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Boating business--boom or bust?
|Author||Topic: Boating business--boom or bust?|
posted 01-24-2002 06:14 PM ET (US)
I've noted before that buying a boat is rarely a rational decision--nearly always an emotional one. So it's a market that intrigues me.
There were a couple of posts earlier this week reporting what various marketers and sales guys claimed at recent shows.
I got my Boating Industry Intl today and it shows several recent press releases reporting lower sales and various incentives to kick start a recovery.
15 Nov Fountain reports sales off 38%
Also a report showing that registrations of boats are flat over the last 10 years...even though PMCs appeared during that time, and despite the population growth over that time
Others have posted Brunswicks recent performance and it wasn't great either.
So were these fall reports just the effect of Sept 11 on a weak industry, or does the slump continue.
Are the incentives really driving in prospects to buy new boats?
What's the effect on the values of our used boats if they dump millions of new boats out there with 0% financing?
Just wondering about non-work stuff...
posted 01-24-2002 06:29 PM ET (US)
It is interesting that you mention Fountain Boats and their sales being off by 38%. Perhaps in reaction to this, Fountain have been very prominent advertisers in several boating magazines, running as much as a 16-page spread in one issue showing their boats.
As for general market conditions, the weekend paper here mentioned that sales of Recreational Vehicles recently picked up. This was interpreted as a bellwether for economic recovery.
Others have pointed to strong sales of boats at recent shows as a similar indicator of improving economic conditions.
My own interpretation of this is not that improving economic conditions or expectations have created greater spending, but instead that troubling political or social conditions have created a mood of uncertainty and anxiety that causes people to wonder if there will be a better tomorrow at all.
The reaction to such a bleak outlook for the future is to ignore the usual advice about saving for tomorrow and instead to spend for today.
I, myself, have felt this emotion, particularly in the aftermath of the September 11th tragedy. We have been talking about getting a bigger boat for years, and in the weeks following 9/11/2001, once the shock wore off, we began to consider whether there would even be a future in which we could finally realize our plans for bigger boats, etc. The alternative is to just jump into that new boat today, foregoing any prudence about spending, etc.
I think that part of the mini-boom, if there really is one, in luxury items like boats and RVs is motivated in part by this kind of thinking.
posted 01-24-2002 06:39 PM ET (US)
I guess i am showing my age 62, but i will not spent the kind of $$,$$$.oo that boat or car sales folks are asking for the product they are trying to sell. I have 3 boats in my yard, 2 cars, 1 Bus/conversion, 1 pick up truck, 1 motorcycle, ,,all in good working order for about $45,000,,,there may be folks who will spend on new, not me.
posted 01-24-2002 07:06 PM ET (US)
Fountain Boats just barely escaped bankruptcy, by getting a 2 million infusion from someone. They still may not make it.
But boat companies seem to be unusual. As soon as one goes bankrupt, somebody else wants to buy it. This has happened about 20 times this year alone. It seems to be a "hobby" that some men just can't resist dabbling in. They always think they can build a better boat, for less money, than the predecessor. Some can, some can't. Just look at BW for the last 10 years.
The National Marine Manufacturing Association just published the following:
"Year-to-Date Comparisons of Wholesale shipments" (Manufacturers to Dealers)
Outboard engines: down 24 percent
The news is filled with the downturn in boating related new sales. The sell-off of leftover OMC produced inventory, both boats and engines, at cheap prices, has also hurt the industry at a time when it needed this competition least.
But if you truly need a new outboard, this is the time to buy. You can get 5 or 6 year warranties on almost any NEW technology (the hard to sell stuff!) you buy, except for Bombardier products. They're giving away cash up front instead.
posted 01-25-2002 07:06 AM ET (US)
Jimh, good point. I was speaking to an antique car dealer earlier this week who had expected to get some good deals at the Barrett Jackson auto auction. Private buyers were bidding the prices up to a point where he couldn't compete.
I hope it really is a sign of people feeling confident in the economy. Even if its not, its still spending.
posted 01-25-2002 08:35 AM ET (US)
IMO The boat building business is very easy and inexpensive to get into. If you ride along the outer banks of North Carolina someone on every block is building a boat. You will see tin shacks with a 50' sport fisherman that will sell for a million being build inside by a father/son team. When you look at the production glass boats you will see the hulls being splashed (copied) from each builder and molds being bought, sold and recycled between builders (how may boats have been knocked of the old Formula 23, I can name 4). Because of this low cost of entry into the market most of these builders are like a flower that dies every fall (recesion)to come back to life again with a better economy. Just think of the list of builders that have come/ gone and come again in the last 20 years
Just to touch a few
posted 01-25-2002 09:25 AM ET (US)
Being this is my livelihood....a few notes.
You are on a major time delay between reality and media. By the time they say we are in a recession, we are usually starting to get out. By the time they say the economy is turning around, it is usually done so months ago. and when they say we are out of it we are peeked. The media is the worst indicator of "real-time" reality.
2nd if Reggie Fountain sold some of that Mr. T starter kit(gold) he is wearing, he could save the company:) He should have stuck to a few models, he has more than Sea Ray I think. Their stock has always been crap, gives you an idea of where the company is(obviously).
Sales might be down in % or $$ but number of units might be up. What I mean is if sales are down 25% in 2001 but dealers were selling at a 30% discount.....etc.
posted 01-25-2002 11:29 AM ET (US)
In 25 years in the same businees, I think that this is the worse recession that I have seen. However, history over the past 30 years show cycles of boom and bust. The shorter the boom the shorter the bust. We have just been through the biggest boom in 30 years or more, so it seems that the bust will last a little longer. Just remember we have always come out of EVERY BUST. During the booms people become lazy and complacent and during the bust they get their act together.
Also, most of us here will buy used boats. History shows that if you buy a used "Classic" it has the potential to go up in value. What did the first Montauks sell for and in good condition what do they bring now. Also, if you buy "Quality" new the same applies. Sorry to ramble but had to get my $.02 out. Regards, Jay
posted 01-25-2002 12:18 PM ET (US)
I find this subject very interesting as during the Cincinnati Boat show (Jan 4 thu 13) The local paper (Cincinnati Enquirer) ran a very large story (1 page all columns) about how very much stronger (20%) boat sales at this show were compaired to the previous years. Interestingly also the sales were in family type boats, from bowrider runnabouts to 36-45' crusers, not bass boats or go-fasters.
The two largest marine dealers were attributing this to 9-11 & peoples fear of distant foreign travel where they feel they (their families) are more vunerable to conditions they can't control. My guess is that it boils down to staying close to home and that some guy named Mouhommad won't find a 60' morter box hulled houseboat on Cumberland lake a high profile target.
As for the troubles in the go-fast boat building industry (Fountain, Baha, Etc) it is probibly just the end of the fad. The boat yards around here are full of them in various stages of use & disuse. You can't give them away. They were high maintenance along with the ladies they attracted, and from what I gather from the local dealers the "Young Kings" that bought them either have moved on the the country club or if they stayed in the marine venue have gone to larger family boats such as Carvers & Sea-Ray type crusers which make better family party boats. I also suspect that the annual gasoline price spike (50-60 cents/gal) every spring in this area (last 3 years) killed enthusasium for the very thirsty 454 v8's. Its not much fun to sit in the marina on your Baha in the blazing sun.
Just some thoughts!
posted 01-25-2002 12:45 PM ET (US)
I agree WS. The folks with the "ginny gunboats" at our marina have indeed replaced their boats with larger SeaRays alnog with PWC's attached. They still speed compete however, along with who has the best gadget that hoists the PWC out of the water for the run to Tice's Shoal, Barnegat Bay, NJ. They race to get the best mooring and then unleash the PWC.
On a side note, I was informed that our marina has available slips for the summer at this time. Granted it does have bathrooms that your wife or girlfriend would use(including showers)with few fisherman and multiple sailboats, but this is the first time that there were available slips in January since it was built 10+ years ago. Usually always pre-summer filled. These slips are 25' and under, 25'-45' are full.
Thanks and have some Italian blood.
posted 01-25-2002 01:01 PM ET (US)
Interesting discussion. It will be interesting to see how the turn-out at the Chicago show is. There has been virtually no advertising for it this year. Lakeland Boating usually does a "boat show" issue -- not this year, and one of the major dealers didn't even place an ad (new, used, or brokerage listing) in the Jan. issue. The local morning news usually does a remote piece from McCormick Place on the show's opening day--not this year. Few, if any, pics in the newspapers. The only advertising I've seen is a hard-to-read decal on the Carson Pirie Scott windows, filled with swimwear ("Summer begins here" theme) Due to our schedules, we're going to the show on Saturday this year, usually the busiest day. Will let you know how foot traffic is. -- lks
posted 01-25-2002 01:22 PM ET (US)
WS, do you have a Whaler? If so it's nice to know there's another guy in Cinti.. That makes 4 of us on the forum I think.
Dixie Dan the Ranger Man says his sales were way up. His big concern is getting them financed. Regards, Jay
posted 01-25-2002 01:55 PM ET (US)
See the second photo on page three of Cetacea to see Walt's boat-
posted 01-25-2002 02:11 PM ET (US)
Kingfish, what a beauty! As many times I cruised up and down the Ohio, I have never seen her. Hey Walt were do you hide her? Regards, Jay
posted 01-25-2002 04:13 PM ET (US)
John & Jay:
Thanks for the welcome back. Have been a reader but unable to contribute due to technical problems. I am talking to Jim about them.
Hope to be able to see you "John" this summer either in the N.C. or lower Lake Huron if things work out. Just a tease but a close friend's post will follow in the next 30-45 days I think.
Jay, The current hiding place is Port Huron Mi. The 25 is the third Whaler I have had the pleasure of owning. I started with a '78 Newport and went thru a 22' Revenge WT and then to the 25'. All the boats have been used locally, as well as in western KY & the TVA lakes. However before 9-11 I found it cheeper and more convienent to leave the 25 in Mi and just hop a commuter flight to DTW on saturday AM & return on sunday evening or monday AM to Cincinnati.
posted 01-25-2002 04:46 PM ET (US)
My Boston Whaler is the second boat I ever purchased. My first boat purchase was a used Laser sailboat in 1980. The Laser rates right up there with BW as far as nostalgia. But it's hard on the back and not much of a family boat. http://www.teamvanguard.com/laser/
Now, I don't dream of a bigger or more expensive boat. Rather I dream of a house with an ideal place to store my boat, and of a new tow vehicle in the future.
My Boston Whaler could possibly be my last boat purchase?????????????????(that statement might be a little bold)
posted 01-25-2002 11:45 PM ET (US)
If you cruse the Ohio river, on a regular basis, you probibly will run across two local whalers. One is located at a beach house 1 mile upstream of New Richmond Ohio on the Ky side. It is named #1 Cookie. Have never met the owner however I have seen the boat on the ferry ramp at Tobermorry Ca going to Manatulin Island in late July. The other is was (is) owned by the owner of the BMW store on Stewart Rd and is a 22' Revenge WT.
posted 01-26-2002 09:35 AM ET (US)
Walt, thanks for the reply. I am in the North Bend area and almost always head down river. I used to have a 38' Roamer "Tam Mur". The only time I head up is for the WEBN fireworks. During the summer we hang out at the "Cabana Bar". The only Whaler I currenly have a 13' Sport. I'm looking for an older Montauk to fish the Fla. area of Apalach. We are also looking for a smaller Cruiser for the Ohio. Please email me if you know of any Whalers for sale in the area. Thanks, Jay
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