40 Years of Ups and Downs

The industry continues to follow macro-economic cycles, though the long-term sales curve is trending downward as average-unit prices climb
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Forty years can be a long time, especially in the life of a relatively young, highly cyclical industry. When Soundings Trade Only launched in 1979, the boating industry was a sprightly 33 years old, if the post-World War II years are used as its approximate starting date.

The United States was in the middle of the second oil crisis of the decade. With crude oil prices nearly doubling in just a year, gas prices were up to 0.88 cents per gallon ($2.87 adjusted for inflation) and would reach $1.22 by 1980. The gas shortage was so chronic that the U.S. Department of Energy proposed a ban on weekend boating. The ban never went into effect, thanks to intense lobbying by industry groups. But stagflation and rate hikes by the Federal Reserve that caused interest rates to soar had a chilling effect on boat sales, which fell from about 350,000 units in 1980 to fewer than 300,000 two years later.

While the gas crisis took its toll on powerboat sales, the sailboat sector had some strong years in the ’70s. Domestic brands such as J/Boats, Hunter, Catalina, Bayliner-Buccaneer and S2 saw sales grow, as Beneteau and Jeanneau increased what would become decades-long export initiatives into the United States. In 1985, Beneteau erected a facility in Marion, S.C., to build models for the U.S. market. Marion remains key to the group’s North American strategy, along with selective model imports by Beneteau America and Jeanneau America, making them the top two sailboat brands in the United States.

While vibrant 40 years ago, the sailboat sector shows just how much the industry has changed. It’s now an anemic version of 1989 (earliest data), when 14,510 units were built domestically. In 2018, according to the annual Sailing Market industry report by Cruising World magazine, 1,471 sailboats were imported into the United States, and 3,826 units were built domestically. The number of U.S. sailboat builders also declined from 99 (with 1,073 workers) in 2014 to 59 (627 workers) in 2018.

The boating industry’s history reflects not only the larger macro-economic peaks and valleys of the last 40 years, but also longer-term micro-trends, such as the shrinking sailboat industry. The powerboat sector, while impacted by downturns, has had a different run.

Don Johnson (center) became the poster child for the fast, exciting boating lifestyle of the 1980s. Johnson celebrates after winning a world championship in 1989.

Don Johnson (center) became the poster child for the fast, exciting boating lifestyle of the 1980s. Johnson celebrates after winning a world championship in 1989.

Boom-Boom ’80s

The 1980s were the zenith of powerboat building. Part of the awareness of boats came from the cultural influence of the television show Miami Vice, with its depiction of the fast, exciting and drug-entwined world of go-fast boats in South Florida. Most of the growth, however, was the result of a rising stock market and the aspirational mindset of the “yuppie generation,” who had access to easy financing and benefitted from stiffer competition from more startup boatbuilders.

For a sense of scale, Bayliner and Sea Ray, which Brunswick acquired in 1986, built tens of thousands of boats from dozens of factories. Bayliner sold 60,000 units during its peak year of 1988, with sales reaching about $1 billion. Its dealer network extended across 64 countries. Sea Ray may not have had the same unit sales, but its dollar figures also were strong. Outboard Marine Corp., which had acquired nearly 16 brands by the mid-1980s to compete with Brunswick, also sold boats (with Johnson or Evinrude outboards) at record rates. Genmar, launched in 1978 with the Lund and Larson brands, acquired Wellcraft and Hatteras with its 1985 purchase of AMF.

Tracker Marine also flourished, having disrupted the fishboat market in 1978 with several Bass Tracker models sold as boat/motor/trailer packages, rather than selling the components separately, as was standard practice at boat dealerships. The boats were also priced lower than competitors’ models. Johnny Morris, who founded Tracker Marine and Bass Pro Shops, saw his brands’ sales climb in the ’80s and ’90s, through to the present day as Tracker is the highest-volume U.S. fishboat builder.

The boom in boat sales tended to be industrywide in the mid-’80s. Unit sales started to rise sharply in 1986, reaching the historic 1988 peak of 524,000 units.

Tax and Burn

Four years later, thanks to another recession and the 1991 luxury tax, sales had plummeted to 278,000 units. Layoffs gutted boatbuilders and equipment makers, while organized protests were held on Capitol Hill by builders and their employees about the tax’s devastating impact on the industry. A boat on a barge in Rhode Island was burned in effigy to dramatize the protest. In 1993, the luxury tax was repealed, and the economy grew stronger. The industry saw sales climb past 320,000 units by 1995.

For the next 12 years, the sales curve was much less erratic than the ’80s, with sales staying around the 300,000-unit mark. Despite gains, many larger boatbuilders would never fully recover from the production volume of their peak years. Many plants operated well below capacity. Two exceptions were jetboats and personal watercraft.

Jetboats, introduced by Boston Whaler in 1992, soon became common among production builders since it was the only growing boat segment in the early 1990s. Personal watercraft, which had sales of about 72,000 units in 1990, peaked at 200,000 units by 1995. They were the “boat” that boaters loved to hate. Genmar chairman Irwin Jacobs resigned from membership in the National Marine Manufacturers Association in 1998, saying he would not rejoin until PWC makers were kicked out. Two years later, he was partnering with Sea-Doo parent Bombardier to buy the assets of bankrupt OMC.

Yamaha entered the U.S. outboard market in the early 1980s, capturing about a third of U.S. market share within a decade. A network of Sea Ray dealers formed MarineMax in 1998, and the industry’s only megadealer quickly acquired other Sea Ray dealers around the country, nearly doubling in size in its first five years.

The OMC bankruptcy reshaped the industry in 2000. Genmar’s purchase of most of its boat brands gave it a significant leg up in the marketplace, while its partner in the bankruptcy, Bombardier, became an outboard manufacturer overnight with a potential global market. Boatbuilders and dealers, however, were left to scramble for engine suppliers with the death of OMC.

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Outboard manufacturers had been forced to comply with EPA and CARB emissions regulations earlier in the mid-’90s, which eventually created a new class of 4- and 2-stroke engines. Beyond emissions reductions, the engine makers invested heavily in ever-increasing horsepower to compete with sterndrives. Those investments helped outboard sales climb 10 years later, as the center console, pontoon and towboat segments took off from 2010 through 2019.

Most sterndrive manufacturers never recovered lost market share following the Great Recession. The NMMA reports that sales of sterndrive boats were around 65,700 units in 2006; 11 years later, they had dropped to about 11,500 units.

The Genmar bankruptcy in 2009 sent another shockwave through the industry, especially for the conglomerate’s supplier and dealer bases, which were forced to look for new manufacturers. Platinum Equity acquired 11 Genmar brands. It quickly sold Larson, Seaswirl and FinCraft to J&D Acquisitions, owned by former Genmar chairman Jacobs. In 2014 Platinum sold Stratos, Ranger and Triton to Tracker Marine, and Four Winns, Glastron, Wellcraft and Scarab went to Groupe Beneteau. Tracker became the clear leader in the fishing-boat segment, while Groupe Beneteau had a foothold in the U.S. powerboat segment with four leading brands and manufacturing facilities in Cadillac, Mich.

Acquisitions Rise

In the last two years, the rate of acquisitions has accelerated. Polaris purchased Boat Holdings, with its Bennington, Godfrey, Hurricane and Rinker brands. Malibu bought Pursuit and Cobalt. BRP now owns Manitou and Alumacraft, and MasterCraft acquired the Crest and NauticStar brands.

Unlike 1980s acquisitions, which largely involved buying boat companies to put engines on transoms, these purchases seem more strategic. Recreational-vehicle equipment manufacturers such as Lippert Components and Patrick Industries have bought up marine equipment manufacturers to widen their reach beyond the RV industry. OneWater Marine continues to acquire marinas and dealerships, and Safe Harbor Marinas bought its 80th facility in May.

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Fewer Sales, Higher Prices

Though 2018 new-boat unit sales are lower than 1979, the average price per boat has continued to rise in the last decade. Imported boats have also seen significant increases over the last 30 years. In 1989, the NMMA reported boat and engine imports of $626.6 million. In 2018, that number was $3.3 billion, with the United States experiencing a lopsided trade deficit due to motoryacht imports from Europe.

The NMMA is forecasting the ninth consecutive year of boat-sales growth in 2019, though at a slower pace than last year. It’s unclear how the next down cycle will shape the industry, but many observers believe the impact will be less dramatic than the Great Recession. The consensus is that the industry has matured into a smaller, smarter group of businesses. 

This article originally appeared in the June 2019 issue.

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