Outlook 2013Posted on
Leaders cautiously optimistic that industry’s rebound will continue into the new year.
Senior vice president and general manager,
Dominion Marine Media
From our vantage point at Dominion Marine Media, working with thousands of boatbuilders, dealers and brokers, it would seem the skies are clearing to a degree as 2012 winds down. We see evidence that businesses are starting to invest cautiously in their marketing to a greater degree than a year ago, in North America, in particular. While the elections and other events have caused some disruption, the trend is positive, and several of the larger companies with which we work are calculating that it will continue in 2013.
That’s not to say we foresee a business bonanza. In the United Kingdom, home of our European offices, we have recently learned that austerity measures will be extended three years, to 2018, as we work to keep our financial institutions solvent. The rest of Europe is no better and in some cases worse. But elsewhere, things are a little better than a year ago. We’re seeing leadership from South America and the Tiger nations in the Far East, plus some countries in Eastern Europe, where the economic news is good.
In North America the economy is starting to move again. Increasing investment by our boatbuilder clients in new models has begun to pay for many, who advertise on boats.com, and for their dealers, on Boat Trader. The new designs are fresh and offer new technologies at a time when the boat-buying public has grown tired of waiting for “better days.” And there are fewer clean, recent-year models to compete against.
The brokerage market, represented on our YachtWorld sites, has shown higher sales volume in 2012 despite the challenges presented by an aging fleet. Even in Europe, aggregate sales reported by our member brokerages have seen smaller declines in sales volume than we might have forecast.
The yacht brokerage market has proven to be resilient over the last several years. That’s partly because so many people still want to own the boat they’ve been dreaming about and partly because the best brokers know that in challenging times it’s not just a matter of finding the buyers. They also need to devote considerable time to persuading potential sellers to move off the sidelines and into the game.
We observe that the most successful brokers and dealers continue to adopt a multimedia approach to their marketing and make sure all are properly funded. Compared with the opportunity available for lead generation, however, many companies still underplay their online spending, whether through portals or social media.
Of one thing we’re confident: The buyers are out there and we’ll continue to invest in our ability to attract them for our customers’ benefit. All of us need increasing sophistication to find the buyers. Even though traffic has continued to grow on our sites in 2012, much has come through mobile devices, which is why we’re investing in site modifications as well as new consumer-focused efforts, such as YachtWorld’s new iPad app and Boats.com’s video boat review program. Yes, the buyers are out there, and increasingly it’s our challenge to connect them to our customers as directly and quickly as possible.
Managing partner, Coburn & Associates
CHB, Michigan Boating Industries Association
Past president and director, National Marine Bankers Association
If you like your optimism in small doses, 2013 is going to be your year — again. The industry has made encouraging gains in the past two years and managed to navigate through some unprecedented economic conditions. Slow growth is once again my key axiom for the marine industry.
I find it interesting that some of the same policy issues from last year still face us as we conclude 2012: high unemployment, regulation, taxation, health care and several other components of the so called “fiscal cliff.” These very real issues are leadership-driven and could cause another setback for the industry.
The good news is that boating remains a big business in the U.S. Annual marine industry expenditures are well over the $30 billion mark and new-boat sales are on the increase. We should seize the current slow-growth environment and the accompanying slight sales increases as positives and run with them as the trends continue to improve.
Unemployment, while still high, is forecast to continue its slow drift downward. Consumer confidence and light-vehicle sales indices are headed in the right direction. Consumers are still on the sidelines, but more of them appear ready to jump into the game. While economic indicators should remain somewhat improved, a majority of marine businesses mentioned that 2012 has been better than last year, yet still appear to be reluctant to hire new employees in 2013.
In terms of recreational marine finance, retail loan availability remains intact, floorplan availability is on the mend, retail underwriting guidelines are easing and collateral values are climbing. More marine lenders entered the business in 2012 and a few more are projected for 2013.
We all know that boaters have been changing — within the U.S. and within the marine industry’s own demographic subset. For those in the industry who pay attention to demographics, consumer demand and technology, the slow-growth road will be a good one to be on.
Everyone must continue to draw on investment and creativity to improve revenue and profitability. With that said, boat sales and financial performance solutions are held by U.S. consumers. Translation: Embrace and capitalize on what another year of slow growth will bring without forgetting that the consumer holds the key to our success.
National Marine Manufacturers Association
Throughout 2012 all eyes were on the election and how it would impact the U.S. economy. As I write this, the focus is on the “fiscal cliff,” uprisings in the Middle East and economic conditions in Europe.
There will always be a looming event holding everyone’s gaze, keeping businesses on the sidelines, fearful of making decisions. Instead, we can use the facts in front of us to make decisions that position our industry for the best possible future. I often get asked by business and consumer media if I think we’ll ever get back to selling 300,000 new boats each year. Here are some of the facts I look at and ideas about the decisions we can make now as an industry:
There are now more boaters in their 50s and 60s and fewer in their 30s, and the primary boating demographic — Caucasians — is the fastest-declining percentage of our population. We must attract a younger and more diverse audience if we are going to get back to selling 300,000 new units a year (we sold 143,000 in 2011).
Boats in use declined for the past five years and the number of registered boats has begun a slow decline as new-boat sales fail to offset boat retirements. We must offer innovative, smart, fun, high-quality boats, gear and engines to keep existing boaters interested and attract new boaters. In addition to superior products we must offer a superior boat-ownership experience through NMMA Certification and Marine Five Star Dealer Certification.
Boating participation grew in five of the past six years, reaching nearly 35 percent of adult Americans — that’s 82 million people! Increased participation creates future demand. Our industry’s Discover Boating campaign helped us reach this rate of participation growth, and if we’re going to maintain momentum Discover Boating is more valuable than ever. For participation to translate into ownership we also need boating to be as accessible as other forms of recreation by building the infrastructure to offer hands-on, on-the-water boat training and maintaining water access for future generations.
The Consumer Confidence Index increased in November to its highest level in more than 4-1/2 years and housing starts have risen a whopping 41.9 percent during the past year, reflecting strong market growth. Not surprisingly, new-boat sales will be up as much as 10 percent in 2012, and if these economic trends continue we could see 10 percent growth in 2013. Increased consumer confidence and a healthy housing market equal increased new-boat sales and a healthy boating industry.
Now is the time to ready our diversity and youth initiatives; build innovative products; support the Discover Boating campaign in promoting the benefits of the boating lifestyle; improve access through organized hands-on training; protect our waterways; and continue offering an exceptional boat-ownership experience. Making these fact-based decisions now, we can prepare for growth opportunities and get back to selling more than 300,000 new boats each year.
Marine Trades Association of New Jersey
In the wake of Hurricane Sandy it is difficult to look to the future and predict what 2013 and beyond will look like for us here in New Jersey. It was only a little over a month ago that we were all sitting together at our October board meeting talking about the successes of the past year, our 40th anniversary as an association and the optimism we were all feeling for the year ahead.
Consumers were gaining confidence, sales were increasing and perhaps we would finally see some continuous positive growth all around. Our fall boat show had strong sales and the highest attendance since its inception in 2009. You could feel the positive energy, and predictions for 2013 were looking good.
Hurricane Sandy changed everything. Her unprecedented tidal surge brought unimaginable devastation and damage to so many of us here. In the days following the storm it was like a scene from a horror movie. Widespread flooding, streets closed, trees down, no power, looting, long lines for gas, houses and businesses washed away and entire communities changed overnight.
The nights were dark, and all you could hear was the continuous hum of generators everywhere. It was surreal. We are certainly not the first to experience Mother Nature’s wrath, but I do not think any New Jersey native was prepared for what we woke up to on the morning of Oct. 30.
Over a month has now passed and much progress has been made in the cleanup and recovery. I am inspired by the strength and resilience of many of the marine business owners I have been speaking with since the storm. They are determined to pick up the pieces, wherever they are, take care of their customers and get back to business, no matter what it takes, even those facing personal losses and impossible challenges.
Like many storms before this one there will be lessons learned and changes made. We have members that are already having these discussions, making changes and planning for the future.
There will be new challenges, issues and tough questions that we will all face, and we do not know what the full impacts of this storm will be. However, what I do know is that we will work together to tackle these challenges, help each other every step of the way, obtain the resources needed to rebuild as quickly as possible and, most importantly, maintain our focus on moving forward and getting boaters back on the water doing what they love.
Managing director, Info-Link
At Info-Link our primary role in the boating industry is to provide clients with fact-based market intelligence — things we are certain have occurred. Since it is not possible to reliably predict the future we tend not to do sales forecasting, per se. This said, we have analytical capabilities that give us unique insight into a wide range of market metrics, and based on this information we are highly optimistic about 2013.
Over the past several years boaters have understandably throttled back on major purchases. Today we are encouraged by the trends we are seeing in the market. For instance, new-boat sales have been increasing steadily for the past year, especially in certain segments, such as pontoon and saltwater fishing boats. Dealer inventories are healthier and most of the distressed inventory — both new and pre-owned — has been flushed out of the system, so boat values are back in check. It has also been at least six years since the last sales peak, and we know the average boater replaces their boat about every six years.
As we all know, boat sales are heavily influenced by the economy, and recent data indicate that the U.S. economy is moving in the right direction. Consumer confidence is up, unemployment is down and home values, which typically show a direct correlation with boat sales, are climbing.
Ultimately, the principal factor influencing major discretionary spending is whether consumers feel comfortable about their future. There is still anxiety over how Congress will handle the so-called “fiscal cliff,” but assuming there are no major surprises we expect to see a continued growth in new-boat sales during 2013. Pre-owned boat sales will likely experience a slight decline due to less available inventory, which is a direct result of fewer new boats being added to the fleet over the past few years.
Meanwhile, there are still well over 10 million existing boat owners in the U.S., all of whom depend on our industry to provide the products and services necessary to keep them on the water. These boaters have also been curbing their expenses, but the average boat is now over 21 years old and more than 900,000 of them change hands each year. Many boats are reaching the point that they need to be repowered, sometimes for the second or third time, and most need at least basic equipment upgrades. With this in mind we expect to see a healthy increase in engine and equipment sales during 2013, as well.
I think most would agree that optimism breeds optimism. We as an industry have an opportunity to significantly grow our market by continuing to show consumers why this is the greatest activity in the world. Where else can you take your family and friends hostage for a day and virtually guarantee a great time? Nobody knows what tomorrow will bring, but I am certain we are now a more focused, unified industry and I, for one, am enthusiastic about our future.
Marine Retailers Association of the Americas
At a recent basketball practice a friend of mine taught his team of 8- and 9-year-olds the value of working together. Each was given two pencils. The players were asked to break the first pencil in half. Every one of them snapped. Then they were instructed to each hand the coach their second pencil. He bound them together with a rubber band and each player was then asked to try to break the bundle of pencils in half. Of course, they couldn’t do it.
The illustration is one that even third- and fourth-graders can understand: As a group, or a team, you are much stronger than you are as an individual.
Yet when you look at today’s society there are few examples of true teamwork or collaboration. There are protests at the capitol in Michigan. There is finger-pointing in Washington, D.C. The National Hockey League, which was to have opened its season Oct. 11, canceled at least the 2012 portion of that season two months later because it couldn’t come to terms with its players’ union. And there’s a general lack of cooperation among leaders everywhere.
Today’s economic and social environments are tough. Uncertainty and instability are preventing major purchases. Unemployment is still high. Consumer confidence is still low. I get why it’s easy to want to blame someone.
But here in the marine industry I’d like to think we’re better than that — that we’re going to come together and create our own success rather than letting such external factors determine our fate. And there are numerous indicators that this is already happening.
Take, for instance, the upcoming American Boating Congress. Last year, through a collaborative effort, many new faces came to ABC and many more are already planning to make the 2013 ABC the most significant legislative event our industry has ever had.
Or consider the Grow Boating and Industry Growth Summit efforts. These are collaborative initiatives that focus on increasing participation in boating — something every one of us could benefit from. The former focuses on the Discover Boating marketing campaign, “Welcome to the Water,” and the Marine Industry Dealer Certification program. The latter focuses on encouraging youth and increasingly diverse audiences to take part in boating, educating boaters, communicating the industry’s marketing efforts and uniting to fend off unwarranted regulations that hamper our growth.
The key in all of this is that we are working together, side by side. Yes, there is some overlap in these initiatives, but what that means is that there’s plenty of opportunity for you to be involved. And it is time for you to get involved, if you’re not already. Let the politicians and leaders of other industries point fingers and assign blame while we build a better future through a stronger, more unified boat business.
In the words of Charles Darwin, “In the long history of humankind … those who learned to collaborate and improvise most effectively prevailed.” I challenge you to find a way to collaborate in 2013.
Vice president-marine sales,
Volvo Penta of the Americas
Volvo Penta remains cautiously optimistic about growth in the recreational boating market next year — again. All of the signs that should portend a robust rebound are here — dropping unemployment, improved consumer confidence, rising home values, age of the existing fleet, post-election stability, etc.
But we believe significant growth in the sterndrive and leisure diesel markets is likely a year or two away. For 2013 we expect overall market growth to average under 10 percent, with the bulk of that growth in the latter part of the year.
To capture all of that growth and then some, Volvo Penta’s focus is threefold: Bring innovation to the market, add value to existing products and contain costs. Every manufacturer knows that new products sell, and innovative products can capture the attention of even the most reluctant consumer. Volvo Penta’s 2012 introduction of the V8-380 followed on our long history of marine innovation. We delivered a rocket of a sterndrive engine with unmatched torque at all power settings and exceptional fuel efficiency. And that translates into fun for the boater. This engine is just a hint of the Volvo Penta sterndrive lineup to come.
Adding value means offering enhancements or improvements with no additional price tag to enhance the consumer’s experience or product longevity. Volvo Penta’s Full Control software package on both our gasoline and diesel products brought a complete range of consumer-friendly software features at no additional cost for the 2013 program year. These enhancements help dealers sell products and consumers use their boats more effectively and efficiently.
Our Volvo Penta IPS, with more than 16,000 units in recreational boats worldwide, is mature and reliable. We are actively investigating products and programs for customers to reduce their total cost of ownership and ensure a quality boating experience every time out. Our customers appreciate the value of working with only one company to sell and service the complete system.
Lastly, our focus is to make boating more affordable. The price of a boat has climbed far faster than any comparable luxury good purchase. We know that engine cost is a major driver in the overall cost of a boat. Therefore, we are evaluating savings opportunities to pass on to our OEM customers in every category.
Yet even with these short-term strategies we believe that the boating public and the pool of potential customers are changing fundamentally. For the marine industry to continue its recovery, we must identify ways to spread the joy of boating and the boating lifestyle to a wider (and perhaps initially reluctant) audience.
The three concepts we’ve identified for short-term growth are relevant here: 1) Innovate — create products that allow non-traditional consumers to visualize themselves in a boating lifestyle and motivate them to a purchase decision; 2) Add value — incorporate the best of key features into an entry-level product to deliver a rich boating experience; and 3) Contain costs — reduce the economic barriers to entry as a first-time boater. We will continue our support and actively participate in Grow Boating and other market-expansion activities.
Owner and general manager,
Mount Dora Boating Center & Marina
Chairman, Grow Boating
December has traditionally been a time of reflection about the year gone by (the easy part) and thinking seriously about the year ahead, fine-tuning plans and preparing to take advantage of opportunities yet to come (the not-so-easy part).
Looking back, 2012 was a year of ups, downs, unpredictability and frankly, at times, was erratic. The good news is our sales are up and we’ll end the year with more money in the bank than we started with. We also learned quite a bit about the “new normal” and customer interests and habits, so we’re more prepared and able to be more aggressive in 2013.
We now have customers who are better informed than ever. They’re armed with more information and options. Our customers have become increasingly value-focused over the last four years and I don’t expect that to change anytime soon.
All aspects of our business — boat sales, service and storage — will need to offer significant value for boaters and potential new boaters. Our job is to make sure we’re offering the very best value in our market and be prepared to explain why.
We’ll need to continue to work hard for every sale, regardless of whether it’s a boat, added service work on a repair ticket or a new storage customer. We’re looking for 2013 to be similar to 2012, with modest growth that will continue to require hard work, superior value and exceptional customer service.
Looking at the big picture, not much changed in 2012 from 2011, with the exception of one thing: “Boating” is alive and well and growing! Last year adult participation in recreational boating grew once again — to a new high of 82 million. Discover Boating is allowing us to tell our story through a national marketing campaign that’s paying participation dividends and will lead to more sales.
Despite high unemployment, slow-to-improve consumer confidence, continuing mortgage woes and a lackluster economic recovery, “boating” participation grew. That is an outstanding fact that speaks volumes. It demonstrates that people want what we have to offer — the boating lifestyle.
Our industry’s Discover Boating program and Welcome to the Water campaign delivered the boating lifestyle message through innovative, effective marketing efforts. I urge you to check out our 2012 results video on the home page of GrowBoating.org.
Boating equals fun, excitement and quality time with family and friends. It’s our story and it’s very compelling. We just need to tell it to everyone we can as often as we can.
In 2013 Discover Boating and Welcome to the Water will continue to put the “ing” in boating in new ways and new media. Boating has a very bright future and we’re planning on being a part of it for a long time to come.
Wendy J. Mackie
CEO, Rhode Island Marine Trades Association
Predictions are tough and mostly dependent on how a person chooses to look at a situation. I tend to look at these situations from a “glass half-full” perspective.
The industry has spent the last few years retooling as a leaner and more efficient resource for today’s and tomorrow’s recreational boater. I believe it will build on this momentum in 2013.
Creative calculated risks that weigh out the interests of the new generation of boaters have been shown to pay off with positive results. Whether because of advanced marketing of new product designs or the high-energy, high-profile events that graced our shores (such as the America’s Cup World Series and the Ocean State Tall Ships Festival), there has been a positive energy among the recreational boating industry in Rhode Island this past year. This type of excitement is necessary if the industry is to stay relevant.
Integrated marketing efforts that braid together the goals of multiple aspects of the industry will prove to be more cost-efficient and effective. Utilizing the local marine trades associations as clearinghouses is a great way to find common goals and work toward them as a collective unit.
In Rhode Island our association membership encompasses all aspects of the recreational boating industry. Though not an inclusive list, it is composed of designers, boatbuilders and manufacturers, marinas, boatyards, sales and service providers, retail and wholesale organizations, educational institutions and other organizations involved in the industry.
We are working on marketing what we have here in the Ocean State to push a message forward that cultivates product innovation and service excellence while showcasing Rhode Island as a top-notch boating destination. When we do this together the cost is minimal and the results are maximized. I foresee more boating and building regions doing the same to take charge of their bottom line and their customer base in this economy.
In 2013 businesses will find they reap what they sow. Proactive industry leaders have reported that effective marketing strategy on new products has helped to sell boats and quality customer service keeps the customer coming back. In this next year businesses will continue to look for ways to showcase what they do best or differently to garner that customer base. Web and social media presence will continue to be important as low-cost ways to promote the unique attributes of businesses, reach new audiences and cultivate new boaters.
In the area of work force development, adept service providers, manufacturers and builders will utilize available government training funds through their local Workforce Investment Boards to keep employees on the cutting edge of technology and best practices. Employers who want to stay competitive in the long term will look to standardized training models, such as apprenticeship, to cultivate their future work force.
In order to get desired results, businesses will need to put skin in the game. 2013 is full of opportunity for creative, forward-thinking businesses that pay attention to industry trends and generational differences in the consumer market. The glass really is half-full if looked at from this viewpoint.
Digital marketing and social media at Fastlane Communications
I love this time of year. I get to sit back, reflect on the past and ponder the future.
When I first became involved in the marine industry it was still trying to figure out what (if any) role “off-board” social systems would play in the industry. Today, companies have started to adopt social systems and have a better understanding of how the social interaction with consumers and business partners can be a great benefit.
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. The key is looking at your product and demographic and figuring out which of the social properties less traveled might fit.
New smart phone 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. This allows for new and creative ideas on how to better market your product as well as what to create to advance new and exciting boating lifestyle applications.
The scenes from science fiction movies of yesteryear are now becoming a reality. Virtual worlds in gaming have been growing at rapid rates, since the mid-‘90s. We have come a long way from the days of paging through Dungeons and Dragons playbooks with friends, to playing Mario Kart against 12 people from around the globe on the Wii from our living rooms. I envision the technology of “virtual” boat tours and shows improving over the new year. Better smart phone applications will improve the live boat show experience and new exciting virtual boating games will encourage the younger generation.
All of this begs for social interaction. The boating lifestyle extends far past the few months we keep our vessels in the water. The opportunity to extend the interaction with boaters during the winter months is great, and with today’s technology and future developments it’s only getting better.
One area the marine industry will focus on more in 2013 (especially the ones that are thought leaders and “get” social media) is the social market overseas. It is projected that the Asia-Pacific market will see a 21 percent increase in the area of social media in 2013. The Middle East and Africa are expected to grow at a rate of 23 percent. Many of these users will not necessarily be using the standard social pages.
My personal goal is to help business create interactive online (and offline) communities in 2013. Keep in mind that web presence, social media interactions, blogging, media relations, and community building are beginning to morph into one animal.
I have heard many times of the so-called “dinosaurs” in the marine industry. They say that most are very adverse to change. That might be true for some, but from my experience in 2012 and looking toward the future, many are ready to move forward, take the bull by the horns and kick some online ass.
Chairman and CEO, Brunswick Corp.
At this particular writing, global economic prospects in 2013 remain uncertain. Global economic issues continue, and in the United States the president and Congress continue to wrestle with our own “fiscal cliff.”
Given that backdrop we are planning for the global economic and marine market outlook to be challenging. Absent any significant economic pressures, such as going over the “fiscal cliff,” the overall U.S. marine market should continue to experience solid single-digit growth, with select segments — smaller boats, such as popular fishing boats and pontoons — leading the way. We are planning for the cruiser and larger boat markets to remain weak.
Amid the economic uncertainty, we will continue to focus on running a lean business, controlling costs, supporting our extensive dealer network and ensuring customer satisfaction. We will continue to seek organic growth opportunities and remain confident of the long-term health of the marine industry. The economic recovery has been slow and comes seemingly sometimes in fits and starts, but boating’s popularity has not waned during this period. The changing demographics in the United States present an opportunity for the industry to develop significant growth by attracting new boaters.
President, Sail America
Sail America is the voice of the U.S. sailing industry, with a mission to grow the sailing market. It plays a vital role for all companies that provide sailing-related products and services. My crystal ball for 2013 is bullish.
Sailing will enjoy a huge exposure increase due to the U.S.-hosted America’s Cup. Exciting (read NASCAR) boats, teamed with new video technology, will dramatically expand the viewing audience. Events start in February and end with the San Francisco-based finals in September.
Sales of both new and brokerage boats will benefit in 2013 from demand caused by a diminished supply of 2008-2010 models. This void will add positive pressure to the new-boat market for several years. Our boatbuilders will have another year of increased production, led by those with fresh product offers. Some segments are rebounding faster than others.
Charter companies and sailing schools had a good year in 2012 and are expected to continue growth in 2013. The sailing gear and equipment market has been our best performer over the last few years and will grow slowly on the OEM side while the aftermarket segment will see faster growth with the continued upgrading of older boats and consumable products.
The sailing-related media companies’ success is directly tied to all of the above, except that the online segment is growing exponentially.
Sailors are a passionate bunch and continue to enjoy their boats through good economic times and bad. Historically the sailing market segment owns the middle ground without the highs or lows experienced by some. My friend Nick Hayes reflects how sailing matters to sailors: “When was the last time a basketball player studied emergency and rescue procedures to keep fellow teammates safe and secure? … When was the last time you saw a quarterback use a star to navigate, the moon to light the field, or pause to gaze upon the aurora borealis during a game? No, sailing isn’t a sport. Sport should be so lucky.”
Managing partner, Legendary Marine
With the threat of the fiscal cliff, unrest in the Middle East, additional regulatory issues and an uncertain economy, attracting new customers and retaining the base appears to be our biggest challenge. As the automobile manufacturers continue to produce new and better models, with ever-improving technology resulting in prolonged periods between maintenance, our customers’ expectations continue to rise.
The last five years have taught us that we must expand our profit centers and become less dependent on new-boat gross margin. I don’t believe 2013 will be any different. On the positive front, I also believe the passionate boater has become less troubled by the ongoing barrage of “bad news” from the media. Despite the media’s best efforts to paint the “sky is falling” picture, those infected with the water gene will find the time and resources to get out on the water.
At Legendary Marine we have enjoyed a fairly significant increase in first-time boater activity over the last few years, and perhaps we are overly optimistic, but we believe this trend will continue. Clearly a major goal of our team is to remain focused on ensuring that these first-time boaters enjoy their time on the water. If we successfully create positive impressions for first-time boaters it is reasonable to assume we will experience some level of growth for 2013.
An additional point of optimism is the fact that many existing boat owners have extended their normal trade cycles due to the recession and the lack of a defined recovery. We are hopeful that many of these owners have learned to live with the “new normal” and are ready to trade their existing boat for something newer.
The recent MDCE conference also revealed the feelings of many leading dealers and manufacturers about 2013. Attendance was up, indicating more dealers investing in their ongoing education, which should ultimately improve their respective business models. For the dealers it was a great injection of some new ideas and sound business practices that were very helpful. Participating manufacturers took this opportunity to demonstrate their support of dealers who are willing to invest in the education and growth of their company.
President and CEO,
Recreational Boating & Fishing Foundation
The boating and fishing industries cannot thrive without participation, and that’s the Recreational Boating & Fishing Foundation’s mission and our primary measure for success. The good news: Participation is up for both recreational activities, a trend I’m hopeful will carry into 2013.
The National Marine Manufacturers Association’s 2011 Recreational Boating Statistical Abstract shows boating participation increased 10 percent, to 83 million, the largest proportion of adults (34.8 percent) who went boating since 1997, when 35.8 percent participated. Additional data from the U.S. Fish & Wildlife Service’s 2011 National Survey of Fishing, Hunting and Wildlife-Associated Recreation shows fishing participation is up 11 percent, reversing a decade of downward trends.
Despite the economic downturn and explosion of technology use, participation in outdoor recreation overall remains strong. To keep the boating lifestyle top of mind we as an industry need to keep a close eye on consumer trends, adjusting our products, services and interactions based on changing demographics and new technology. As the boomer population ages, it will be increasingly important to look at other consumer segments to drive participation. Hispanics and the millennial generation top that list. And as consumers engage with new technology, tablets and mobile devices we need to deliver relevant information to them in multiple formats when and how they want it.
In 2013, keep a finger on the pulse and be open to change. Boating participation will remain strong.
Vincent J. Petrella
Executive director, Yacht Brokers Association of America
I recently attended a two-day meeting of the Certification Advisory Council, the governing board of the National Yacht Broker Certification Program. The CAC is made up of two members from each of the seven sponsoring yacht broker associations in North America.
We began this annual meeting by polling each member about their past year’s experiences and their outlook for the future. As we polled the room, it was clear that sales of previously owned vessels (brokerage boats) have been encouraging in most regions while the consensus was that new-boat interest and sales activity was still soft in most major markets of North America.
The major concern for those who sell brokerage vessels is the continued decline in desirable product, primarily relating to the availability of late-model used vessels. As the availability of good late-model vessels (1 to10 years old) has significantly declined, yacht sales professionals are left with a variety of older vessels (11 to 25 years old) that are more difficult to sell for various reasons, including outdated technology, heavy maintenance and restoration requirements, an inability to secure adequate purchase financing and marine insurance and just plain lack of desirability to today’s buyers.
Although some difficulties still exist in the new- and used-boat markets, most yacht sales professionals were optimistic about 2013 after an active and promising fall boat show season; this was, of course, up until the time that the Northeast was slammed by Sandy.
Sandy had a devastating effect on the marine industry in the Northeast. Marinas and boatyards have been swept away or severely damaged, and with them many new boat dealerships and yacht brokerages suffered damage, inventory loss and business interruption. We have all seen images of hundreds of boats in piles or submerged and destroyed or seriously damaged.
No one really knows the extent of the total damage and loss to this point and how it will affect our industry in the years to come. The big question that remains in the minds of yacht sales professionals is whether boaters will be traumatized by the likes of Sandy and leave boating altogether or whether they will reinvest their insurance settlements and continue to live the dream of the boating lifestyle. Only time will tell.
Our industry has been faced with incredible challenges, but despite the constant obstacles and roadblocks, yacht sales professionals throughout North America remain resilient, optimistic, adaptable and committed to success and the continued growth of the recreational marine industry.
Yacht sales professionals support the efforts of the Grow Boating and Discover Boating/Welcome to the Water initiatives to introduce new boaters to the boating lifestyle and to reinforce the joys of boating to those who already participate.
For a lot of us the past year was a cacophony of economic, political and hurricane-related news. When it comes to looking forward to next year, each of these 2012 legacies is going to have an impact on the boating industry and on the boater, including BoatUS’s 500,000-plus members. The good news is that boating continues to provide that wonderful relief from the rest of our lives and this value proposition, if we as an industry promote and “work” it, will help boating continue to be a preferred recreation for many Americans.
As a result we are looking forward to an improving 2013, with some caveats. Families need to have the disposable income and feel comfortable to use it in order to afford a boat, storage and gas and everything else that comes with it. While nationwide unemployment numbers are trending down, there are geographic pockets where they remain stubbornly high. Add to this a politically connected uncertainty about tax structure for the future and potential changes to the alternative minimum tax and the second-home mortgage interest deduction (including boats). This combination of unemployment for some, the threat of unemployment for others and questions about future household finances will join together to impact our recreation.
The negative impact of weather events is increasing the cost of boating. Last October’s Hurricane Sandy created an estimated $650 million in boat losses — the single largest industry loss since we began keeping track in 1966. This catastrophic loss is going to force all insurers to review their rates, adding to the cost of boating. We expect that premium rates will increase across the country due to a range of events, including low water levels on the Great Lakes and many other drought-stricken waterways, increased tornado activity, powerful snowstorms and hurricanes. On the other hand, there is increased repair activity boosting local marine businesses.
Where is the opportunity? For boaters with good credit, borrowing money has never been more affordable. Fall 2012 boat sales numbers are showing improvement in certain classes of boats, and Northeast boaters with Sandy insurance checks may help boost those more. From the industry perspective, are we doing all we can to ensure customer satisfaction? Are we providing over-the-top service, value and products? And are we looking out for new or potential boaters and every day working on ways to bring them into — and keep them in — the joy of boating? With these priorities, it can be a great year for all of us.
President, National Marine Distributors Association
As president of the National Marine Distributors Association I have been asked to give my “crystal ball outlook” for 2013 from the marine distributors’ point of view.
NMDA does an annual “state of the industry” survey in July, and at that time the optimism level was quite high. The season had been strong in most parts of the country and accessories were selling well. New-boat sales had picked up and used boats were continuing to be sold and/or upgraded.
But then we had Hurricane Sandy, which has impacted a large number of boaters, businesses and families; many of them have been harmed by the storm. Companies that have been in business for many generations are now trying to figure out whether they can stay in business — or get back in business, in some cases.
The losses from this tragedy are overwhelming and will certainly affect many of us in 2013. Short-term, the losses will most certainly be a negative, but long-term I am confident many businesses will be rebuilt and will be even better than before Sandy, new boats will be purchased and many boats will be repaired.
The businesses that have weathered the recession are strong, well-run businesses. These dealers, boatyards and chandleries are ready to take advantage of opportunities and can react to changes in the economy. NMDA distributors and manufacturers have worked with their customers to help them not only stay in business, but also have helped them learn how to grow their businesses.
Reasonable financing is available to people who qualify and want to go boating. If boat fuel next season remains at today’s “reasonable” prices, it should not be an issue. A very smart man told me today: “People who want to boat are boating.”
We know that our customers, the dealers across the country, are cautiously optimistic. History tells us the recreational boating industry is the first to take a dip in a recession and the last to come out of a recession. In 2012 boating businesses in all areas of the country were definitely on an upswing. In 2013 this positive momentum will carry us through at least mid-year.
There are bright spots ahead, but many unknowns. It looks as if hard work, careful decisions and perseverance by well-run businesses remain, as usual, the necessary ingredients for success in 2013.
Larry Russo Sr.
President and CEO, Russo Marine
Here I am at my keyboard laboring over what topic to focus on for the 2013 Outlook article. There are so many worthy subjects to write about, but the one that keeps bubbling to the top is this one: How will this industry manage to balance what appears to be the “new normal” of low consumer demand with the collective industry capacity to build to a much larger audience?
Every boat manufacturer needs to produce so many units per week, per month, per year to absorb their overhead and make a profit to survive. As I see it there are dozens and dozens of former high-production builders that have lost their key points of distribution in major markets. Who are they going to get to sell their boats? There are only a finite number of good boat retailers in each market, and those retailers already represent the top-selling brands.
When I drill down into the market-share data by category I see that the top 10 sellers in each market have the lion’s share of the sales, leaving little to no opportunity for the other builders. In Massachusetts, for example, there are 25 sterndrive brands represented. The top 10 brands have 82.5 percent of the market, leaving the other 15 brands to fight over the remaining 17.5 percent. On average, that leaves slightly more than 1 percent of the market for each of them.
In the saltwater outboard category there are 75 brands that compete in Massachusetts. The top 10 sellers control 48.7 percent of the market, leaving the other 51.3 percent to be shared by the 65 other brands. That’s less than 1 percent share per builder. These two examples are not sustainable business models for the builders who do not rank in the top 10 sellers categories.
There are only two possible scenarios that will develop in 2013. One: The industry could boom and we will see a rapid run-up in the demand for boats, giving these builders, which are now on life support, a much needed infusion of new business. Or two: We will not see a boom for boating next year and these builders will continue to suffer to the extent that they will consider their options: 1) merge their business with a compatible partner; 2) surrender to an acquisition; or 3) shut down their operations. The market forces are at play here and they cannot be halted. Remember the adage: “A business that is not growing is starting to die.”
So my message for 2013 is this: Go find a growth opportunity.
President, Yamaha Marine Group
Over the past year the marine industry has shown some strong indicators of growth and promise. No, we are still not where we were five years ago, but there are many positive signs that point the way to great things to come for 2013.
U.S. house prices rose 1.1 percent from the second to the third quarter this year, according to the Federal Housing Finance Agency’s seasonally adjusted purchase-only house price index. Overall, 2012 saw consistent price increases, with the HPI index for the third quarter 4 percent greater than the third quarter of 2011. In September, housing starts jumped 15 percent, reaching a four-year U.S. high, according to the Commerce Department.
These statistics tell us there is clear evidence of an economic recovery.
Consumer confidence is also up. The Conference Board’s Consumer Confidence Index reported its highest level in more than four years in November, indicating that U.S. household spending could grow in 2013 and long-term financial commitments could also increase.
The marine industry is gaining some momentum that we must continue to leverage in 2013. According to reports from Info-Link Technologies, a Miami-based market research and analytics firm, boat sales were up 11 percent year over year from October 2011 to October 2012, with all categories showing growth. Pontoons and aluminum fishing boats continue to increase in popularity.
Boating participation remains strong. A study by the Recreational Boating and Fishing Foundation and The Outdoor Foundation showed that the sport of fishing added 800,000 participants this year, bringing the total number of Americans who fish to 46 million.
The most interesting statistic from this survey is that females and young children accounted for most of the new boaters, showing a great deal of family growth in the segment. Baby boomers may still account for much of the boating market, but these findings show new interest from generations X and Y entering the market.
The market is telling us it is ready to buy boats. The past year has shown a great deal of enthusiasm and optimism at boat shows, dealer meetings and boatbuilder meetings.
The population of boats in the U.S. is getting so old that boaters must start replacing them, and I believe we are reaching that critical moment where pent-up demand meets new, exciting products.
Yamaha has launched a second wave of game-changing outboards, a whole new concept in boat control and more endless propeller solutions in 2013. These new products represent tremendous opportunity for industry growth.
I believe these and other new Yamaha products will hit the market at just the right time, as consumer confidence continues to improve.
Yamaha plans to welcome 2013 poised to deliver the right products at the right time. Consumers are ready, they are confident and we have faith that the market will continue to improve over the next 12 months.
Karen M. Trostle
President, Sterling Acceptance Corp.
The 2013 economic outlook for our nation and the boating industry in general is again going to be a mixed bag.
The economy has been slowly muddling along and will continue at its very slow growth pace. The single biggest obstacle to generating increased growth is relatively weak demand. Also, consumer confidence remains well below historical statistics several years after the end of a recession.
The low level of job growth and even softer pace of income growth may inhibit confidence levels from improving in the short term. Add to the bag at least a partial fiscal cliff and weak global environment and you don’t get a very pretty picture.
I am normally an overly optimistic person and look at the glass as half full. I still believe that companies that focus on customer service and product superiority will continue to grow and prosper. Smaller boats that appeal to the entry-level consumer will continue to outperform. The top end of the market will also see greater growth. The middle market, which used to be our bread and butter, will most likely see further declines.
We will see more lenders entering the loan market, which will open doors for higher advance amounts and more aggressive applicant credit granting criteria. Banks and other lenders still have a strong appetite for boat loans. With increased regulation, lenders will be hard pressed to retain profit margins so rates will probably not decline any further. Eventually I think everyone should get prepared for increased rates, although maybe not until 2014.
Hurricane Sandy’s destruction of boats may impact boat sales for the positive in the short run, as folks replace their lost units. Let’s hope we can keep our momentum up and grow our businesses above industry averages.
President and CEO, Correct Craft
For 2013 I am cautiously optimistic. Consumer confidence is increasing and the real estate market seems to be correcting. Both of these are good signs for our industry.
However, next year will be what it is and we will all adapt. I think the more important focus is long-term, where I see many things happening that will impact our industry. Some of those things are challenges and some are opportunities. A few of them are:
• Changing demographics in the U.S. We have all heard about the changes that will take place in our country in the next 20 to 30 years. One thing is for sure: There are big changes coming.
• Fishing bans: These have already impacted our industry, and we are going to see many more bans in the years to come, both here and around the world.
• Freshwater issues: This is already a problem in some countries and will be more of one in the U.S. We will see more and more restrictions of boat use.
• Changes in propulsion: I believe propulsion will be much different in 10 years. Recent technological developments in electric use and battery storage will be driving down costs. I would not be surprised to see electric boats play a very significant role in our industry within 10 years.
• Global economic growth: I have had the opportunity to visit nearly a hundred countries, and the perception most people in the U.S. have regarding other countries is not consistent with reality. There is significant wealth being generated around the world. The press tends to focus on Asia, but six of the top 10 fastest-growing economies are in Africa. The fastest-growing economy for the next 20 years will be Mongolia. The Middle East has tremendous wealth and people looking for a way to spend it. South America is developing quickly.
• Asian competition: In every Asian country I visit there is someone talking about getting into boatbuilding. Governments are helping their people invest in boating. The first Asian boats will not seem like worthy competition, but they will figure it out and be huge competition to U.S. boatbuilders.
• Global migration: The largest migration in history is happening now. People are moving toward the coast all over Asia and that should ultimately be good for the boating industry.
• New ways to use the water: One of the new ways is through an industry our company has embraced: cable parks. We see this as a challenge and opportunity for our industry and we have recently purchased one of the world’s premier cable parks. We are looking for others and have proposals from proposed and existing parks all over the world.
• Technology: when you look back over the last 20 years the technological developments have been astounding. In the next 20 years technology will advance even faster — dramatically faster. I cannot predict all of the ways this will impact our industry, but I guarantee it will be a significant impact. We need to be looking ahead and staying up with the changes.
The above is just scratching the surface. If you want to read a good book on where we are going into the future I recommend “Abundance” by Peter Diamandis and Steven Kotler. That book will quickly expand your thinking about the future.
Efrem “Skip” Zimbalist III
Chairman and CEO,
Active Interest Media
I would like to focus on four issues that will influence the marine industry over the medium term. There are numerous others, but I will just discuss these four.
First, the fundamental marine market is healthy. People love to spend time on the water with friends and family and nothing has happened to diminish that desire. Participation data, intent to buy, boat show attendance, showroom traffic and days spent on the water all show a generally upward trend.
Macroeconomic and political issues influence, often substantially, marine sales from year to year and from one geographic region to another, but the underlying trend is positive. The demand is there for the industry to grow if our political leaders will provide a positive environment.
Second, the inboard or sterndrive cruiser segment of the new-boat industry, particularly in the United States, continues to be one of the hardest hit and still has shown few signs of improvement. The specialty segments are providing the growth, such as pontoon boats, aluminum fishing boats, trawlers and outboards generally.
As a result of very low sales, the average age of the cruiser fleet has increased dramatically over the last several years. As potential buyers look at buying a new boat, typically in the $200,000-$750,000 range, they have been reluctant to pull the trigger.
Uncertainty about the economy and tax policy is a big reason, but the cost/value equation is another. Manufacturers are working hard to improve value, and the results of these efforts may well determine the extent to which this segment will regain its share of the market.
Third, many U.S. boat owners are extremely busy and don’t want to spend a lot of time managing their boat when they are not using it. They don’t want to worry about maintenance, insurance, storage, licensing and financing. Companies that make it easy to own and use a boat will flourish.
In the volume segments of the new-boat market there is still a lot of room for improved economies of scale to reduce costs. I believe there will be increased concentration and fewer brands in these segments as a smaller number of high-volume, good-quality manufacturers deliver a superior product.
This article originally appeared in the January 2013 issue.
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