Skip to main content

Marina operators hear a message of hope

  • Author:
  • Updated:

Record turnout at IMBC is told to prepare for recovery that could begin before the end of the year


Expect 2009 to be tougher than 2008, but economic recovery could begin later this year or in early 2010. In the meantime, a keen nose can sniff out business opportunities now, and a sharp eye can find ways to prepare for the rebound.

That’s how a businessman and an economist — both at the top of their games —see the short-term future, based on the assessments they gave at the Jan. 25-28 International Marina and Boatyard Conference.

The conference drew 600 people to the Greater Fort Lauderdale/Broward County Convention Center — a record number and a sign that marina and boatyard operators aren’t hunkering down; they’re out gathering information.

So it seemed to Mark Amaral, managing director of the American Boat Builders and Repairers Association, a conference sponsor. “They come to talk to their peers and colleagues to learn what’s happening,” he says. “That’s invaluable.”

It’s all the more invaluable in these difficult economic times.

“Is it fear that brings us here or is it hope?” asks Jim Frye, president and chairman of the Association of Marina Industries, another conference sponsor.

The speakers laid out some fearsome facts, but offered some grounds for hope.

“We’re not in a typical recession,” says economist Tony Villamil, the business school dean at St. Thomas University in Miami. “We have a crisis of confidence in the United States economic system and in the world economic system.”

Buffeted by job losses, plummeting home values and stock losses, consumers aren’t spending. Banks aren’t lending. Both are in a wait-and-see mode. That’s why, Villamil says, “This will be over when we decide it’s over.”

1929 vs. 2009
Villamil, undersecretary of commerce for economic affairs in the George H.W. Bush administration and economic adviser to two Florida governors, sees few parallels with 1929. “We are in quite a different environment,” he says.

Economists today know a lot more now about how economies work, and governments around the world are responding with fiscal and monetary stimuli.

“It’s a fluid situation,” Villamil says. “The future depends on a number of factors.”

Chief among them is a business’ strategic plan, demographics, credit availability and interest rates, U.S. economic growth, global economic activity, consumer net wealth and energy prices. Villamil says there is good news on some of these fronts.


Interest rates are low, the federal government continues to pump money into the banking system, Congress is moving ahead with a massive fiscal stimulus package, central banks and governments worldwide are working to try to kick-start the global economy, and energy prices are more manageable now.

Fuel prices “are an important factor for boating and the marine industry,” Villamil says. “Forty to $70 a barrel would be OK in 2010.” (Crude oil was fetching about $42 a barrel in early February.)

Demographics also are favorable to boating in post-recession America, he says. Baby boomers are a huge demographic, and, when the economy settles, they will be looking to spend more of their time in leisure pursuits, including boating.


The darker side of that equation is consumers’ net wealth, which has been decimated by the housing crisis, the stock market crash and job layoffs. Their lack of confidence in the economy and a persistent lack of confidence among bankers are big hurdles to recovery, he says.

To gauge confidence among lenders, Villamil is keeping an eye on the interest rate spread between corporate bonds and Treasury bonds and on Federal Reserve reports on the volume of commercial paper (short-term corporate debt) that banks are refinancing. A narrower spread between the bonds and a growing volume of refinancing would suggest growing confidence, he says.

Frozen liquidity
Restoring consumers’ net wealth and confidence may be a tougher nut. There’s a new reality in the marketplace, says marina investor Wayne Huizenga Jr. Borrowing against home equity increased $7 trillion during the decade before the recession.

“A lot of that went into buying toys,” says Huizenga, who is president of Huizenga Holdings Inc., chairman of Rybovich, the megayacht marina and refit yard in West Palm Beach, Fla., and a former managing partner of the Miami Dolphins.

Now, he says, home values are down 20 percent nationally on average, and there’s no more home equity to borrow against. The liquidity of many consumers has tumbled 40 percent with the crash in home values and stocks.

“How will these dollars be replaced?” he asks. And how will confidence be restored?

“Consumer confidence is at its lowest level since they started keeping the index,” says Villamil. He says politicians and the media need to restrain the gloom-and-doom rhetoric, and consumers should know that typically corporate layoff announcements are exaggerated because of federal rules that require companies that employ 100 or more to estimate and announce layoffs of 50 or more workers — and do it at least 90 days in advance. “This doesn’t help us get through the consumer-confidence hoop we face,” he said.

Making predictions for the future
Villamil’s projection for 2009: “The first half of this year is going to be very tough,” he says, but if government stimuli have any serious traction, we can expect the economy to hit bottom by the latter part of ’09 and start to pick up in late ’09 or in 2010.

He believes this recession will prove to be U-shaped, instead of L- or V-shaped, meaning the economy has declined sharply and when it bottoms out probably will stay there awhile, then climb back up, and not stagnate like the Japanese economy did for all of the last decade and most of this one.

Villamil expects a 1 percent decline in the real gross domestic product  in 2009, 1 to 2 percent inflation, 2.1 percent real personal income growth, a .85 percent federal funds rate — the rate at which banks lend money to each other overnight — and 7.8 percent unemployment this year and getting worse beyond this year. “I think we’re going to see 8 or 9 percent [unemployment] before this is all said and done,” he says.

Consumers’ balance sheets will have to be “repaired” before discretionary spending shows a healthy growth trend of 3 or 4 percent a year again. In the meantime, businesses must adopt countercyclical business strategies. They must try to keep key employees (“Cut them back, but don’t cut them off.”) and lock into long-term borrowing rates, because with the trillions of dollars in government infusions into the economy, he expects inflation to rev up in 2010 or 2011. He counsels businesses to keep inventories “lean and mean,” and keep advertising — but in creative ways that draw customers in this difficult environment. “Those that do this will do OK,” he says. “This, too, shall pass.”

Think long-term
Huizenga foresees tough sledding, too, but he also sees opportunity.

“It’s not all bad, but you’re going to have to think differently,” he says. “It’s a tough marketplace.”

New-boat sales are at a near standstill, layoffs are mounting, boat repossessions have doubled, boat usage is down, fewer slips are filled (yet cheap slips remain in short supply) and the dockominium slip market is moribund  and likely will remain so “for years.”
Chartering is way down, Huizenga says, noting that while in the Caribbean this winter he saw the majority of charter yachts had no bookings. “Charter crews were roaming the docks for work,” he says. “More megayachts are being parked. Highlander is mothballed.”

Highlander, the 151-foot megayacht Malcolm Forbes built, is one of the nation’s iconic yachts. A Forbes magazine spokesman told the New York Post it will be back in service in the fall if the economy picks up, but for now its crew is furloughed.

In this economic climate, cash is king, Huizenga says.


He advises buying up overleveraged or overcapitalized companies on the cheap. If a business has plans to build soon, now is the time to do it. Building costs, he says, are way down. A marina could add docks or reconfigure them for megayachts because that sector continues to grow. “It’s a great time to build, if you’ve got the cash,” he says.

Invest in employees — send them to school for training — and reacquaint yourself with your customers, he advises. “Times have changed, their needs have changed,” he says. Look for opportunities to jawbone agencies to streamline boatyard and marina permitting. Governments at all levels are looking for ways to spur growth, and easier permitting could do it.

Seek out partnerships — public-private partnerships, closer relationships with subcontractors, international partners. Change your offerings to match new market realities. Offer three- or four-day or long-weekend charters where seven-day charters used to be the rule.

Uncharted waters
Huizenga says every company also must factor in the sea change in the way Americans will do business for the foreseeable future.

“The old model is obsolete, and our customers’ needs are different,” he says. “We’re going to see a paradigm shift in how business is conducted.”

For years, investors underestimated risk versus return, and this superheated the economy while raising risk to dangerous levels, he says. “The banking system will agree that they were greatly underestimating risk for the return they were getting. Banks are re-evaluating how they make money. They will lend again, but money won’t be as cheap as it used to be. They’re going to have to re-evaluate and ask for a higher return on their investment.”

Huizenga suspects boaters’ behavior will change, too. They’ll be more frugal. “People are still going to boat, but they’re going to downsize,” he says. That means smaller boats, smaller engines, more energy-efficient power, more local cruising and time at anchor — less punching the waves for the sheer exhilaration of speed.

Huizenga believes waterfront businesses have at least one ace in the hole.

With waterfront in such short supply in major boating centers, “I don’t know that there will be a lot more facilities built like the one we’ve built in Palm Beach.” Rybovich has a full-service yard with 660- and 330-ton Travelifts, 38-slip marina for yachts up to 300 feet long with 16-foot draft and a fitness center, swimming pool, lounge and gaming room for guests.

This article originally appeared in the March 2009 issue.



NMMA: Proposed Speed Rule an ‘Existential Threat’ to Industry

The association is calling on every marine brand, employee and boat owner to file public comment by Oct. 31 over a sweeping regulation to protect North Atlantic right whales.


Axopar and Nimbus Renew Agreement

The boatbuilders have entered an agreement whereby Nimbus Group will retain exclusive rights to sell Axopar boats on the Swedish market.


Hurricane Ian Leaves Devastation in Florida

The storm left a wide swath of destruction, heavily impacting marine interests from Tampa Bay to Marco Island.


Email Is Your Ticket to Holiday Sales

Developing an effective email campaign can bolster sales and help fill winter coffers at your dealership.


NMRA Presents Annual Awards

Edson CEO Will Keene and ComMar Sales president Tim Conroy were recognized for their contributions to the marine industry.


DEALERS: Are Interest Rates Impacting Demand?

This month’s Pulse Report survey asks dealers whether interest rate increases are causing a downturn in boat sales. Take the survey here.


EPropulsion, Mack Boring Partner with Crest

Pontoon builder Crest will use an ePropulsion Navy 3.0 Evo electric outboard motor and an E175 battery for its 2023 Current model.


Beneteau Reports Significant H122 Growth

The company reported that its revenue grew 8.6 percent and income increased by 30 percent during the first half of 2022.