Is it safe to say we've finally made a bottom in our industry, because it sure feels like down to me.
The recession by some estimates could be officially "over" by late this year, with recovery in 2010. But in the same way that unemployment is a lagging indicator, recreational boating, I fear, will be a lagging industry. If we've learned anything from our cyclical past, it's that we're typically the first in and last out of every economic whirlpool. That's the way it goes when you're selling big- ticket items purchased with consumer discretionary income.
So-called green shoots? The stock markets rallied nicely this spring, the unemployment numbers for May were better than expected - even as the jobless rate continued to climb - and consumer confidence, which had improved in April, showed another large gain in May. Some would say it's simply a matter of the pace of the decline slowing a bit, of bad news becoming a little less bad. While that has a ring of truth to it, I'd rather think of the glass as half full, although that may be a tad optimistic, given where we've been and where we still need to get to.
Like it or not, the industry is still contracting. In time, we will emerge leaner and stronger, but right now we're still in the midst of a painful winnowing process. By some estimates, the job loss in our industry could be as high as 75 percent. The steep, swift decline in demand has been both sobering and surprising. No one expected things to fall off a cliff, even those who saw the slowdown coming and reacted quickly, by historical standards.
In our corner of the economic world, the closest equivalent to the Chrysler and GM bankruptcies has been the Chapter 11 filing by Genmar Holdings, the country's second-largest fiberglass boatbuilder, with 15 brands. Most of us were caught off guard. First reaction was a gape-mouthed, "You've got to be kidding."
Bankruptcy? For a company operated by Irwin Jacobs, the irrepressible operator himself, one of those smart, shrewd, opportunistic entrepreneurs who never believed in letting a good economic crisis go to waste? It made one wonder: If it could happen to Jacobs and Genmar ...
Analysts immediately predicted more dealer and builder woes this summer as the industry finally bottoms, hamstrung by too much inventory, too much debt, a shortage of floorplan financing and a reeling consumer whose balance sheet has been shot full of holes. It's still too early to tell what ramifications the Genmar situation will have on dealers, workers, suppliers and others.
Change, as they say, is clearly in the wind. Jacobs says the boating industry will have to undergo "fundamental change," even if the details of what that means are still anything but clear.
NMMA president Thom Dammrich says this recession has in some ways given businesses a blank sheet of paper on which to start redrawing what the new "normal" might look like. Some see a return to the "old days," which is another way of saying smaller is better. As one boatbuilder recently told us, "People can't get small fast enough."
This is a tough time for making predictions, but it's pretty clear that production and distribution models will change moving forward - they already have in a number of cases. There will be more on-demand production, dealers will probably carry less inventory, and changes in model-year designation likely will take place.
Those businesses without a lot of debt, whose leaders have tuned their radar to search for opportunity, that have stayed close to their partners, clients and customers will be the change agents of tomorrow. The world has shifted, and natural selection will reward those who are smart, nimble, adaptable - and fortunate enough to have had adequate financing to weather this long series of gales. They'll write the next chapter, the one that will follow the denouement of this painful story.
This article originally appeared in the July 2009 issue.