MIAMI 2014: Signs of recovery are becoming more common

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MIAMI — So how’s the marine industry doing?

From left are GE Capital Commercial Distribution Finance Marine Group president Bruce Van Wagoner; NMMA president Thom Dammrich; and Rob Podorefsky, managing director of the GE Capital Interest Rate Management Group.

From left are GE Capital Commercial Distribution Finance Marine Group president Bruce Van Wagoner; NMMA president Thom Dammrich; and Rob Podorefsky, managing director of the GE Capital Interest Rate Management Group.

Outboard sales in 2013 were at 59 percent of their peak sales year, personal watercraft at 42 percent and sterndrives at 19 percent, compared with 89 percent for cars and 87 percent for recreational vehicles, NMMA president Thom Dammrich said.

But there are signs the industry is gaining ground and taking steps to grow sales, Dammrich said during “Riding a Wave of Optimism,” a conference hosted Wednesday by GE Capital and the National Marine Manufacturers Association at the Miami International Boat Show.

Attendance at shows has been up 10 percent, the California market — once a pillar of the industry — is showing signs of recovery, small boats are selling well and there has been a small amount of improvement in large-yacht sales, he said.

Grow Boating efforts are bearing fruit. A poll of conference participants showed that 53 percent are taking steps to market to a more diverse audience. The Grow Boating youth committee has collected information about more than 2,000 youth boating programs nationwide and will use that information to create a searchable database of youth programs at www.discoverboating.com.

The website drew 2.6 million visitors in 2013 and 1 million of them linked through to boat manufacturer websites — a 132 percent increase. Discover Boating’s hands-on boating skills training programs are selling boats and keeping people in boating, Dammrich said.

“Lack of formal boating training can be a barrier,” he said. The industry also is making gains in advocacy through Boating United, a new campaign to bring the industry together to advocate on issues.

“We are optimistic” going into 2014, added Bruce Van Wagoner, president of the Commercial Distribution Finance Marine Group.

He said dealer sales are up, dealer costs are falling, inventory turnover is improving and earnings are up. Van Wagoner is projecting 8 percent growth in boat retail sales, compared with about 5-1/2 percent in 2013. In 2010, 25 percent of dealer inventory was more than a year old; today it’s closer to 13 to 14 percent, a level that can sustain profitability.

Speaking about the economy, Rob Podorefsky, managing director of the GE Capital Interest Rate Management Group, projected real U.S. GDP growth of 2.5 to 3 percent in 2014. He expects some adverse short-term effects from unseasonal winter weather and last year’s unsustainable inventory accumulation, but there are other helpful developments: 16 straight quarters of rising consumption, a gradually improving labor market, steadier gasoline prices, more investment in homes, rising home prices, increases in spending on services and some improved business investment.

He said the Federal Reserve’s paring of asset purchases will continue. “Data would have to be particularly weak and markets would have to get unruly to the point it posed downside risk to the economy” for the Fed to stop the tapering, Podorefsky said.

He said the Federal Open Market Committee of the Federal Reserve is not close to raising short-term interest rates, but “market-based interest rates are vulnerable to shift; a near-term economic soft patch supports lower rates for now while greater confidence in the economy later this year, combined with fewer Fed asset purchases, would most likely be accompanied by higher interest rates and expectations of less Fed support in the coming years.”

Near-term, commodity prices should be “well behaved,” meaning little inflation, he said; medium term, a tighter labor market could pose a risk of some inflationary pressure. He said the eurozone “is in a better place” than it was last year at this time.

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