Dealer conference panelists say consumer dedication to the lifestyle gives marine industry an edge over others
The industry has been dealing with a lot of uncertainty while waiting for Washington to break through the tax/debt impasse, but it’s an industry that’s getting pretty good at dealing with uncertainty.
That was the sentiment of Cobalt Boats CEO Paxson St. Clair, one of four industry leaders who spoke at an open forum during the Marine Dealer Conference & Expo in November.
St. Clair joined Brunswick Corp. CEO Dustan McCoy, Yamaha Marine Group president Ben Speciale and GE Capital’s marine group president, Bruce Van Wagoner, in a gathering of some of the industry’s most influential voices.
The panelists spent nearly two hours candidly answering questions from moderator Jonathan Sweet, editor of Boating Industry magazine, and the audience. The questions touched on topics that included boat affordability, regulations, changing consumer demands and dealer-manufacturer relations.
All four panelists seemed optimistic despite the obvious challenges.
“It’s an industry of survivors,” Van Wagoner said. “We have a tremendous group of dealers trying to get better every day. We have to quit looking back and saying, ‘Oh, we used to do X amount.’ We have to keep looking at where we are today.”
“You wake up every day and you have to be optimistic,” Speciale said. “We’re in the marine industry. There’s no other industry that’s come out of this stronger and better. Consumers are very dedicated to our product. There’s no other product like it. I just don’t see how you can’t be optimistic about what we do.”
For St. Clair, the industry’s entrepreneurial spirit is what sets it apart.
“I think we have a passion that’s unusual,” he said. “The group that comes together here is at the top percent of the overall passion and enthusiasm. We’ve overcome some incredibly difficult times as a result of that passion and enthusiasm.”
Brunswick is so optimistic it’s taking spending to 2005 levels, even though the industry is half the size it was then.
“Look at the overall growth in some of our segments right now,” McCoy said. “We’ve got some segments that are up 22, 23 percent. Show me an industry that has that kind of growth.
“This is a great industry to be in,” he added. “There’s no reason we can’t double the size.”
Paul Terzian of Manahawkin, N.J.-based Causeway Marine asked when and if supply and demand will be more closely aligned in terms of the production cycle.
“It’s tougher than hell,” McCoy answered. “Inventories in the field are a heck of a lot lower than they should be. Those of you who are dealers are looking to us to say, ‘You need to get it to me when I need it.’ Frankly, it’s been a lot harder than we thought it’d be.
“We’re in the middle of the fourth year of trying to figure that out, and I know from my standpoint we’re looking at increased inventories so we can get dealers through the selling season, and we’re probably going to have more inventory than we’re used to carrying.
“We’re operating on negative,” he said. “Less inventory in the field made the industry healthier, but for many people who sell pontoons and aluminum boats, which are up 20 percent, it’s really been next to impossible for manufacturers to keep up.
“It’s just something we have to keep working on and realize it’s never going to go perfectly smoothly. … We’re always going to have to stay open and keep communicating and not get upset with each other,” he added.
Van Wagoner says he sees reports of weeks on hand and days on hand.
“I think probably there are a lot of sales missed,” he said. “It’s still an impulse product, and we saw dealers who did step up and they had much more successful years, but that’s not to say everybody should do that.”
Aging inventory accounts for only 13 percent of the overall field inventory, said Van Wagoner, which is “extremely healthy, probably a bit low. If we keep it too low, how do we get product from a manufacturer to you when you need it?” he asked.
The right stuff
It’s also a matter of having the right inventory, St. Clair said.
“We’ve all been forced to explore different niches to get a few more sales, so we have more models, lower overall volume and it’s always so difficult for a dealer to make sure he’s got the right model,” he said. “I think when we talk with our 20 Group, always one of the first topics is, ‘How do we find ways to move inventory where it needs to be?’ We try to create opportunities for dealers who need specific product.”
Speciale said inventories will always be an issue because of such things as the shift from “20 percent at peak to 2 percent in the offseason.
“I mean, that’s just crazy,” he said. “When you have 2 percent of annual inventory in December and 20 percent in June, that’s tough. That’s where relationships with suppliers and manufacturers are so critical.”
GE has a transfer program to help facilitate moving inventory where it’s needed.
“I think the industry is doing a great job of allowing dealers to move product back and forth among each other to make it easy,” Van Wagoner said.
Pricing out the market
St. Clair said that over 12 to 15 years the price of a 26-foot bowrider has gone from $50,000 to $100,000 while the cost of the Chevrolet Suburban he likes to drive has remained much more stable.
“We have to find ways to make boating affordable,” St. Clair said. “We do have some smaller boats to get the middle class in, but do they want a bigger boat if it’s $100,000? It’s a roadblock.”
At the same time customers want more amenities and toys on board, St. Clair said.
“The new-boat buyer is more refined,” Speciale said. “I’m just amazed at what comes packaged on a boat.”
“I think we’ve got to be real careful blaming it on the consumer,” McCoy said. “It is the biggest thing, pricing consumers out of the industry.”
This article originally appeared in the January 2013 issue.