TURNING the TIDE Recession may be easing for boat industry

February 06, 1993|By Peter Baker | Peter Baker,Staff Writer

For close to 20 years, marine businesses boomed in Maryland and around the country. But in the late 1980s, the bottom fell out, and the boating industry is just starting to be refitted.

The reason, of course, is money. Boating money is drawn from discretionary income, those dollars put aside for recreation.

Those who have it, analysts and lenders say, are hesitant to spend it. Those who want to borrow it have had a hard time qualifying for loans.

So the recession has hit the boating business harder than most.

"In Maryland, there are at least 200 fewer marine businesses than there were at the beginning of the recession," said David Morrow, president of the Marine Trades Association of Maryland. "And it is not just the sale of boats . . . it trickles down all over the waterfront.

"How bad has it been? All you have to do is walk through a marina and count the empty slips."

Yet, despite the depressed state of the industry during the past four years, there is optimism.

"We are encouraged that things are going to be improving," said Mr. Morrow. "But even with the economy coming around, income spent is going to be spent first on the necessities, and being discretionary dollars, we are going to be among the last to see it."

Boat shows such as the Chesapeake Bay Boat Show, which opens at the Convention Center today, have been the traditional barometer by which retailers gauge the coming year.

Henry Brehn, who tracks the winter boat shows for the National Marine Manufacturers Association, said attendance has been up at the shows in New York and Philadelphia, but the interest of consumers seems to be directed toward smaller, less expensive boats.

Bob Moyat, who compiles an annual report of the boating industry for the trade association, said the industry was severely depressed through the end of 1992 in all areas except small boats and accessories.

"Housing starts are up, car manufacturers are building more for the spring," Mr. Moyat said from his office in Chicago. "I think that, as the economy gets going better, we will pick up as well. We are looking for about an 8 to 10 percent increase over 1992."

David Pilvelait of BOAT/U.S., a national group that tracks the consumer side of the industry, said, "We're pretty skeptical, although we would like to be optimistic. . . . But the latest figures we have indicate that if there is 5 to 8 percent sales growth this year, they are going to be doing real well."

Mr. Pilvelait and Mr. Moyat agree the trend continues toward smaller powerboats and accessories that update boats purchased previously.

"I think the consumers are holding on to what they have, which has been the trend," Mr. Pilvelait said. "But they are buying accessories, particularly electronics. Everybody wants to have the latest gadget out there."

Power vs. sailing

In the 1970s, when the oil crisis made diesel fuel and gasoline increasingly expensive, the sailboat market was driven by a gale of increasing popularity. New builders sprang up almost overnight. Established builders expanded, and new business coasted into the following decade.

In the 1980s, with fuel costs at more reasonable levels, powerboating again became a popular pastime, and fishermen, water skiers and cruisers spent freely. In 1988, consumers laid out $18 billion for boats and gear, the peak year in boating history, according to National Marine Manufacturers Association statistics.

In 1989, the recession hit the marine industry, and sales of powerboats and sailboats plummeted. Maryland and other coastal states took the biggest hits. By last year, total retail sales were down to $10.3 billion, off 45 percent since 1988.

Even as analysts point to signs of a recovery, growth in the sailboat market probably will be slower than in the powerboat market, Mr. Pilvelait said. Of the 11 million registered recreational boats in the country, only 4 million are sailing craft, he said.

"While sailing still has a little bit of that elitist air, powerboat manufacturers are coming out with good marketing schemes, low-cost package deals with boat, motor and trailer at a reasonable price," Mr. Pilvelait said.

"The power side of the industry has designed boats that will let you use the boat as a fishing platform, a ski boat -- or you can take the family for a cruise," he added.

Another boost for the power side of the industry has been personal watercraft. Approximately 79,000 jet skis were sold last year -- a growth rate of 16 percent for a sport vehicle with an average cost of $5,000.

"Again, that reflects that the powerboat section of the industry has done its homework and is trying hard to recover," Mr. Pilvelait said.

So where does that leave the business of sailing?

Mr. Moyat projects a 2 to 4 percent rise in sales of sailing boats and accessories in the coming year. Mr. Pilvelait believes the increase may be less.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.