Going into the Miami boat shows, economic uncertainty was again in the air, ratcheted up this time by concerns about the degree to which global economic problems might weigh on U.S. growth.
Would headwinds from volatile global financial markets, coupled with slowing growth abroad, be enough to knock the U.S. economy off course?
I spent several days talking with industry executives and consumers at both the new Progressive Insurance Miami International Boat Show on Virginia Key and the Yachts Miami Beach show on Collins Avenue, and both had the feeling of business as usual.
Engaged buyers were poring over boats, taking test rides, asking questions and so forth. Time will tell just what, if any impact the most recent volatility will have on post-Miami sales. Most builders I spoke with said business leading into the Miami shows from the fall and winter shows was strong.
“The fundamentals of the economy are good,” NMMA president Thom Dammrich told me in an interview after the industry breakfast at the show’s new location at the Miami Marine Stadium Park and Basin. “Net net, lower oil prices should be good for the economy. The stock market? The stock market is not the economy.”
Good point, and one worth remembering.
At the industry breakfast Dammrich outlined how far the industry had come during the past five-plus years of slow but steady growth. About 243,000 new boats were sold in 2015, a number that could increase to roughly 260,000 if sales increase by about 6 percent this year.
“I think we’re poised for a strong year in 2016,” Dammrich told an industry audience of about 250. “And I think we have a couple more years of growth beyond that.”
Overall, he believes the U.S. economy is on solid footing and will successfully weather the slowdown in the global economy. He pointed to solid U.S. fundamentals — the improving labor market and an uptick in wage growth, consumer confidence and consumer spending, along with other signs, including strong fall and winter boat shows.
No one has a crystal ball when it comes to skittish financial markets. “It’s a concern,” Dammrich said later in an interview. “How much of a concern remains to be seen. If the market doesn’t rebound — if it’s down 20 or 30 percent at the end of the year — that will be problematic.”
But, he continued, “Consumer spending is still strong. I’m optimistic. GE is optimistic. I think the stock market thing is just a blip. We’ll get through it.”
Given the uncertainty in global markets, U.S. marine businesses are in an enviable position, relative to many of their counterparts elsewhere in the world. Roughly 95 percent of all boats sold in this country are built here.
“It’s such a U.S. industry,” said Jack Ellis, the founder and managing director of Info-Link Technologies, a boating data and research company. “We’re a little more insulated from what happens in the rest of the world. I agree with Thom. I think we’ll see a couple of more years of growth.”
“The U.S. just keeps chugging along,” added Peter Houseworth, director of client services for Info-Link. “And the American consumer adjusts. They’re constantly adjusting.”
If you’re looking for a canary in the coal mine, look no further than the U.S. boat manufacturer, says Scott Deal, founder and president of Maverick Boat Co., which produces four product lines.
“Ask the boatbuilder. We see things slowing down before anyone else,” says Deal. “We’re subject to consumer confidence and disposable liquid income.”
And how has business been? “We’re working three shifts, and we can’t keep up,” says Deal. “If you listen to the economists and read the business press, you can get pretty nervous. Turn off your computer and look around. Look at the trucks on the highway. Business is good across the board.”
Correct Craft CEO Bill Yeargin agrees that it’s best not to become a captive of market gyrations.
“The stock market has everybody freaked out, but there are a lot of fundamentals that are very good,” says Yeargin, a member of the Manufacturing Council, which advises Commerce Secretary Penny Pritzker on manufacturing issues. “I’m highly optimistic mid- and long-term, but there will be moments that will be bad. We just can’t be captured by them.”
This article originally appeared in the March 2016 issue.