The new year is the time those of us in the news business look back on the previous year’s events and reflect on which had the biggest impact.
Unfortunately, choosing the No. 1 story of 2008 from a marine industry perspective wasn’t all that difficult. In the words former Clinton political strategist James Carville used to define the 1992 presidential campaign, “It’s the economy, stupid!” In fact, we were hard-pressed to find stories in our top 10 that weren’t related to the economy — either as contributing to the downward spiral or resulting from it. Here is the list, as chosen by the editors and writers of Soundings Trade Only.
1. The Economy — In 2008, the economy dominated headlines in the boating industry and in every other facet of life in the United States. The Dow Jones Industrial Average dropped more than 4,400 points, or 33.8 percent — its biggest decline since 1931. About $7 trillion of shareholders’ wealth was wiped out. Marine-related stocks were hit hard. Brunswick Corp., for example, was trading at $19.63 a share last February, and at the beginning of 2009 was at $5.20. That was up from its 52-week low of $1.82, which it hit in November.
Many industry leaders say the economy was the worst they’d seen in their careers. “I have been an investment banker and a chief executive for over 20 years, but I have never seen the turbulence that we’re experiencing right now,” Ceasar Anquillare, CEO of Winchester Capital and chairman of WinMarine Ventures, told Trade Only in September.
Time will tell whether the effects of the $700 billion bailout plan approved by Congress will trickle down to the boating industry. Rising unemployment, a prolonged housing slump and a credit squeeze continue to affect boat sales as 2009 begins.
2. Shakeup at Brunswick Corp. — In mid-May, the country’s largest boat manufacturer announced it was ceasing production of its Bluewater Marine brands — Sea Pro, Sea Boss, Palmetto and Laguna. It also announced plans to sell its Baja line to Fountain Powerboats. Brunswick at the time said it was moving toward a “smaller manufacturing footprint,” with more locations that can produce multiple brands and models.
The following month, Brunswick said it was closing four plants in the coming year in addition to the eight plant closures previously announced. This would bring the total number of plants down to 17 or fewer by 2009, and would reduce the company’s fixed-cost structure by $300 million.
The plant closures also meant the loss of at least 1,000 hourly and salaried jobs.
Officials said savings of about $100 million were expected by the end of 2008, with the full $300 million in savings coming by the end of 2009.
“We’re not predicting where the market is going,” chairman and CEO Dustan McCoy says. “What we’re doing is sizing ourselves so no matter what happens with the market, we’ll be able to be profitable.”
3. Tightening of the credit market — Last year saw a number of financial institutions drop out of marine lending, both on the retail and wholesale sides. In June, GE Money exited retail lending. Citizens Bank of Rhode Island announced in August it was pulling out of the marine market. And in late September, KeyBank announced it was getting out of both retail and wholesale marine finance.
In December, Textron, one of the top five wholesale lenders, said it was exiting floorplan financing.
4. Fuel prices — At the height of the boating season, gasoline reached record highs of more than $4 a gallon on the highways and more than $5 a gallon at some marinas, especially in coastal markets.
Although people were still using their boats, most seemed to be taking shorter trips or staying on board at the dock.
As of the beginning of 2009, gasoline prices had plummeted around the country to well under $2 a gallon, which may help bring more people back into boating come spring and summer — if prices remain low.
5. The election — On Nov. 4, Barack Obama made history by being elected the nation’s first black president. While it is still too early to say how an Obama administration will affect the economy in general, and the boating industry specifically, some say brighter days are ahead.
“With the changes in Washington and this change psychologically of what’s going on in our government … I think all of this is going to have an effect,” Genmar chairman Irwin Jacobs told Trade Only in December.
He predicted Obama’s election would go a long way to restoring consumer confidence, which is critical to the success of the boating industry.
“I’m watching Obama doing things I have not seen being done,” Jacobs said. “I am proud as hell he’s the president-elect of our country right now, and I didn’t think I’d ever say that, but I am because he’s doing what’s necessary.”
6. Passage of the Clean Boating Act of 2008 — In July, President Bush signed the Clean Boating Act into law, protecting the nation’s estimated 17 million recreational boaters from cumbersome and complicated federal regulations. Without the legislative relief, boaters would have been forced to comply with new permitting regulations set up under court order by the Environmental Protection Agency.
The National Marine Manufacturers Association and BoatU.S. formed a group called Boat Blue in 2006 and put together a grassroots effort to get the legislation passed before an Oct. 1, 2008 deadline. An estimated 150,000 people sent e-mails to Congress on the issue, with 120,000 of those coming from the BoatBlue.org Web site.
“It’s just a wonderful day for boating,” said BoatU.S. vice president for government affairs Margaret Podlich the morning after the bill was signed. “The beauty of this year-plus effort is that everybody came together toward this common goal.”
7. Changes to Grow Boating — In October, the National Marine Manufacturers Association announced it was temporarily redirecting Grow Boating assessments because the money collected would not be enough to pay for a national campaign. It was agreed that 85 percent of what’s collected from engine assessments would be given back to manufacturers to pass along to dealers to help spur sales. The remaining 15 percent would support public relations, the Discover Boating Web site, the Marine Industry Dealership Certification program and other core programs.
Industry leaders expect about $6.5 million to be redistributed back to manufacturers. They plan to revisit the program later this year. Safeguards were put in place to ensure manufacturers were directing the money toward their dealers.
Dealers contacted by Trade Only had mixed reactions.
“We all agreed as dealers and manufacturers and the NMMA that the money was supposed to be spent for the Grow Boating campaign,” says Jim Thorpe of Spring Brook Marina in Illinois. “We’ve paid into it all these years and all of the sudden a bunch of guys get together and redirect it and [decide] not to use it for what it was meant to be for. I think it’s the most ridiculous thing.”
Larry Russo Sr., of Massachusetts-based Russo Marine, was involved in the decision to change direction.
“We need buyers today, not next year and the year after, and all of our marketing messages were geared toward non-boaters in non-boating venues, non-boating publications, attracting and trying to persuade new participants into the recreation of boating,” he says.
8. The weather — Mother Nature was not kind to boaters in 2008. In early September, four named storms were churning in the Atlantic — Gustav, Hanna, Ike and Josephine, with Ike proving the deadliest and costliest to the U.S. Ike barreled through Galveston Bay, Texas, in mid-September, leaving in its wake nearly 15,000 damaged or destroyed boats. It caused $200 million in damage to boats — $175 million of that in Texas alone.
There were 16 named storms in the hurricane season that ended Nov. 30, including five major hurricanes of Category 3 or higher.
Spring rains curtailed boating in the Mid-South states of Arkansas, Kansas, Oklahoma and Missouri. Rising lake levels and flooding created potentially dangerous boating situations.
In June, Wisconsin’s Lake Delton completely disappeared when the isthmus that separated the lake from the Wisconsin River washed away. The dirt and sand were so saturated they simply couldn’t hold. It only took a few hours for the lake’s estimated 75 million gallons of water to escape.
Many Iowa boat dealers also reported business was off as a result of flooding that made boating impossible. The Cedar Rapids area was especially hard hit.
One bright spot was the rise in water levels at Lake Powell on the Arizona-Utah border. Levels on the country’s second largest man-made lake rose enough that a well-known shortcut — Castle Rock Cut — was open to boaters for the first time since 2003. All this was a result of the heaviest snowpack in eight years.
9. Going “green” — Many boat and engine manufacturers, accessories makers and marina owners were “going green” in 2008.
Boatbuilders are looking at solar, wind, wave, battery power and other “clean” alternatives for boats, while new hybrid systems and other green methods are reaching the marketplace. Clean Marina programs are growing throughout the country, and many owners have discovered green initiatives can be a draw for boaters in a market with several locations to choose from. Accessories makers, too, are increasingly developing and marketing environmentally friendly products.
Alternative fuels also are being looked at in the boating industry. Biodiesel, made from vegetable oil or animal fats, is non-toxic and emits less smoke and odor, and is a renewable source of energy.
Even boat shows and other industry events went green in 2008, with many shows offering “green” areas to feature products or conference organizers touting the use of recyclable materials at their event.
10. Florida passes Amendment 6 — The Florida boating community worked hard to pass Amendment 6, which requires county assessors to set the value of working waterfront for tax purposes at its current use, instead of at its highest and best use. It passed with the support of more than 70 percent of Florida voters.
In a state where boating is a way of life, advocates of the amendment argued that marine business owners are under pressure to convert their marinas, boatyards, drystacks, commercial fishing and other marine-related facilities to other more profitable uses, in part because of high waterfront taxes, which reflect the value of condominiums and other high-end properties in the neighborhood.
“We’re thankful for the public of Florida — that they came through,” says John Sprague, government affairs chairman of the Marine Industries Association of Florida. Sprague worked for three years to get the amendment on the ballot.
This article originally appeared in the February 2009 issue.