Day two of the American Boating Congress kicked off yesterday with a breakfast at the InterContinental hotel in Washington, D.C. It was followed by remarks from three members of Congress, presentation of the Eddie Smith Manufacturer of the Year Award, an economy update, and an NMMA briefing that outlined its legislative priorities for the year.
First to speak was U.S. Rep. Debbie Dingell, D-Mich., who opened by saying, “Boating is important to both our physical and mental health, but [it] is not possible without continuing investments in infrastructure and conservation.”
She emphasized that “continuing to authorize the Sport Fish Restoration and Boating Trust Fund is essential to both conservation and boating infrastructure.”
Dingell is a champion for the America Competes Act of 2022, which includes $52 billion in funding to support microchip production in the United States, $45 billion to improve the supply-chain system, and $2 billion to support production of critical components in automobiles and consumer products that could help alleviate the supply-chain issues that have plagued the marine industry for two years.
“This act addresses supply-chain issues that stem from products such as [micro]chips that your industry needs for engines and other components,” she said. “We are too dependent on other countries for chips and advanced battery technology. Those products need to be produced in the United States.”
Dingell closed by saying, “[Most representatives] don’t understand the importance of your industry. They think of yachts, not the type of boats most of you build and sell. When you go to the Hill, you need to tell your story and how your products and industry enhance our country.”
Brian Mast, R-Fla., took the podium next to talk about the “highly regulatory environment of Joe Biden,” and how the administration’s energy regulations are harming businesses, both large and small, including those in the marine industry.
“We must reverse day one Joe Biden energy policies if we want to see a change in supply-chain issues and reduce inflation,” Mast said. “Let’s make sure that the United States is the most efficient it can be by making sure [the government] is not in the way.”
NMMA president Frank Hugelmeyer delivered a state-of-the-industry speech, outlining where the boating business stands after two-plus years of Covid-19.
“I am happy to say that this is my first in-person American Boating Congress, and I look forward to shaking all your hands and getting to know you better in person,” Hugelmeyer said. “Please take the time to talk to me during our two days together.”
Hugelmeyer outlined the economic impact of recreational boating on the U.S. economy. “Our industry is responsible for 4.3 million American jobs, which is 3 percent of all U.S. employment,” he said. “Outdoor recreation in 2020 accounted for 1.8 percent of the U.S. gross domestic product.”
He pivoted to discuss the “normalization” of retail boat sales after two years of explosive growth (10 percent in 2020, 40 percent in 2021). Hugelmeyer pointed to NMMA data that shows a 13 percent decrease in retail boat sales in January and February this year, and said that the organization expects the downward curve to continue toward the 14-year average of 18,800 unit sales for those months.
“Still, interest in boating, based on Google search data, remains high,” Hugelmeyer said. “The index during the Covid-19 pandemic in August 2020 was 100, 68 in April 2021 and 50 in April 2022,” pointing to a graph that labeled where the industry is today as the “Next Chapter.”
Hugelmeyer reported that marine industry economic indicators, such as private housing starts, fuel availability, wages and employment, SUV and light truck sales, marine dealer inventories and consumer net worth/debt, are currently “good.”
Areas of concern include interest rates, fuel prices, wholesale and retail credit availability, and recreational vehicle inventories, which are currently very high, according to NMMA data. The most troubling indicator, Hugelmeyer said, is consumer sentiment.
Hugelmeyer also highlighted NMMA’s Discover Boating program and emphasized the importance of attracting and retaining new boaters. “Anyone who gets into an active outdoor activity between age 5 and 18 is likely to stay in it for a lifetime,” he said. “We need to target these younger audiences to maintain growth, and Discover Boating is one avenue to make that happen.”
The NMMA president concluded by releasing the 2022 American Boating Congress numbers. The event this year attracted 200-plus attendees from more than 30 states, and coordinated more than 50 Capitol Hill visits with representatives. There was also, for the first time, a new-product showcase at the docks outside the event venue, which Hugelmeyer said NMMA hopes to expand in the coming years.
Jeff Angers, from the Center for Sportfishing Policy, and Maverick Boats founder Scott Deal took the stage next to present Sportsman Boats president Tommy Hancock with the Eddie Smith Manufacturer of the Year Award. “Tommy has strived to connect manufacturing to conservation throughout his career,” Anger said. “I can’t think of a better member of our industry to receive this award.”
Hancock was given a German sextant made in 1890 to commemorate his achievements and contributions to the industry.
An update on the state of the economy was presented by Curtis Dubay, senior economist at the U.S. Chamber of Commerce, who predicted that a recession likely will occur in the next one to two years and that the main driver is inflation.
“The Fed has entered an anti-inflationary stance by raising interest rates,” Dubay said. “The administration expects inflation to drop to five percent by the end of the year, but three years of elevated inflation is likely.”
Dubay explained that money customers saved during the pandemic “is a probable reason for continued strong consumer spending despite inflation.” He added: “The Fed’s balance sheet needs to shrink to bring down inflation.”
Rep. John Garamendi, D-Calif., drove a discussion about supply-chain issues and shipping to and from ports in his state, which receives a vast share of the shipments of products and manufacturing components from China.
“It’s the accordion effect,” Garamendi said. “Once China’s lockdowns — which are preventing ships from leaving ports — resume, a huge influx of ships will arrive on the West Coast. Once they are empty, the priority is to get them back to China as fast as possible and load them back up again. It’s an up-and-down cycle that aggravates the supply chain.”
Garamendi also took questions, responding to one person’s query about the drought in the West and its effects on boating. “Traditional sources of water, like the Colorado River, may no longer be reliable going forward,” he said. “The water level in Lake Mead today is at the lowest level since the [Hoover Dam] was built. At some point, the dam will no longer be able to produce electricity.”
“What’s going on around us … it’s real,” Garamendi added. “There are things happening around us that we can all see, and they are going to continue. Resources we once relied on will become unsustainable. This is a global problem, and it won’t just affect the boating industry; it’s going to affect the whole world.”
Garamendi also highlighted the importance of the Water Resources Development Act of 2022, which is one of NMMA’s most important legislative priorities. “The U.S. Army Corps of Engineers does not want to provide dredging for recreational harbors,” he said. “Their focus has always been on commercial harbors, but that needs to change, and this act will provide the funding through fees to make that happen.”
George Cooper, a partner at Forbes-Tates Partners, provided an update on the upcoming U.S. midterm elections but summed up the data in a few sentences: “The idea of Democrats remaining in power is highly unlikely,” he said. “Historically, administrations with widespread inflation do not win elections. An 8.5 percentage rate is not going to help Democrats take more seats, especially in the House. The leak of the Supreme Court document also is likely to polarize voters where certain elections really matter.”
The morning session wrapped up with Tilly Fowler, senior vice president of government relations and regulatory affairs for NMMA.
“The Water Resources Development Act is so important for funding the U.S. Army Corps of Engineers, who maintain a significant number of recreational sites across the country,” she said. “WRDA asks for $295 million in funding for U.S. Army Corps of Engineers recreation facilities and infrastructure, and addresses critical navigation needs at recreation harbors and waterways.”
Fowler added: “It also improves the corps’ joint management authority, provides funding to reduce the spread of aquatic invasive species in the Great Lakes region, and maximizes natural resource infrastructure solutions to strengthen resiliency.”
Fowler also explained that the Consumer Protection and Fuel Transparency Act is a priority for NMMA because of the probability of consumers misfueling boats with E15 gas, which is prohibited by the federal government for use in recreational boats. The act calls for better fuel-pump labeling to prevent mishaps. The Biden administration recently ordered the Environmental Protection Agency to allow the sale of E15 fuel during the summer months as a way to reduce fuel prices.
Attendees who opted for Capitol Hill visits with representatives left the ABC venue at 11:30 a.m., led by “Hill Captains” assembled by NMMA. “I’m really interested to see how this all works,” said Emilie Depies (Knoll), marketing communications manager of Volvo Penta of the Americas and a first-time ABC attendee.
“Walking the halls of Congress was inspiring, and meeting with the members of the Senate and House was an eye-opening experience,” said Gary DeSanctis, president of the Active Interest Media Marine Group (which Soundings Trade Only is part of). “It’s remarkable how many good people are working on our behalf to help ensure safe, accessible boating, and to keep our industry thriving.”
The day concluded with a networking reception where Hugelmeyer presented Rep. Nancy Mace, R-S.C., with NMMA’s Legislator of the Year Award for her work on promoting the industry in her district and nationwide.
The last day of ABC opened this morning with a breakfast where Chris-Craft president and NMMA chairman of the board Steve Heese delivered opening remarks.
Trade Only Today’s coverage of ABC will continue Monday.