|Future of Boating|
It’s no secret. The current recession has put America’s pleasure boat industry so deep under water, some are predicting it will never rise to the surface again. Puh-leese!
Those pundits just don’t get it. They wouldn’t recognize what really drives boating even if it bit them in the transom! That’s not to say, however, that the boating industry isn’t about to undergo some major changes. It is. And, America’s boaters will be swept along with them. But, will the changes be good or bad? That all depends on expectations.
Obviously, this is not your garden variety post-WWII recession. As housing and stocks took record plunges last year, collateral damage to boating caused by the bubble’s collapse became evident. Boat sales plummeted a painful 50 percent. Credit lines that manufacturers and dealers need to build and inventory boats, and financing for consumer purchases dried up as reckless lending and investment patterns became known. Indeed, credit availability will be the biggest single impediment to a robust recovery for boating.
The sudden speed of the downturn caught boat dealers grossly overstocked. Worse, it meant more new boats could no longer move down an already overstuffed pipeline. The backup forced shut downs in most boat and engine plants. Ugly times for boating, with a capital “Ugh!”
On a better note, since July, there has been a spike in boat sales. Still, the industry that traditionally introduces many new models at the nation’s fall in-water boat shows isn’t hitting the market with very many this year. It’s a sign of the changes ahead . . . less choices.
In recent years, boatbuilders were multiplying their models faster than unlimited hydroplanes. Boat dealers were pushed hard to stock all the models, in all the colors, with all the power variations. Clearly, builders had abandoned the sound business practice of setting production levels based on consumer sales in favor of cramming as much as possible into dealer inventories. It was a prescription for trouble. If an economic downturn occurred, excess inventories would create enormous financial problems for dealers. As a result, it’s now projected that upward of 25 percent of the nation’s dealerships could fail before this thing is over.
On the other hand, if there’s any good in all this excess, it’s that it has triggered unprecedented bargains for boat buyers. But, that’s really short term. Once the inventory goes, so will those deals. The question is what will boating look like after that?
First, recessions aren’t all bad. For one thing, they eliminate the excess in industries. Post-recession, there will be fewer manufacturers and brands of boats. Bankruptcies are already happening. For example, Genmar Holdings—builder of 13 well-known brands like Carver, Four-Winns, Glastron, Wellcraft and Larson, among others—coupled with failures like Fountain Powerboats have already rocked the boating world. Genmar was the industry’s second largest builder. While some of its brands will eventually survive reorganization, no one is naming which ones won’t.
It’s a similar story at Brunswick, the world’s largest boat and engine builder with 16 top brands like Bayliner, Sea Ray, Meridian, Hatteras, Lund, Boston Whaler, among others. While analysts are confident Brunswick will not go bankrupt, it will survive because top management has made the right calls to position the company for the future. But among those decisions has been the elimination of the Maxum, Sea Pro, Sea Boss, Palmetto and Laguna boat lines, so far. In any case, it’s not safe to assume any brand from any builder is totally safe for the long haul. Remember Chris Craft was once number one in the world!