Marine Manufacturers Report Q2 Improvement But Remain Cautious

Marine Manufacturers Report Q2 Improvement But Remain Cautious
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Nearly half of marine manufacturers, 49 percent, say business conditions were stable in the second quarter, while 39 percent report that business is expanding.

The National Marine Manufacturers Association released its second-quarter marine CEO Sentiment Report, showing a much more upbeat perspective since the onset of the pandemic.

“Marine CEO sentiment was much more optimistic in Q2, returning to levels pre-pandemic, bolstered by record new boat sales this summer,” said Vicky Yu, director of business intelligence for NMMA, in a statement. “Production has been steadily ratcheting back up since the lockdown restrictions were lifted, and manufacturers are actively hiring or bringing back furloughed employees, working through order backlogs as operations return to normal.”

More than half — 51 percent — said sales were up or on par with the same period of 2019, and 15 percent reported substantial growth in sales; 47 percent reported new orders were up compared to a year prior, reflecting strong demand for new boats.

Hiring improved as manufacturing lockdown restrictions were lifted, with 37 percent of manufacturers actively hiring in the last quarter, 44 percent sustaining their normal staffing levels, and 19 percent reporting job cuts.

Some 73 percent of marine manufacturers report order backlogs, and many also say supplier deliveries are slower than they were last year, said Yu.

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Of those surveyed, 58 percent said they were experiencing supply chain disruptions — a marked improvement over the first-quarter survey, when 71 percent faced disruptions, but still a majority of the industry.

“While there has been some improvement, there are some supply chain effects still,” Yu said.

The most significant challenge for marine manufacturing CEOs in Q2 continued to be issues around the pandemic — including adapting operations to public health guidelines and getting access to testing — cited as the top challenge for 39 percent of marine business leaders.

That's followed by 24 percent of manufacturers citing weak sales and 14 percent citing workforce availability and cost as their top issues.

Although manufacturers are optimistic about the surge in boat sales, they’re also being cautious with capital expenditures, said Yu.

In the second quarter, 43 percent of manufacturers reported increased investment in capital expenditures, compared to 69 percent a year ago, while more manufacturers (57 percent) reported flat or cuts in cap-ex investment compared to 31 percent a year ago.

“We see they’re holding back on fixed assets so they can remain nimble through this,” said Yu.

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