Forecast 2014

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Industry leaders peer into their crystal ball and most see slow but steady growth

John Adey

President, American Boat & Yacht Council

As we come to a close of this year, I struggled with my thoughts and observations for the marine industry in 2014. For some time I have been deeply concerned about the “graying” of our industry, given the fact that today’s boat owner, as well as the marine industry professional, is aging. This phenomenon is not new and has happened in many fields of expertise.

adeySeveral years ago I met author David DeLong, who wrote a book called “Lost Knowledge — Confronting the Threat of an Aging Workforce.” He noted that an unprecedented number of highly skilled professionals and managers were leaving their jobs as aging baby boomers begin retiring from the workforce in droves.

Recently I had the opportunity to address about 140 boatbuilders during a marine engineering conference and was pleasantly surprised as I looked out across the audience. Within this group was the typical long-term employee, but in addition I noticed a new group of faces sprinkled throughout. These folks were young and seemed energetic as my co-presenters and I discussed the nuances of a boat’s electrical system.

Following the talk I had a chance to mingle among the group and ask some questions. Some were from other industries, such as automotive and industrial, and some were fresh engineering graduates. All told me they were relatively new to the boating industry and that their employer saw this as an excellent opportunity for training and decided to invest in their education.

I left that meeting encouraged, for the first time, that at least one segment of our industry is having some success attracting and embracing young talent. This is my hope for 2014, that this younger generation finds the recreational boating industry as a long-term rewarding career. While there certainly is a movement to attract younger people to boating through product offerings and better marketing, the question is: Who will support the infrastructure it takes to keep these new people on the water?

My New Year’s wish for everyone? Make an effort in 2014 to invest in our younger generation. It is going to take an industrywide effort to attract more young people into our businesses and show them the passion and enjoyment we all have for this industry. Once we have them experience what we all have known for years, they’ll be hooked just as we are.

atkinsIan Atkins

Senior vice president, general manager,

Dominion Marine Media

The end of 2013 is in sight and it’s been a better year than 2012 for many in our industry, Dominion Marine Media included. But there’s no room for complacency as we head into the next.

U.S. brokerage sales, reported in YachtWorld’s      SoldBoats.com database, will likely top 31,000 boats by year’s end — the first year our member brokers have sold more than 30,000 boats since before the Great Recession. Good news as we adapt to a “new normal.”

As the market improves, we will all need to invest. Remember the shift from print marketing to online? At Dominion Marine we made that transition and helped many others through as difficult a paradigm shift as any. The good news for those who also adapted to online realities is that they are still in business and in many cases prospering. The tough news is, as we all know, that technology is accelerating yet again.

In 2014, we’re likely to discover at some point later in the year that use of the mobile web — smartphone and tablet access to the Internet — has surpassed usage from the traditional desktop/laptop. That means all of us, whatever the size of our business, need to adapt our online presence, making sure we reach the bigger audience, in some cases a new audience, offered by mobile.

Two other themes stand out: Social media continues to gain importance, especially as search engines give higher and higher priority to social media commentary when ranking business websites. And video has become a must-have in the promotion of any business. Developing internal resources and increased sophistication around effective usage of both needs thought and resources in any business investment plan.

In our own strategic planning earlier this year, we debated what’s best for our customers and the future of our brands — YachtWorld, Boat Trader and boats.com. We decided that we must accelerate our established plans to become faster, leaner and more agile so we can respond to customer needs more quickly. We’re investing seriously in updating our own software and infrastructure while simultaneously developing game-changing software solutions such as DX1, the end-to-end dealer business platform launched in November at MDCE. We have long seen our business as a provider both of buyers for our customers’ products and technology to help our customers operate their businesses more efficiently. That hasn’t changed.

Something else that hasn’t changed is the attitudes of successful businesses we watch in our industry. As consumer confidence grows and as financing gradually becomes more accessible, they’re looking at where to invest productively, exploring how to connect with Generation C (the “connected generation”) and grappling with ways to change their culture and reach a more diverse group of potential buyers. Exciting times for all of us in this business. Not easy, but nonetheless easier in a slightly improved economic climate.

J. Everett Babbitt

President, Bellingham Marine

babbittFor the past couple of years, we’ve seen slow yet steady improvement in the marina industry. We remain optimistic and expect much of the same for 2014.

It’s been great to see an improvement in boat show attendance; the number of motivated marina owners coming through our booth is starting to increase again and the number of leads we have coming in from developers that are translating into real jobs is getting better.

Marina owners are starting to see the growth in boat sales trickle down into their markets. Many are reporting an overall decrease in the number of vacant slips — both wet and dry. Dry storage facilities in Florida that sat nearly empty during the market’s downturn are slowly starting to fill and some of the marinas that had experienced a drastic decrease in occupancy are back to having a waiting list. There was also a report recently issued documenting the industry’s continued shortage of slips for larger boats. This continued shortage had developers who are interested in catering to these bigger boats coming back on line.

In addition, money is loosening up in the U.S.; developers and marina owners are having an easier time getting their projects financed. We’ve also seen some “greenfield” sites come back into play — this indicator alone speaks to the improvements we’re seeing in our market.

As far as trends in the marina industry, customization and innovation continue to drive the standard for new facilities toward greater automation and personalization. High-end finishes and architectural details once reserved for the most luxurious marina facilities are making their way into the mainstream. Rounded finger ends are becoming a standard feature in Australia and are continuing to increase in popularity in the U.S., use of LED lighting is becoming more widespread, and requests for hardwood and composite trim packages are starting to show up in large public projects. Sleek finishes, organic styling and use of advanced lighting technologies are setting the stage for today’s most high-end marina properties. Remote metering of power and water and self-pay kiosks on fuel docks are also increasing in popularity.

2012 and 2013 have been good years for our industry; we remain optimistic that this trend will continue in the coming year.

Jim Coburn

Managing partner, Coburn & Associates; past president, National Marine Bankers Association

coburn_newOur outlook for the marine industry in 2014 once again beckons optimism. Comparably to 2013, those who have invested in and strategically planned for a slower-growth scenario will have a productive year.

 

Solid gains have been made in the industry for the past three years and 2014 should maintain that same trend. We estimate that unit boat sales growth will perform at approximately 6 percent for the year and anticipate a slightly improved performance in 2014.

Several good-news opportunities appear to be available as we head into 2014. Both current and distressed inventory levels are currently at modern historic lows. Unemployment, while becoming a controversial and debatable statistic these days, is projected to continue its downward trend in 2014. Consumer confidence is expected to improve next year, even after a strong 2013 mid-year performance gave way to a tepid fall performance.

Pontoons, aluminum fishing, bowrider and other price-leader boats will again lead the sales drive. And U.S. boating participation — a statistic that directly leads to sales — is expected to maintain positive trends. The big business of boating’s annual expenditures will continue to exceed $35 billion.

With that said, there are some areas to watch. Government policy, regulation and politics are still the wild cards that could affect boat sales and the industry. Shamefully, U.S. policy issues in very recent times could produce new setbacks as we navigate through 2014 and 2015. Those include issues like regulation, taxation, heath care, (lack of) budgeting, sequester elements, “tapering” of quantitative easing and remaining fiscal cliff components.

All of these are legislative/executive branch leadership-driven and have already stifled some of the industry’s growth. Marine businesses continue to be cautious about new hiring and many have made significant adjustments to their business plans as a direct result of taxation, health care and other U.S. policy measures. Best put by some peers in our industry, it appears that “gamesmanship” is now one of our U.S. market drivers.

Boat loan availability remains intact and floorplan finance availability continues its mending ways. Recent lender surveys reveal that boat loan underwriting guidelines have eased slightly and boat loan bookings increased in 2013. That trend is expected to continue at the same pace in 2014. Small numbers of boat lending bank players will continue to enter the market, provided the market maintains sales traction, improved risk performance and profit opportunities.

The boat finance industry’s wild card is in the area of regulation, specifically through the Consumer Financial Protection Bureau. New regulations that may impact lending are expected throughout 2014 and 2015.

Consumer pent-up demand still lingers and provides an opportunity in 2014 as more consumers will jump back into the game. While many of the jumping-in consumers will be a younger demographic, the issue of affordability and income are industry sticking points for accelerated business. Some studies show boat pricing has increased more than other transportation and recreation commodities, such as automobiles and RVs. It is not surprising that both automobile and RV industry sales have performed much better than recreational marine since the end of the Great Recession.

Embracing the good news and strategically navigating through issues facing the industry will be a great beginning guide to success in 2014. It has truthfully been a slow grind out of the Great Recession, and it has not been particularity pleasurable for us to watch other industries make faster sales and profit gains. However, another year of slow growth provides real opportunities as long as we manage it and appreciate that consumers always hold the keys to our success.

Thom Dammrich

President,

National Marine Manufacturers Association

Why will recreational boating sales grow in 2014? As I look around, there are plenty of indicators pointing to their continued growth in 2014 and for several years to come.

dammrichAs I write this, new-car and light-truck sales are reaching pre-recession highs. November’s annualized sales rate of 16.4 million units is the highest since February 2007’s annualized rate of 16.8 million — 10 months before the recession began. RV sales are expected to be up 10.7 percent in 2013, and the Recreational Vehicle Industry Association is projecting a further 6.1 percent increase in 2014, bringing total unit sales back to a pre-recession 335,000 units.

The only drag on GDP is declining federal government spending, but in an environment where we need to get our annual federal deficits and the federal debt under control, that is not a bad thing. Interest rates remain at historical lows, though longer-term rates are starting to increase — an indication of a strengthening economy. While most GDP predictions for 2014 are for more of the same — in the mid-2 percent range — some are suggesting stronger growth.

Household debt as a percentage of disposable personal income is getting back to “normal” levels and is approaching the long-term trend line without the financial bubble. Debt is becoming a lesser burden on households. In addition, with rising home prices and the rising stock market (the two largest components of household net worth) household net worth recently exceeded its prior high.

The wealth effect and its effect on new-boat sales are real. We continue to be challenged by the need to make boating more affordable, attract more youth and minorities and address government attempts to harm boating through taxes and restrictions on access. On the flip side, while there will be pullbacks along the way, we are working together to address these challenges and, as we do, we’ll position our industry for a multiyear period of growth.

In 2014, with improving economic conditions, manufacturers’ continued focus on innovation and consumers’ interest in the boating lifestyle we’re likely to see 5 to 7 percent growth in retail unit sales. Our biggest risk is a failure by Congress and the president in providing appropriate leadership on the budget, deficit and debt. Manufacturing capacity, particularly in the supplier base to boatbuilders, is another risk. And the weather is always a risk.

Moving into 2014, NMMA has increased our industry-leading boat show advertising budget by over 20 percent. We are optimistic that Americans’ love affair with boating is as strong as ever, and winter boat show attendance should reflect the improving economy. And as I write this, we’re preparing for our next meeting of the Recreational Boating Leadership Council to continue tackling our industry’s challenges. My plan is that when I sit down to write a 2015 outlook next year we’ll have made additional strides in positioning recreational boating as a leading recreational activity.

Anne Dunbar

Director, IBEX show

dunbarWhen it comes to predicting what will happen in the marine industry in 2014, one indicator that we watch and that has been reliable and consistent for many years is the RV industry. Historically, the marine industry trails RV by six to 12 months.

According to the most recent report from the Recreation Vehicle Industry Association, the first eight months of 2013 saw an 11.8 percent increase from the same months last year. This bodes well for the marine industry in late 2014 and into 2015, as long as other market factors don’t derail the possible growth.

Another valid indicator is my customer base — the more than 500 IBEX exhibitors who are on the front line when it comes to new-boat unit sales. What I am hearing from them is that while sales of mid-size cruisers continue to lag, the smaller-boat segments — outboards, fishing, and pontoon boats — continue to enjoy a more robust recovery. This has been the trend for most of 2013, and I expect it will continue through most of 2014. What our industry needs right now to kick-start boat sales in 2014 is more affordable, new and exciting entry-level boats.

When it comes to forecasting the future of boating, IBEX is a leading and reliable indicator. Each year there are standout product innovations introduced that improve not only the boat, but also the overall boating experience. In other words, IBEX is where you see change coming. This knowledge is extremely powerful. The boatbuilders and suppliers who take advantage of what they see and learn at IBEX are consistently leading the pack.

In order for us, as an industry, to sell more boats and get more people into boating, we must continue to improve and evolve at a pace that meets the needs of an increasingly demanding consumer. The marine industry evolves at IBEX each year. It is the starting point for better boats.

IBEX is well positioned for a successful 2014. We look forward to hosting our first event at the beautiful waterfront Tampa Convention Center in Tampa, Fla., Sept. 30-Oct. 2. As of early December, 85 percent of the exhibit space was sold and we are anticipating a sold-out event.

In addition, IBEX 2014 will offer dock space to exhibitors with the opportunity for live in-water demonstration for the first time in its history. This is an incredibly exciting new dynamic. Exhibitors began lining up for the dock space before we even had a layout to show them. Currently 50 percent of the new IBEX dock space is reserved, and similar to the exhibit hall, we expect it to sell out soon.

My team and I are working hard to ensure that IBEX Tampa will be the most dynamic show we’ve ever produced, so mark your calendars and come see what changes to expect in 2015 and beyond.

Peter Durant

Association manager, Sail America

durantSail America is the voice of the U.S. sailing industry, with a mission to grow the sailing market. As association manager, I represent the sailing community when writing my crystal ball outlook for 2014. I have met a lot of people this past year and have been fortunate to talk a lot about sailing. I am amazed how many people have been touched by the sailing bug, no matter the point in their life.

Sailing enjoyed a tremendous boost from the America’s Cup in 2013. People sat at the edge of their chairs, watching the greatest comeback in sports history unfold on their TV, computer or smart device. We watched as amazing video and graphics showed us the playing field, and the fantastic commentary made it easy even for the non-sailor to understand what was happening. Will a Cup hangover dampen our growth? I think not!

Growth will continue to be unevenly distributed across the country, as manufacturers continue to rebuild their depleted dealer networks and find reasonable financing options. Sailors are hands-on purchasers and want to see a boat before they buy; this might help explain the increase in show attendance.

While we await an announcement regarding the Cup, the enthusiasm has carried over into consumer confidence. I am encouraged by the increased numbers of people attending boat shows around the country, and even more encouraged by the number of people that are buying boats. I anticipate that new models and fresh product offerings will lead to another year of increased production and sales.

Millennials are being offered more solutions to remain in sailing. Charter companies and sailing schools should expect continued growth in 2014 as these solutions gain traction. Online peer-to-peer rental companies should also see new growth as they look to increase boat use by pairing boat owners with potential rentals.

The sailing gear and equipment markets will continue, as expected, to experience good growth as new technology and product innovation continue to drive them. The aging of the fleet, buoyed with consumer confidence, will drive the OEMs and aftermarket sales.

The sailing media companies’ success will continue to be driven by everything mentioned above as they continue to engage new audiences and readers through education, amazing photography and video and insightful editorial.

With increasing consumer confidence and enthusiasm I am cautiously optimistic that sailing will continue to grow in 2014.

Michele J. Goldsmith

Sales manager, Marinco/Mastervolt/Ancor;

chairwoman, NMMA Accessories Board of Directors

Each year prior to METS our company holds a global training event. This year, more than 100 people from Sri Lanka to Kaohsiung to Europe and the U.S. attended. What I took away from that event was an overwhelming sense of optimism and community. Regardless of the news, the unrest, the slow recovery of the global economy, people continue to boat and somehow, some way, our boating ecosystem finds a way to thrive.

goldsmithSure, we have our challenges, from the cost of boating to changes in demographics, pulls in multiple directions on recreational time, to unknowns in Washington, D.C., and a global economy more closely tied together than ever before that is slowly recovering, but may have some hiccups.

However, there are signs of improvement and positivity, as well. Wall Street is seeing all-time highs, which translate to stronger 401(k)s for employees. Housing values are recovering. Fall U.S. shows were strong, with high attendance and boats sold. Even in Europe, where high unemployment and weak economies continue, there were signs of positivity at consumer shows and robust attendance at the recent METS show in Amsterdam.

It is an exciting time for our company, which includes the Marinco, Mastervolt and Ancor brands. We have a new owner who brings renewed optimism and energy and many new products that are just entering the marketplace. The company is focused on innovation and technology, the development of products that are intuitive to boater behavior, making it easier to operate the vessel, adding value and enriching the boater experience, and new technologies that allow what is the norm at home or in the car to happen onboard.

Our company foresees integrated solutions — the interconnection of multiple components into one easy-to-operate system that the boater can monitor, control and troubleshoot from anywhere desired, all at a reasonable price — as the future.

Finally, it is my great privilege to lead the NMMA’s AMD board of directors. This team of dedicated manufacturers is creating tools and programs to enrich and ensure success for accessories companies and support NMMA’s focus on advocacy and expansion of boating participation.

We have just developed a fun, informative news and tools page (http://www.nmma.org/membership/resources/amd/default.aspx). Reach us directly at AMDboard@nmma.org. And 2014 will bring our newly formatted celebration in support of the Boat PAC and its advocacy work. Formerly the Blue & White Ball, this special event will occur at the IBEX show in Tampa on Sept. 30.

Regardless of the unknowns, what I know for sure as we enter this new year and long into the future is that our global boating community will endure and adapt and do so with passion for a sport and lifestyle we love.

Matt Gruhn

President,

Marine Retailers Association of the Americas

Coming into 2013, there were a lot of unknowns. There was unrest in the Middle East, a looming fiscal cliff and seemingly all kinds of economic potholes to be wary of. Looking ahead, things simply seem to be stabilizing.

christmas tree 2010, anja, lori, mammaMuch of the Middle East turmoil seems to be subsiding. I think we’re all starting to understand that for all of their dramatic partisanship, our elected leaders will not let us go “over the cliff,” and at the time of this writing there’s even talk that a bipartisan budget is becoming a reality. After all the ups and downs and the bickering over the last few years, it’s tempting to consider this stable.

With a nod to that stability, our industry should continue to grow. From conversations we’ve had at the Marine Dealer Conference & Expo, our regional Marine Retail University events and at the recent Recreational Boating Leadership Council meetings, we should expect slow but steady growth in 2014.

One of the focal points of the MDCE this year was the topic of growth. As the industry continues along this slow and steady growth phase it can be tempting to push the envelope, get overly aggressive and try to force the issue. We must be diligent, however, about growing intelligently.

The data shows that as new-boat sales continued to grow leading up to the official recession, the profitability of our dealerships was spiraling downward rapidly. A culmination of factors — excessive inventories, out-of-control personnel expenses and inefficiencies everywhere — compounded to make some of our best boat-selling seasons our least profitable. That’s a bitter pill to swallow.

We need to continue to remember the lessons of that period of time as we solidify our growth curve. In doing so, be prudent about decisions to introduce costs, look for new avenues for growing your business and be aggressive when an opportunity presents itself.

Volvo Powertrain Skövde

George Harris

President and CEO,

Northwest Marine Trade Association

I’m optimistic that the “fragile recovery” from 2009 will continue for all NMTA members and that we will see Washington’s new-boat sales and boating participation continue to increase for 2014.

In 2012, Washington state new-boat sales saw their first year-over-year increase since 2005 with a 9 percent increase, to 3,325 units. For 2013 we are on track to finish with an 11 percent increase, which is 3,700 new boats sold. Used-boat sales for 2012 and 2013 are holding at roughly 34,000 units, which is down 7 percent from the surge of used-boat sales we saw in 2009.

In the Northwest, aluminum boats are outselling fiberglass boats, which is a major change from 2007, when fiberglass outsold aluminum 2-to-1. We are also seeing a shift to smaller boats. In 2004, 92 percent of the boats sold were less than 26 feet. Today 96 percent are less than 26 feet. It appears from this data that boaters with sufficient wealth will continue to purchase and use the large boats. The “boating middle class” is doing so in smaller, more affordable boats.

harrisOur 700 members, with the majority located up and down Puget Sound, benefit from our strong local economy and diverse year-round boating opportunities. Recreational fishing in the Northwest (salmon, crab, shrimp) continues to be a great opportunity for our members. Nearly all segments (new-boat sales, moorage, service, accessories, insurance) have seen a substantial uptick in their business due to the increased recreational fishing seasons in Washington.

For the past five years, recreational fishing seasons have actually expanded in the state, creating more opportunity for anglers. This is due in large part to successful lobbying on the part of our association and three other recreational fishing organizations that emphasize the social and economic benefits of recreational fishing to our policy-makers. Associations and boating organizations need to be strong advocates for maintaining and expanding recreational fishing opportunities.

I certainly have some concerns looking ahead to 2014, including: 1) baby boomers retiring from boating; 2) a shortage of skilled workers to provide quality products and service and the challenge to retain them due to the seasonality of boating; 3) increased boating regulations and reduced access to the water.

All of these are top priorities for our association. Our staff and volunteers are working on them daily with our own Grow Boating program, workforce development partners and a robust government affairs program that is working with all state agencies and the legislature for legislation and policy that helps increase boating participation and grows boating businesses. Supporting national and regional associations that advocate for boating is our best way to address the concerns of a boating business or a particular boating passion.

I want to applaud the work of the Recreational Boating Leadership Council and Discover Boating for their respective work and vision. The RBLC has changed the conversation about the future of boating for every business and boating organization. Thanks to RBLC, we are all now taking action to address critical issues such as the changing demographics in the United States, boating education, making boating more attractive to young people and affordability. The Discover Boating program is getting results, creating 700 million positive boating impressions in 2013 and generating leads for dealers.

Consumer confidence is at its highest since 2008. Home values in the Northwest are beginning to increase. These are good signs as we prepare for the 2014 Seattle Boat Show in January, which is the No. 1 sales event for our members.

We have a long way to go from where we were in 2008, but boating businesses should be optimistic about 2014 and beyond.

Ron Huibers

President, Volvo Penta of the Americas

Volvo Penta concludes 2013 as a productive year that featured delivery of new, innovative and award-winning products and services. Although the market growth had not developed as well as we had forecast, we continue to see growth prospects ahead for 2014. The advances in the past year within the U.S. stock market, employment and housing sector contribute to an improving consumer confidence. We also see a firming up in other key markets and a potential for limited overall growth.

huibersVolvo Penta grew in each of our product segments during 2013. We are seeing more global trade within the boatbuilding industry. Recent trade shows — whether in North America, South America, Europe or Asia — have featured new brand introductions to new geographic markets. Innovative products, together with strengthening distribution for an improved end-to-end customer experience, will continue to be a key differentiator.

At Volvo Penta we will further accelerate the “easy boating” strategies that have generated marketplace success in 2013: integration and innovation. Our “helm-to-prop” integration philosophy began 10 years ago with the introduction of Volvo Penta IPS — now with 16,000 units operating in over 400 boat models.

Our OEM and dealer customers have told us that one-stop responsibility for all products and assistance improves efficiency and response time within distribution and aftermarket chains. To achieve the highest level of integration, the ability for engineers to develop new products and services is significantly enhanced when the mechanical and electronic architecture is open.

At Volvo, our level of integration has made possible the development of proprietary systems that give customers one source and one point of responsibility, delivering new levels of performance. We will continue to leverage the scale of the Volvo Group to bring new product and technologies to market that continue to offer boaters an even better experience.

Innovation continues to guide our development. This past year, we delivered on the concept we introduced called “Glass Cockpit.” We were pleased to receive a number of international innovation awards, including [those at] IBEX and METS. This system approach now provides an improved customer experience and functionality.

Glass Cockpit gathers all driver information for engine control and navigation, then displays it in one spot. The operator can customize the pinch-to-zoom displays to focus on what he or she wants to know, reducing information overload. The Garmin-designed displays epitomize “user-friendly.” Together with the joystick steering first introduced by Volvo Penta years ago, we see many examples where making the operation of the vessel easier, familiar and ultimately safer can both retain customers and attract new boaters, as well.

We see a number of parallels to the auto industry, relative to customer expectations. Next year we anticipate more customers will take advantage of the confidence they can achieve with our recently expanded range of extended-coverage programs, from gas to diesel systems, featuring availability of up to five years of full coverage.

On the engine side we further expanded the already widest product lineup in the industry with the introduction of the D11 diesel and IPS 950. We also introduced new-generation gasoline sterndrive engines to the recreational gas market. Following on the award-winning V8-380, we continue to deliver higher horsepower-to-weight ratios. The products we introduced this past year include the new V8-430 and, more recently, the new V8-350 that feature significant improvement in performance, fuel efficiency, throttle response and fun.

To a certain extent, we are not really competing against each other in this industry, but moreover, together we are all competing against other leisure lifestyle choices. The demographics, in fact, do play to our favor and the ability to attract and retain customers can be realized with new products and services that are more enjoyable and promote the concept of “easy boating.”

At Volvo Penta, we are quite optimistic about 2014 and will continue to innovate and develop products and services so that customers choose to increase their quality of life by boating with family and friends.

One big positive for the industry: Boaters continue to take to the water in record numbers and are highly satisfied with the experience.

One big positive for the industry: Boaters continue to take to the water in record numbers and are highly satisfied with the experience.

Gaspare Marturano

Managing director, social media, Fastlane

What happened? I swear I just blinked and 2013 is over. I sat down with my coffee and reflected on my musings in Trade Only’s 2013 Outlook. I really didn’t remember what I wrote, so I had to reread to see if any of the nonsense from my always over-caffeinated brain came true. So I will break down what I said about 2013.

2013 Prediction 1:

“Most businesses have embraced ‘standard’ social properties (Facebook, Twitter, YouTube) in 2012. In the new year, I suggest to my clients that they begin to branch out to lesser-known online communities.”

I have to admit this was an easy one to predict. There are many new and exciting social venues that were coming online, and I was glad to see my clients embrace some of the newer, less utilized social sites.

Although I am still not a fan of Google+ for use in the marine marketplace, using Google Hangouts for mini-videoconferences with dealers or distributors has been very popular. I see more folks taking advantage of this free service to connect in 2014.

Services like Amazon now provide online video customer service. They are still working out some minor bugs. This could become a useful tool for the marine industry and should be tested on some scale in 2014.

gaspare2013 Prediction 2:

“New smartphone apps that enhance the boating experience will become a focus of many in 2013. I recommend brainstorming sessions where no idea is too off-the-wall. Management needs to encourage creative thinking.”

Apps are now the norm. In 2014, online app downloads are expected to reach more than 70 billion. Companies will begin to use mobile apps to do more than just provide a quick and easy way to work with their customers (and employees).

According to the latest Pew report, “63 percent of adult cell owners now use their phones to go online, a figure that has doubled since we first started tracking Internet usage on cellphones in 2009. In addition, 34 percent of these cell Internet users say that they mostly go online using their cellphone. That means that 21 percent of all adult cell owners now do most of their online browsing using their mobile phone — and not some other device, such as a desktop or laptop computer.”

Bottom line: At a minimum, you need a website that utilizes “responsive design” (that means you can view it on a mobile device). If you are so inclined, have an app developed. I am working with most of my clients to do just that.

2013 Prediction 3:

“I envision the technology of ‘virtual’ boat tours and shows improving over the new year.”

This one did not take hold (I still have high hopes), but I took the bull by the horns and we created our own virtual boat show. We are still beta testing and hope to be the first to present a product to market that the marine industry can be proud of. If you would like to see/test, drop me a line.

The marine industry is evolving. We have had some real hard times. At some point, I felt like we were a bit like Rocky Balboa in the original. As an industry, we were getting our ass kicked by Apollo Creed. We fought back as best we could, never giving up. We were beaten, bloodied and bruised — Rocky, with severe eye damage, and Apollo, with internal bleeding (a bit like us and the U.S. economy), but even though Rocky lost that fight (a split decision), he came back in Rocky II, III, IV, V, etc.

My thoughts for the marine industry are best summed up in the immortal words of Mickey Goldmill: “You’re gonna eat lightning and you’re gonna crap thunder!” in 2014!

Dustan McCoy

Chairman and CEO, Brunswick Corp.

mccoyWe believe that market conditions are generally and slowly improving. The overall marine market right now is back to 60 percent of 2007 levels, with certain categories, such as aluminum fishing boats and pontoons, having recovered even more.

We believe that new-boat sales will continue to grow slowly over the next three years.

At its core, the industry is fundamentally healthy, as boaters continue to go on the water at record rates and are highly satisfied with the boating lifestyle. However, we believe they continue to be more and more challenged by the cost, the time and the effort of boating, particularly relative to other leisure activities.

The market and today’s boater continue to change, and we expect that to continue. And we’ve also observed over the last five years a very active and still robust used-boat market that we think offers significant potential for us to convert used-boat owners into new-boat buyers in the years ahead.

The issue is boating’s value, versus the benefit. So from our perspective, understanding that there’s no lack of desire to boat and no lack of understanding that boating is a great activity, the challenge for the industry is creating greater value and improving cost.

William McGill

CEO, chairman and president, MarineMax

Predicting 2014 for the marine industry is akin to a meteorologist attempting to predict the weather, only to be surprised with Hurricane Sandy and no 2013 spring in the northern markets of the U.S.

mcgillWe at MarineMax are forecasting our business to continue to grow in 2014, as our team is committed to staying focused on why we are in business, and that is, we change people’s lives by uniting them with their “self” and others on the water.

Boating is and will continue to be the very best recreation for escaping and uniting with family and friends. Last April marked my 40th year in our industry, and today I am still enjoying our recreation for the personal connections with my inner emotions, as well as connecting with my wife, three adult children, two young daughters at home, my nine grandchildren and friends.

Many of the most rewarding moments in my position are when our female customers say to me, “Thank you for me getting my husband back,” and, “Wow, our children want to boat with us,” which validates why we are in the business of changing people’s lives. Knowing that what we do changes people’s lives is what gets me up every day, excited to serve our customers and team.

We keep telling our team to focus on the things that are within our control, which is helping our customers to select the right boat, teach the entire family how to use it, service second to none and show our customers how to enjoy boating as part of the MarineMax family of boaters.

Last year alone we were involved with our customers with over 1,000 Getaway trips, rendezvous, dock-tail parties, Women on the Water classes, seminars, trips to Italy and more recently getaway trips enjoying the British Virgin Islands with our charter fleet, MarineMax Vacations.

Our industry has experienced many new challenges and has seen new sales of boats and yachts slip significantly from 2007 levels in every segment of our industry, but the good news is that for the past few years we are steadily recovering, with consumers feeling better and with improvements in business, housing, employment and the stock market.

2014 will most likely be a year of single-digit growth for our industry until consumers feel more certain about where things are headed in our economy and the world. Perhaps the midterm elections in 2014 will be a catalyst to greater growth for recreational boating? Recovery sure feels better than the mess we and our customers have had to endure.

Fred Pace

Managing partner, Legendary Marine

In 2013 the national and regional news media were consumed with elections, the fiscal cliff, unrest in the Middle East and multiple other negative economic issues. The year delivered a whole new menu of “crises du jour.” I suspect that 2014 will likely serve up its share of troubling developments that may cause some boat buyers to postpone their purchases.

paceThat being said, Legendary Marine enters 2014 with an overall more positive mindset and attitude than the previous year. In fact, we enjoyed our best year in history in 2013! The many challenging economic factors that impacted the northwest Gulf Coast, including the Gulf oil spill, appear to have stabilized. Armed with GE’s prediction of reasonable economic growth, coupled with evidence of a much healthier real estate market and an uptick in local employment, we’re cautiously optimistic.

We are fortunate to live in a healthy military market with a strong active-duty and retired community that we have worked hard to engage and that has delivered a positive ROI to our bottom line. Additionally, there are a significant number of new major commercial developments under way throughout our region that will positively impact the markets we serve.

We clearly recognize that there are many other recreational activities vying for our customers’ time and their discretionary dollars, so we must aggressively — and strategically — work with passion to keep them on the water. In 2014 Legendary Marine will continue to focus manpower and resources to increase boat usage among our existing customer base in order to keep them in boating.

Our entire organization benefits when our customers use their boats. We benefit from fuel sales, storage, marina services, part sales, service work, new-boat upgrades, etc. Our marketing and sales team will work cooperatively to plan, organize and host many special events and educational programs to engage our customers and prospects.

While the cost of entry into our sport and lifestyle continues to rise, we’re hopeful that the industry’s focus on the affordability message will be delivered. We are promoting this message in our market through a variety of media and marketing channels.

In addition, we also know firsthand that our customers are always driven by new technology and innovation, along with improved ease of use and convenience. We will capitalize on all opportunities with the brands we represent to deliver applicable messages.

Donald C. Parkhurst

Senior vice president, marine & RV finance group manager, SunTrust Bank

After several years of weaker-than-normal economic growth following the Great Recession, I am hopeful that 2014 may finally see at least a modest pickup in growth. This should help the unemployment rate to continue its slow decline and should help boat buyers to gain some more confidence. That confidence is essential to their deciding to purchase more boats. We will not see sales return to pre-recession levels, but I believe we will see faster sales growth.

parkhurstEarly in 2014 the Federal Reserve will begin to taper its bond buying as the economy shows this extra strength, which should keep the economy from really getting strong. However, we are in uncharted waters on this new policy experiment. The interest rate yield curve should become steeper, which will keep short-term interest rates, like car loans, low, but will cause mortgage rates to go higher. Boat loan rates are in the middle, so they should rise modestly, but they will still be low by historical standards.

Banks are hungry for loans, and this will translate into new banks entering marine lending and to somewhat easier terms for boat loan borrowers. The higher interest rates will slow boat loan refinancing, which has been a substantial part of lenders’ volume over the last few years.

Even though I am more optimistic about boat sales growth in 2014, we still have issues in our industry to be concerned about. We are demographically challenged in the coming years because the baby boomers are retiring in droves. While this gives the ones with comfortable retirements more time to enjoy boating, for many lesser well-heeled individuals it means giving up their boats. We are seeing clients sell their boats and pay off their loans with no intention of buying another boat.

There are still many boaters out there who purchased boats before 2009 that owe more on their boats than the boats are worth. This will be a continuing drag on sales because they have to come up with cash to buy another boat.

Rob Parmentier

President and CEO, Larson Boat Group

I see tempered optimism in the economy, and today’s boater — and customer — is very different from the one we knew 10 years ago. I think we’re going to see similar signs in 2014 to what we saw this year. Certain categories — pontoons, saltwater fish, freshwater fish and towboats — are going to continue to see single-digit growth.

Unfortunately, runabouts and cruisers have been down for the last six years. It’s devastating, but I believe it’s at its inflection point. My prediction for growth in that portion of the industry is going to be closer to 2015 or even ’16. Down the road, I think we’ll start to see a small, slow rebound in the cruiser and runabouts market segments.

parmentierStatistics show that boating participation and registrations are flat, partly because people keep their boats a lot longer — eight to 10 years instead of three or four. Given the economy and the price of new boats, we can see why new-boat sales have slowed.

When a family with an older 23-foot bowrider looks at trading it in, they see that the price on the new model of their boat has gone up exponentially and they can’t justify it.

We have a very small industry and don’t enjoy the volume necessary to get prices down, so we have to figure out other ways to do things smarter to get the costs of the boats down. That’s why pontoons are doing so well. You can still get an 18- or 19-foot pontoon package with a 60-horse outboard for under $25,000.

When you see something happening for four, five years in a row, it’s no longer a fad. It’s a reality. The pontoon market will remain strong in the years ahead. This is why Larson has re-entered the pontoon market — to be where the customers are.

Innovation and affordability are the keys. If you look at our new Escape pontoon line, with its styling and innovative features, like a full stand-up head that retracts into a wet bar, there’s nothing out there that looks like it. We are investing a lot of capital and time in our fishing lines: Striper and Larson FX. People want something different. Innovation sells.

As an industry we must continue to improve the quality in our products, but we also have to figure out how to make boats more affordable, reducing maintenance and the “hassle factor,” because time will remain a critical part of society.

Finally, there has been a shift in how people boat — away from overnight cruising and toward day boating — and we have to cater to that by making sure our product development plans deliver what the boating public wants.

I know my colleagues and competitors are all working on the same things. Everybody wants to find that next silver bullet. The complacent boatbuilders are gone. You can’t be complacent anymore. You’ve got to be thinking about new things every day.

Margaret Podlich,

President, BoatUS

At Boat Owners Association of the United States, we see Americans continuing to watch their wallets and expect discretionary spending on the family boating budget to remain on par with 2013. That’s not to imply that there isn’t opportunity within this environment — quite the contrary. With this “new norm,” which economists say may be here a while, what can we do?

podlichFirst, we can focus on a core fundamental: Boating remains an incredible outlet for dissolving the stress of the unstable world that surrounds us. For those of us with boating in our blood and multiple boats in our family, it’s difficult to fathom the incredibly large — real or perceived — first step of boat ownership. When you next meet a stranger, ask them what they think about boating and what it would take for them to get into it. You’ll be surprised to hear their answers. And they might just give you some ideas for your own business.

The challenge for the industry is improve service to existing customers and embrace the need for action on a new emerging boating base.

From the boat owner’s perspective, a boosted focus on customer service can make the difference between whether they stay in or get out of boating. Yes, the industry is working on it. But we are still not where we should be to make boating an available and easy recreation. We need to reanalyze what works from the customer’s perspective — not our own — to keep these folks happy. If you can provide good service, you will profit.

It will take a personal and institutional commitment to grow boating. This starts at home. At BoatUS we are making a big push to get our employees out on the water and inviting families, too. When was the last time your staff enjoyed the water together?

For boaters, waterway access challenges continue to pop up around the country. Maybe it’s an anchorage that has closed or land development pressures on a local boat club. In many cases, local boaters, boating organizations and the boating industry will have to work together to ensure boating is, in reality and in perception, a community asset.

E15 (15 percent ethanol gasoline) remains a threat to boating, but looking into the new year we see significant congressional interest in reforming the Renewable Fuel Standard, which mandates increasing amounts of ethanol. BoatUS continues its push for reform on this critical issue.

We look toward 2014 as an opportunistic year and look forward to working within the industry to help boaters go boating.

Rives Potts

President, Brewer Yacht Yard Group

The first two words that come to mind for 2014 are “cautiously optimistic.” Many businesses have declined due to the recession and we are seeing improvement, but what’s striking is that we’ve not climbed out as fast as expected.

pottsIn my mind, the only question is how fast recovery will happen and to what level we will see it return.

That’s the economic side. On the boating side, the industry has to realize the market has changed. Boat owners are aging and the younger generation is not filling those boaters’ shoes as quickly as we would like.

One reason is the boats themselves. The younger generation is more cost-conscious, more concerned about their time. Therefore, boats must be made more cost-efficient, easier to operate and easier to maintain.

New boat owners are not as inclined to “putter around” on boats, fixing and maintaining them, but they do love “messing around” on them with their friends. As a result, manufacturers must meet younger expectations, and yacht clubs and marinas need to understand the needs of this market. Families, and especially women, are more important in the decision-making process of where and how to spend resources and time.

Along those lines, facilities have to be more appealing in what they offer. Operators must be sensitive to customer needs more than ever before. For full-service marinas, this means both in service and marine amenities.

From a service standpoint, we have to know boats better than ever before, as customers expect more from us. The traditional customer who knows his boat and often does upgrades is vanishing. New customers expect yards to anticipate, communicate and fix problems in order to assure a hassle-free boating experience.

No longer can a yard expect customers to know what’s wrong with their boat or take care of it themselves. Yards have to be willing to take care of the customers and their boats. Yards have to deliver excellent service on time, on budget, all the time.

On the amenity side, a marina operator who offers just slips with electricity and water may not attract new boaters. Today, cable TV, additional power, and reliable Wi-Fi are all expected in addition to traditional offerings. Also high on the list are pools, playgrounds, clubhouses, lounge amenities, community pavilions, exercise facilities, attractive landscaping and lighting, and security features. Customers want their boating experience to be like their home away from home.

In summary, boat manufacturers have to be on top of what is wanted, just as facility operators must anticipate customer needs and desires. If we can be sharp and diligent on both fronts, we’ll see a nice rebound in the industry that will sustain itself for a while. I’m very bullish on the industry, but it won’t come without smart, hard work on our part.

Larry Russo Sr.

President and CEO, Russo Marine

It’s hard to believe that the catastrophic financial disaster known as the Great Recession began over five years ago. The road to recovery has been a “slow-go” for most, but many survivors are experiencing a healthy return to profitability.

Sales revenue at Russo Marine is down 40 percent since its peak in 2007. However, our profitability for 2013, as a percentage of sales, is the highest it has been since 1988. We have right-sized our business for the “new normal,” which is fewer new-boat sales and less revenue.

russoYes, we are pleased with our current performance, but we are concerned about the future. We are selling mostly high-priced, premium brands to aging baby boomers that have a high net worth. They have no issues with obtaining credit or paying cash from a well-heeled brokerage account. The stock market has gone up 75 percent since the fourth quarter of 2008. Their net worth has increased. They can afford the lifestyle they so choose.

The problem is this: The boomer demographic is aging out. As this consumer group diminishes in number, they will be replaced by the next group. It is well documented that the next group, Gen X, has serious financial constraints. They are burdened with home mortgages, equity loans and student and credit card debt. In addition, they have not seen an appreciable increase in their household income in several years.

This group is not financially well positioned to purchase a new boat. To compound the problem, the price of new boats has more than doubled since 2000 and available credit remains very restrictive. This is not a recipe for growth and success.

Smart people in the design, engineering and manufacturing sectors in our industry need to figure out how to reduce the cost of boats to make them more affordable to the next generation of buyers. Gen Xers are already at the purchase-consideration age. If we cannot get this accomplished, we will be reduced to selling boats only to the wealthiest in our markets.

Ben Speciale

President, Yamaha Marine Group

How well we do as an industry in 2014 depends upon how well we prepare for the opportunities that lie before us. Many opportunities have been presented by recent economic trends.

Overall, the economy is growing — just more slowly than we might like. Growth for 2013 will likely be 1.6 percent overall, but the third quarter was 2.8 percent, which is a good trend. At the same time, the Dow rallied in 2013, exceeding 16,000 for the first time in history.

specialeThe unemployment rate is stable and moving in the right direction, while the housing market is improving for a second year. Home prices rose by 5 percent and sales were up 20 percent nationwide. It is fair to say consumers have adjusted to gas prices, and vehicle sales are back to pre-recession levels (16.1 million units).

Consumers have been buying more boats, too. Here are some examples: Aluminum boats less than 20 feet are up 3 percent while aluminum boats greater than 20 feet are up 12 percent. Fiberglass boats under 20 feet are up 7 percent; 20 to 24 feet, up 19 percent. Meanwhile, fiberglass boats between 25 and 29 feet are up a whopping 40 percent. Boats above 30 feet are up 24 percent.

Clearly, the saltwater segment is recovering, particularly in Florida. Perhaps the greatest opportunity of all is pent-up demand. In recent years the boat replacement rate has been cut in half from the pre-recession norm. That low replacement rate can’t go on forever because the boats in service just won’t last that long. We believe the more serious marine consumers will begin replacing boats at a higher rate over the next few years. We all must be prepared for the demand that we expect to come.

We have been preparing. In recent years Yamaha has introduced a variety of next-generation outboards. Last year we launched the F200 and VMAX SHO 150, which have been very well received. We also launched Helm Master, our fully integrated boat-control system.

This year, again, we are launching two new outboards — the second-generation F115 and the new F175, each of which will bring new benefits to their respective segments. New products give consumers a reason to look and, hopefully, to buy.

On the legislative side, we have two opportunities in 2014. Congress will address the Magnuson-Stevens Act reauthorization. Magnuson-Stevens is the primary law regulating fishing in coastal waters. The law, as currently written and enforced, is very difficult for recreational anglers and all of the businesses that depend on the sport of fishing.

We must be sure that recreational fishing is considered and accommodated when the law is updated next year, and that means we must all become activists. This includes taking up the issue of ethanol and E15. We cannot let E15 become the predominant fuel available in this country. It clearly damages marine engines in use and will cause economic harm to our industry and consumers. This is the year to change it.

An improving economy alone is not enough to ensure we reach our potential in 2014; we need to start believing in the consumer again and make the appropriate inventory decisions. At the same time, this is the year to fight against public policies that could damage our businesses for the long term. In 2014, more than ever, we must work together to be successful.

Bruce Van Wagoner

Marine Group president, GE Capital,

Commercial Distribution Finance

GE Capital, Commercial Distribution Finance collects and analyzes a wide range of data to support dealers and manufacturers in the marine industry. Those analytics span historical and current time periods; forward-looking periods are included in some instances, as well. Because we have a broad perspective that covers multiple market segments, we have the ability to develop insights that are relevant proxies for the marine industry’s performance.

vanwagonerFrom a wholesale finance perspective, CDF has seen double-digit growth in both purchases and payoffs in dollars from 2012 to October 2013. This indicates healthy sell-through. In other words, dealers have the confidence to order and stock more inventory while, at the same time, product is being sold at retail. This is represented by an increase in inventory turn rates (which are running well over two times) and a reduction in aging (less than 4 percent of inventory has been in stock over 540 days).

CDF also has the ability to look at the health of its marine portfolio by analyzing financial information, in aggregate, provided by dealers. A recent analysis shows there’s growth and profitability across the dealer base, which is a fairly diverse group. Revenues are up year over year and operating expenses are down. Earnings before interest, taxes, depreciation and amortization are up, as is net income.

All of this data points to a healthier dealer base and one that is poised for continued growth. Dealers’ increasing financial strength translates into increased confidence in the form of business expansion. It also provides support for increased credit capacity from CDF.

We’re currently finalizing our growth projections for 2014. Some of the important variables we consider are key economic data relative to the market, retail registration data and important demographic trends, as well as GE’s own data.

Government uncertainty certainly doesn’t help matters, but we have been dealing with that uncertainty for quite some time. In addition, we experienced a wet spring across most of North America in 2013 and good weather could send a tail wind. Based on what we know today, we are building our plans for 2014 to be better than 2013.

With an eye toward the future, CDF is in the process of developing predictive analytics tools to share with our strategic partners. I’d like to extend my sincere thanks to our many manufacturer and dealer partners who have embraced the business metrics we’ve generated. Working smarter and working together, the industry has a bright, profitable future.

Efrem “Skip” Zimbalist III

Chairman and CEO, Active Interest Media

(owner of Show Management)

The headline for 2014 is that we expect our boat shows to build on the momentum achieved in 2013, which is finishing very strong. Bookings for our 2014 Yacht & Brokerage Show in Miami Beach are running well ahead of last year and we are expanding our footprint to handle more and bigger boats.

As always, there are segments that are stronger than others and geographies growing more quickly than others, but the general direction is up. I expect the pace of growth in 2014 to be slightly better than 2013.

zimbalistThe growth is not coming from a large influx of new entrants to the market, but from existing exhibitors expanding their footprints. The number of exhibitors is pretty stable, with a small churn of about 10 percent (this peaked at over 20 percent in 2009). Foreign marketers are focusing on the United States, as demand here is growing more rapidly than in many overseas locations.

This relative weakness in some overseas markets is caused not only by lagging economic growth, but also by restrictive tax and import policies. There is also a lot of very exciting new product being introduced as the more savvy manufacturers respond to changing demographics and market demands.

Particularly encouraging is a nascent resurgence in the smaller-boat (30- to 60-foot) market. At Fort Lauderdale, this was the fastest-growing segment, and we are seeing that trend continue in Miami. This segment has not seen a lot of activity really for the last decade, and it is good to observe some signs of life there.

And finally, attendance numbers at our and other shows indicate that the consumer is itching to buy. Fort Lauderdale attendance was the highest since 2006 and our exhibitors reported good increases in sales and identification of new qualified prospects.

If there are pockets of weakness, it is largely caused by local economies, supply chain and weather issues rather than basic demand. There are some geographies where dealer networks were weakened by the recession and have yet to be rebuilt. There are other areas where there is very little local stock for display at shows due to pipeline tightening by manufacturers and strong sales of quality brokerage product.

On balance, we are looking forward to continued growth in 2014, provided our politicians permit it to happen.

This article originally appeared in the January 2014 issue.

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