Boating Buoyed by Strong Sales
The slowing economy and consumer cautiousness about spending, especially on big-ticket items, has put the nation’s boat industry on alert.
But although boat sales in certain parts of the country are starting to slip, Southern California boat manufacturers and dealers have yet to see any hints of a slowdown. In fact, some dealers say, sales in the state--the nation’s second-largest boat market behind Florida--are as strong as ever, propelled by continued high demand for more expensive craft.
“People talk about the recession, they talk about the slowdown, but we’re seeing just the opposite,” said Jerry Barron, general sales manager for Hallett Boats in Irwindale. Barron said his company has more of a backlog than at any time in its 41 years of business, thanks to strong sales of its custom-made, performance pleasure boats, between 21 feet and 40 feet long and priced between $40,000 and $150,000.
“We are not expecting signs of the recession,” said Dave Geoffroy, executive director for the Southern California Marine Assn., a nonprofit trade organization that promotes recreational boating. “It’s been a little bit slower in the winter months, but the economic situation at this point has not impacted boating as one would expect. It varies from state to state, and usually Southern California or California is the last one for business to slow down.”
California boasts nearly 1 million registered boat owners, two-thirds of those in Southern California.
Some of those owners, along with dealers, exhibitors, manufacturers and other boating enthusiasts, will gather this week for the 45th Annual Southern California Boat Show, which starts today at the Los Angeles Convention Center. The show, the West Coast’s biggest, is expected to attract more than 100,000 attendees during its nine-day run.
Such boat shows have been key predictors of consumer boat-buying trends. Recently, such trends have been upbeat. Sales of motorboats, sailboats and accessories in the U.S. reached a record $25.6 billion in 2000, up 15% from the year before. Particularly strong are sales of sailboats, up 32% from the year before.
But dealers are seeing a slight dip in sales of certain kinds of motorboats, typically chosen by first-time buyers, because of higher gas prices and recent rises in interest rates. Indeed, the trend of less expensive boats lagging in sales behind other, pricier boat classes--including sailboats, yachts and cabin cruisers--has been evident for the last five years, industry analysts say.
Within the last month, industry giant Brunswick Corp. announced plans to close four of its motorboat manufacturing plants, and Outboard Marine Corp., one of the largest makers of outboard motors and motorboats, filed for reorganization in Bankruptcy Court.
“With the economy going down, the first thing to go is the boat,” said Christopher Landry, editor of Powerboat Reports, a consumer publication based in Clinton, Conn. “It’s certainly a yellow alert for the industry.”
Brunswick said last week that it intends to close four plants that produce family-type cruisers, ranging from 17 feet to 33 feet. Brunswick spokesman Dan Kabrera said the Lake Forest, Ill.-based company, which also makes bowling balls and other sporting goods, will be able to do “more with less.” The company will continue to operate 18 plants. About 650 factory jobs will be eliminated.
Industry experts are at odds over whether Waukegan, Ill.-based Outboard’s troubles are a reflection of the industry’s health or due to specific internal problems.
Outboard Marine’s reorganization will have short- and long-term consequences for the industry, said Daniel Gillies, an analyst for CIBC World Markets. If Outboard liquidates any of its inventory, other manufacturers might be forced to slash prices into the second quarter, he said. With its former competitor out of the picture, Brunswick could grab a larger piece of the lucrative outboard engine market.
One Costa Mesa boat dealer said he is already feeling the effects of Outboard’s reorganization.
“We handle [Outboard] products, and of course that has hampered our sales because right now, there is no warranty on them,” said Bill Allison, owner of Allison Marine. But he said he is not discounting any Outboard items at this time because, regardless of its financial difficulties, he believes the merchandise is still reliable.
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Smooth Sailing
Total U.S. sales of motorboats and sailboats reached a record high in 2000. California, ranked second in the country in sales, spent $901 million on boats, motors and accessories in 1999.
2000: $25.6 billion
Boat, motor and accessory sales in the U.S., in billions
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Source: National Marine Manufacturers Assn.
