000 welded aluminum boats. It
takes job orders by way of contracts, some of which are government operated. These
contracts are generally done two years in advance, which gives the company the unique
advantage of knowing its production schedule in advance and allowing it to estimate
profits at a more accurate rate than companies in other industries. Silver Ships builds ships
according to specification agreed upon in the contract. Silver Ships is a prime boat builder
for the U.S. Coast Guard, U.S. Navy, other U.S. and international government agencies
and commercial customers. The company also repairs boats on a request-only basis and
contracts on a number of refurbishment jobs.[i]
Industry Analysis
The aluminum military and workboat industry is attractive to small businesses as its
narrow scope reduces the likelihood of larger shipbuilders entering the market. The
overall competitive forces working on this industry could be characterized as moderate.
An analysis of Porter’s Five Forces indicates that the highest pressure comes from the
bargaining power of buyers. Rivalry among competing boat manufacturers, threat of entry
from other firms, the threat of substitutes and bargaining power of suppliers are all
moderate or weak.
