State of the industry report is upbeat; activity picks up in small-boat sales
This could be the year the turnaround begins. Consumer confidence is on the rise, the auto and RV industries are seeing an uptick, and the retail financing crunch is starting to ease. And while there's still a long way to go, dealers say boat buyers are back at the shows.
"We clearly are beginning to see that consumers are tiring of deferring their boat purchase, and we're seeing more buyers coming to the shows," said Thom Dammrich, president of the National Marine Manufacturers Association, in his annual state of the industry address at the Miami International Boat Show and Strictly Sail Miami. "That seems to indicate to me that in the next couple of months, particularly as we enter the height of the selling season for the boating industry, we should see some increase in the sale of new boats."
With 17 million boats in use in the United States and 70 million adult Americans going boating each year, the industry isn't disappearing anytime soon, Dammrich says. "That's a tremendous installed base and a clear signal that boating is not going away," he says. "I think we've got a great future ahead. We've got some challenging times still to get through, but we will get through them and this industry will prosper again."
The Miami show ran Feb. 11-15 at the Miami Beach Convention Center and Sea Isle Marina & Yachting Center. More than 100,000 people were expected to come out for the event, which drew 96,736 in 2009.
Running concurrently in Miami Beach was the 22nd annual Yacht & Brokerage Show.
There were fewer exhibitors at the main show this year - down about 200 from 2009. Many of the NMMA's shows have been smaller this year, but that's not necessarily bad - smaller footprints mean denser crowds, Dammrich says.
"That just creates a level of energy at the show that we haven't seen in a few years," he says. "I think most dealers are reporting good sales at the shows - not everybody, but certainly there seems to be a lot of activity in smaller boats and we're getting a lot of feedback that dealers are seeing the first-time boat buyer again that they haven't seen for three or four years."
While Dammrich was optimistic in his remarks, he also was realistic about the challenges still facing the industry. In 2009, retail sales of powerboats were down about 28 percent from 2008, but sales were actually higher than expected, with between 145,000 and 150,000 units sold at retail. That figure, Dammrich says, is expected to be flat this year, but the good news for manufacturers is they will have to ramp up production to meet that demand.
Through 1991, the industry sold about 400,000 new boats a year. That figure dropped to about 300,000 through the mid-2000s and now stands at about 150,000. "I think most of us believe the industry will rebound, although it's going to take time and it will not happen quickly, but no one knows where the new normal will be," Dammrich says. "Will we get back to 300,000 units a year or will the new normal be something less?"
Some coming challenges facing the industry include:
- New boats will cost more as new emissions requirements take effect, including for the 2011 model year when the industry must add catalytic converters.
- Floorplanning for dealers is expected to remain difficult to obtain, though the availability of retail credit appears to be easing.
- Unemployment remains high.
- The industry has lost a lot of talent in the labor pool with the layoffs of thousands of skilled workers.
"The government continues to take actions and keep our Washington, D.C., staff very busy, doing things that certainly aren't intended to make our lives easier or us more successful," Dammrich says.
"In challenging times like this, it's important to keep things in perspective," he says. "If we look at 2009, boating remains a big business. Even in this environment, it's still nearly a $30 billion business. While sales are down, the industry is still very much alive and well."
And as the recovery begins, now is the time to prepare for success and for a different customer - one who is dealing with competition from other lifestyle activities, is increasingly using the Internet to make buying decisions and might not be the white male who traditionally made up much of boating's customer base.
The U.S. population is predicted to grow to 440 million in the next 40 years, Dammrich said. "If we can just maintain the same level of penetration of the American population for boat ownership that we have today, we will sell an awful lot of new boats over the next 40 years," he says.
This article originally appeared in the March 2010 issue.