Taking a Global View

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No matter which numbers you crunch, the United States is far and away the world’s largest boating market. The consensus is that we have about 50 percent of the global market, but I’ve heard estimates of 60 or even 70 percent. In January, the NMMA reported that boating contributed an estimated $170.3 billion to the U.S. economy while supporting 35,000 marine businesses, and 691,000 direct and indirect American jobs. More than 270,000 units were sold in 2018, the highest number since 2007.

To look at trends behind the numbers, we decided to do a special section to see how international trends impact domestic segments.

It’s fair to say that our big slice of boating heaven is unlike the rest of the world, except maybe Canada, in the sheer range of products and activities. It’s probably more accurate to see the United States as five or six regional markets that have been united by four megatrends: high-horsepower outboards, pontoons, center consoles and towboats. The fact that sales of new towboats surpassed sterndrive sales last year is a clear indication of how different boating is now compared with 10 years ago.

We’re also seeing other trends. In international trade, our industry has moved from consistent annual surpluses to deficits, as the percentage of exports has decreased in recent years. In prerecession 2007, U.S. manufacturers exported $677.9 million worth of engines and $2.2 million in boats. In the same year, we imported more than $1.02 billion in engines and $1.46 billion in boats.

By 2017, U.S. engine exports had fallen to $466.6 million, and boats were down to $1.29 billion. On the flip side, imports were up to $1.28 billion for engines and $1.89 billion for boats.

The imbalance in trade is partly due to a strong U.S. dollar, which always dampens exports, but there are other factors at work. We’re seeing an influx of motoryachts from Europe and Asia at FLIBS, Palm Beach, Miami and other big shows, which are challenging our domestic brands.

Most foreign yacht builders have come to recognize that the U.S. market is not only the world’s strongest, but also the most stable. Instead of making a few sales in the United States, as many of these builders did 10 years ago, they’re viewing the market as a much bigger chunk of their long-term growth strategy.

We’ve seen that with the success of Italy’s Azimut, which will soon overtake Sea Ray, with the highest domestic sales for boats above 40 feet.

At the same time, as we reported in the November 2018 issue, Groupe Beneteau has begun to manufacture some European models at its facility in Cadillac, Mich. Beneteau has been building sailboats in Marion, S.C., for decades, so the idea is nothing new. But one wonders how far its strategy of building European boats in local markets will extend.

Will they move from Antares pocket cruisers to Prestige motor­yachts? The company also plans to manufacture Four Winns and Wellcraft models at its facility in Poland for the European market, so the trans-Atlantic strategy is working both ways.

Other non-U.S. brands have also started to build here. Two or three builders doesn’t mean a trend, but it does show how globalization, bolstered by a strong domestic market, is creating new opportunities in boatbuilding.

We’re also seeing this movement in the marine equipment sector. Companies such as Volvo Penta, Yamaha and BRP have been in the United States for so long they seem more domestic than international (Mercury will disagree with that), while other non-U.S. equipment manufacturers that weathered the downturn now dominate their respective fields. The top three players in marine refrigeration, for instance, have Italian and Swedish parents. They introduced new technologies and styling that disrupted the segment, leaving domestic competitors behind.

U.K. manufacturers such as Cox Powertrain and Lumishore have plans to start production here, while others, such as Scanstrut, Glomex and CMC Marine, realized that if they want any kind of OEM sales with U.S. boatbuilders, they must establish a permanent presence. A good example of that is Glomex, which last year invested in a new U.S. headquarters in Columbia, S.C. The Italian antenna manufacturer had worked with North American distributors for 25 years but realized it could grow sales by offering service on the ground.

Looking at exports, nearly 100 U.S. equipment manufacturers were at Metstrade, selling into a healthy international market, while others are making plans to enter the often-confusing global equipment market. International trade for both foreign and domestic seems to be as healthy as it has been in a decade.

Of course, any discussion about international trade wouldn’t be complete without tariffs. Suffice to say that they’ve already forced many U.S. builders to change their export strategies.

Though many of us had hoped the Canadian and European Union retaliatory tariffs would be history by now, nobody is predicting they’ll be gone anytime soon. These builders are relying on a healthy domestic market while waiting for legislative relief.

michael-verdon

The bottom line is that builders in every country have come to realize that the United States, with its large, affluent boomer demographic and the strongest economy in world, is where the bulk of the business is. And they all want a piece.

This article originally appeared in the February 2019 issue.

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