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Inflation Remains a Concern for Builders

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June’s year-over-year inflation rate of 9.1 percent is the highest in 41 years and may crimp profit margins for boatbuilders.

Input costs are poised to continue rising, Bill Yeargin, president and CEO of Correct Craft, told Trade Only Today.

“We are seeing significant increases in our costs to build boats, the most I’ve seen in my 40 years in the industry," Yeargin said. Thus far, builders have mostly been able to pass along the higher input costs in their selling prices, but they cannot always do that, he said.

In addition, the Consumer Price Index rose 1.3 percent in June from the May reading, the Department of Labor said in its monthly statement. Both measures were higher than analyst expectations.

Regarding the workforce, Yeargin said the labor market is easing slightly but that “it is costing more to get people, and it is costing more to keep people.”

Yeargin said he does not perceive that inflation, higher interest rates or record gasoline prices are deterring boat owners or buyers. A few at the lowest margins may decide not to buy a boat this year, and others may not get approved for credit.

“I don’t think it’s going to be a long-term problem like it was in the ’70s,” Yeargin said in reference to inflation. “Commodity prices and fuel prices are really coming down, and those are really good signs.”

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