Making Waves Overseas With Well-Made Products

Nation's Business, Sept, 1998 by Thomas Love

Although their boats are powered, the partners have experience with sail. They used to own Pacific Seacraft, a firm that produced sailboats-one of which appeared on a national magazine's list of the top 100 U.S. products in 1987. The following year they sold the company to a Singapore-based conglomerate.

Under their agreement with Pacific Seacraft's new owners, Mohrschladt and Howarth could not build competing sailing craft, so they founded Cabo Yachts. Their first sport-fisher, the Cabo 35, was launched in 1991 and won rave reviews.

Initially they sold their boats in California, but sales lagged because of the state's then-weakened economy, so they explored more-promising markets, first on the East Coast and then overseas, Mohrschladt says. "In 1993, we made a decision to export."

The company placed a costly advertisement in a Japanese boating magazine every month for a year and eventually allied with a strong Japanese dealer for Cabo Yachts' products. In 1994 the company introduced its second model and started selling in Japan.

"We were doing a lot of business with Japan when the [Japanese] stock market crashed, and then we looked to Europe" in a major way, Mohrschladt says. "We had a dealer in Italy ... and one in Greece who [were] doing very well. We moved sort of bit by bit."

Of Cabo Yachts' $19 million in sales last year, $3.8 million came from abroad. The company is expanding its plant by 30 percent and its production capacity by 25 percent, and it now sells in 15 countries and has dealers in more than a half-dozen.

Cabo Yachts has succeeded in exporting, Mohrschladt says, because it turns out quality products-"quality is the main thing, particularly in Japan"-and because it delivers on customers' expectations. "When someone thinks about a sport-fishing boat," he says, "they picture an American boat. That's the image they have. There aren't many countries that are successful in exporting boats.... Sport fishing is pretty much of an image thing. You want to look good when you're fishing, so we cater to that sort of fantasy."

For its success in foreign markets, Cabo Yachts was named 1998 Small Business Exporter of the Year by the U.S. Small Business Administration.