Boat building takes on water in recession.

• Position: Eastern

When commercial fishing and seafood processing foundered in the mid-'90s, industry hunters turned to another traditional maritime trade to help buoy the coastal economy. But now boat building--2,500 businesses statewide, including parts and service suppliers--faces foul weather after high gasoline prices, then recession knocked the wind out of its sales.

Now in its 30th year, Washington-based Fountain Powerboat Industries Inc. was forced to seek harbor in Chapter 11 bankruptcy in August. After hoisting sales to a record $79 million in fiscal 2006, it hasn't made a profit since, losing about $1 million in its most recent quarter, with revenue down 60% from a year earlier. Manufacturer of some of the most expensive powerboats in the world, it owes $20 million and is seeking an investor to bail it out. Founder Reggie Fountain Jr., the speedboat racer who still runs it, hopes the company will emerge from bankruptcy this fall.

"More of the smaller companies are going to face what Reggie faced," says Mark Bradley, director of boating-industry services of the N.C. Small Business and Technology Development Center in Raleigh. "The industry will eventually turn around, but no boat-building entity is going to ever be back where they were."

Statewide revenue for the sector totaled about $500 million in 2007, the last year for which a firm estimate is available. Employment in boat building and supporting industries fell from about...