Can The Boat Industry Survive?
 

Not trying to be too negative, but with fuel costs, operational expenses and other economic factors skyrocketing, I am guessing the boat building industry will experience a change unlike any other industry has ever experienced. It is even possible that the entire industry may evaporate until it can reinvent itself.

A small weekender SeaRay for $16k used to cost a hundred bucks to operate on a weekend, those costs have tripled, maybe even quadrupled, knocking many out of the dream of this entry level market. They used to say that these types of times simply weed out the weak, but when you read about a powerhouse like Brunswick struggling so severely, along with fuel prices that most likely will NEVER come back down, what is the outlook???

Remember, oil affects MORE than gas, it is a factor in the construction process and will probably create a domino effect.

Looking for input on the subject, not arguments.
Thanks.

The outlook for me is good. 85 Sunny, and I am going to put the boat in first thing in the morning and enjoy the heck out of the weekend and not think twice about fuel prices, diesel prices, insurance, or any of the other costs - not because I am in that league (in fact most of my boating gets put on a Credit Card with no end in sight), but because I don't care. It is what I enjoy and what I am going to do.

Eric

I think of it this way: a few yrs ago a buddy took his family to DisneyWorld for a week, flew down, stayed in their hotels, tickets, meals, etc, etc. spent $5,000 for 1 wk.

What if I spend that much over an entire summer of boating and family gets to enjoy lots of great weekends, and fun together.

When its hot they "aint no better place to be"

Yep - My wife and I don't go on vacations, we don't go out to dinner often, we don't do other things because we substitute the opportunity to spend the entire summer boating with friends, and if the summer fuel bill is 5k than so be it - the memories are worth every dollar.

When the economy rebounds the profits will be spent on luxuries like cars, boats, vacations. Things are tight in a lot of industries so there maybe a little hurt going around but remember in the early 80's interest rates were in the high teens, that would be far worse than today's problems.

Not really looking for personal experience, looking for the industry outlook like Jupiter stated. My only objection to what Jupiter said is that I am wondering "if" the boat builders can ride it out. It is quite possible that a $100k boat will be more like $200k by this time next year. Then throw the fuel costs onto ownership and many people may just move to another industry for their hobby.

Can the industry survive...yes. These times may shake out the under capitalized, but the quality builders will remain. Many owners may cut back on usage, but won't entirely, and those considering new purchases may postpone them...but will the industry disappear...no way.

Agree. Take a good hard look at the tech industry from 95 to 2000. Take a good look at it now. It survived, but a cleansing occured. Nothing really new here if you study other industries. It will survive, and it will change some things.

The current state of the economy will weed out some builders and the strong will survive! Boaters are stubborn and they love their sport/hobby.

if the people of this country don't stand together and do something about the big oil companies windfall profits more than just the boat industry will suffer i understand a barrel of oil costs whatever the market will bear but our wonderful oil companies in this country should NOT be allowed to make huge profits while the rest of the country suffers we need to stand together and do somthing about it just my two cents

after going to havasu this past weekend at the poker run and the races it doesnt look like anyone is paying attention. Ive never seen so many boats there in my life. Heck im going back for memorial! and im also going to work on my tan at my local lakes on the weekends you only live ones just work harder boys if you have to.

Global markets.....it is not that simple. Fuel here is still relatively reasonable comparatively speaking. Here is a perspective of how bad it is for us....
http://money.cnn.com/2008/05/01/news...rice/index.htm

Some will and some will not. If you are a middle income family would spend the money a new boat that costs 40 grand plus? Then spent $300.00 a month on fuel plus storage. Plus you need the truck that can tow the boat that sucks on mpg. I really don't think the gas prices will go down and if they do great. I would like to see this thread a year from now.

Sounds great but the dollar is going down and oil is traded in dollars. Also I lived 1/2 my life in Germany and people tend to make more money for the same job there than the US. So the euro is worth more and you have more take home.

Actually, I think the boat industry can survive the oil prices, and the credit crunch. The biggest threat is the government taxing boating out of existence. The government looks at boats as a luxury, and think it's OK to slap tax after tax on them. Everytime they add a "luxury tax", the boat industry completely dries up. The Federal government had to repeal the last one. You can bet the states will try again.

Michael

Guess it depends on the state. The IRS always looked as my boat as a second home and the state never charged me as much for it as other items on PT.
Those where the good old days.

I think the boating industry will survive, but will hurt for a while. Boaters will not "stop" boating, but may cut back on frequency or distance. Die hard boaters.. ( like I think most of us are on OSO) will go boating no matter what and I will quit eating lunch, before I put the boat away.
That being said.. I don't think gas prices are all to blame. The US economy is based on two things. Spending and export. Joe Public is spending less and less. The baby boomers with some spare $ are spent their money. We got out boats and toys. We are winding down in our expenditures.
The US export market sux. Period. It will be 3-6 years before the "next generation" of spenders have extra cash to spend to kick the economy in gear. THe US gov. needs to stop screwing around in the world, get out of the Middle East and concentrate on the US citisens, instead of some forign BS.
We have enough oil in Alaska, Colorado, and offshore to meet all domestic fuel needs. I don't buy gas from forign owned gas companies like Shell, BP etc. I would love to tell our Gov. to keep their nose with in the US. but they dont listen. :(
There aer countries that pay 10 cents per gal of gas and there are those who pays $10+ per gal. I wonder what would happen to OPEC if WE ... US patriots would just stop refining their black chit.. Most refineries are owned by US firms. AS far as I am concerned they can keep the oil. Or better yet.. I will sell them food for as much as they charge me me for gas.. Let's see what the gas price would be when they go hungry. But guess what ?/ Our Gov. gives them "free Food", becouse of some low life left wing liberals, special interest groups don't like to see people hungry. How come Iraque and all the other OPEC countires don't feed the world. Why do I (WE) have to ???
I don't like to see people hungry either but I think every one knows what I mean.

Good point.. The best way to compare is how long (in hours.. let's say ) to take to earn 1 gal of gas. or 1 gal of milk.
In Europe.. gas is more.. but it takes les time to make that amount.
There is H2O in Europe... may be I relocate. :)

Gas is less then 10% of my annual operating cost,it will now be more like 20% of my annual cost,I will still boat as much as always BUT unlike many on this board I am`a blue collar worker,not a big wheel with millions,I'm just very lucky to have 2 jobs,1 that pays very well. Will I like spending 250$ on diesel and another 300 or 400 every weekend,HELL NO. Now I do know many other local boaters who were just barely able to afford to go boating before,they are screwed,a few I talked to are saying they plan on boating very little because they literaly won't be able to pay their household bills if they pay double to fill their boats. They are already spending double just to get to work.I snowmobile too and It's another sport where I used to spend 250$ to 300$ a weekend filling the truck and sleds plus meals at restaurants,hotel rms etc,that has doubled and I saw less then 1/2 as many people out riding this winter as I have in the past but its more of a blue collar sport so the people that couldn't afford it stayed home. With the competing global market for oil I don't think oil is EVER going to go back down and gas is going to probably end up between 5$ to 7$ a gallon and it will stay there,Smitty

That also is How I look at It!

Exactly! Boating is really a BARGAIN when you think about it, and it is very tough to beat as a family activity. I grew up boating with my parents and 3 brothers and a sister. Rather than everyone going all directions every weekend, we were in our 20 foot Formula doing a lot of skiing, fishing and camping. Great memories! Now we ALL have boats and get together most every weekend in the summer along with all the cousins, nieces and nephews! Gas prices will not slow these families down. I bought a new Formula in 2005, one brother bought a new Montere in 2007 and another brother and my sister are in the market for new boats right now!:D

Oh, forgot... Another side benefit is during the crappy winter months during the holidays we all bring our boating videos from the year prior and watch them!

Too many people look at oil profits in dollars, not percentages.
Shell only made 7.5% profit last year. In my business that sucks.

Furthermore, it is the American public who have voted in officials
who support fanatic green agendas that prevent the oil companies
from even entertaining re-investing profit in developing new abundant
sources of oil.

Get over it America, the price of oil is only your own fault.

Pesky Varmint

The boating industry will surive. However, the herd will be thinner.

[QUOTE=Pesky Varmint;2546504]Too many people look at oil profits in dollars, not percentages.
Shell only made 7.5% profit last year. In my business that sucks.

7.5 % sounds great to me. In the Construction Ind. you get 3 to 4%, after overhead, ins. and all the BS, workers comp. etc.
The key is that 7.5% is on many billions.
The more "volume" or sales, the less percentage you can get by. I rather do 5 mill a year at 3% then 3 mill at 5%.
Next year.. I'll be lucky at 1.5 Mill at 4%

I was on the phone with a very well known industry person last night and the outlook is not good. In their opinion when this is all said and done there will only be 3 or 4 strictly performance builders left standing.

Costs have gone into outerspace and demand has pretty much stopped for new product. One large mfg has 50-75 new boats sitting at the factory. Though there are dealers that are strong and can stay "afloat", many are on the edge right now.

This is the ISSUE - since we are at the beginning of this cycle, some are still riding, sliding and hoping for the turn-around.

What if the turnaround NEVER happens?

I am sure there was a time when Covered Wagon sales were down and they were waiting for the turn-around, and guess what happened?

Evolution. Times changed. How many Covered Wagon companies survived? Yes, the stronger builders will survive. How many are there? One? How many years can they wait it out? Let's just say Outerlimits is the company to hang in there because of strong sales to date. Can they just sit and sell only 2-3 boats a year until the turn-around happens?

And then it may turn into something like the Rolls Royce market on the water where there is only enough market share for one, maybe 2 to builders to compete.

Just thoughts.

You can hardly compare the construction industry to the oil industry. What R&D does the contruction industry do? About none. What investment in plant and equipment does the construction industry have? They don't even have plants that need to upgraded and replaced. Does the construction industry have to sink millions into a well that could produce nothing? No, they just bid on a job, build it, and collect the money. It's a low risk business. That's why the margins are low. Just about anyone can get a contractors license, and get into construction.

Michael

Construction is a "low risk business?" I am sure a few contractors on this board would disagree with you on that one. There are a few more variables that go into it than just bidding and collecting money. You are right, just about anyone can get into the business, and they can be the low bidder on every job they want to. But you don't go broke from the job you don't get. It's the one you dropped your pants for that you "bought" just to get work and keep cash flow going that puts you out of business.

Restaurants have the highest rate of business failures. Contractors are second.

Having spent my entire career in the surety industry (guaranteeing the performance of contractors), I can assure you that it is a risky business.

Few notes..
I dare ANYONE to get a CGC license in FLA (or CA) and pass all the exams. Hurrican codes and siezmic codes.
The industry is extrimely risk oriented. OSHA, lieb ins. etc. One little incident and out of business you go. One little mistake on the contract and out you go.
A few days in delays and liqudated demages,, and out you go. And on and on.. as far as R&D. The Construction Ind, leads just about everyting ion R&D. Cement plants, admixtures, adhisives, fasteners, methods. AC. Heating, Software, alarm. FP. roads, bridges and all the equipment, trucks dozers. etc. etc.. we have invested to do a low margin work. I can go on and on, but I won't. The comment you made shows that you have no clue about the Construction Ind.
And who do you think does the drilling for the Oil Companies?? Contractors.. and no doubt it can be a successful and lucrative business. But the risks are a lot higher then anyone realize.

I agree with an earlier post. There will be a consolidation in boating period. The performance market will end up with 3-4 V builders (Cig, Outerlimits, Nortech, Active Thunder) and three or 4 cat builders (Skater, MTI, and Nortech). I pick these builders for 1 of 2 reason, strong international and government contract business, and two great economic models.

The productions guys like Foutain and Donzi are in real trouble because they count on volume to make a margin (first death was Baja). I also expect for the industry to go more factory direct, just in time ordering model, and less reliable on the dealer caring inventory.

As for me, I will keep boating as long as it doesn’t affect my life. I am very blessed and fortunate enough to ware it hasn’t affected me at all, yet.

Dont forget Sea Ray isnt doing so hot either.

You are VERY MISTAKEN! You are right just about anyboady can get into construction, but very few are succesful. Maybe the mom and pop homebuilders building 3 houses a year don't spend much on research and development but large firms spend huge amounts of money on r+d.
Sorry for the hijack.:grinser010:

I don't see Fountain or Donzi going out Fountain just purchased Baja and Donzi has a little more strength to hold out. They just hired Graig Barrie, I see Donzi going more custom on there ZR line

Having been associated with the aerospace industry for over 25 years, I could easily argue with a comment like that......

Can The Boat Industry Survive? What sort of a question is this. Either your very young or naive. Look back as far as yo can.........63, 73, 78, 83, 87, 91 and so on. The boating industry will always survive.....it always has. No it has not shined like a bright bulb in the sky lately, but nothing really has in the dark a gloomy times that are upon us. But the industry has always remained and will.
In times like these it will root out the weak and meak........and the strong will survive

You are right. Jafo.. I should have been more specific in that comment, but I did say " just about". I should have said "Construction and related/associated industry".
I been incolved with NASA in their shuttle hanger projects. With the Armed forces with their "Construction" activities. Missle silos in Texas. The Epcot Center. Highrises all over. Nuclear Plant with CECo. (Biran, & Braidwood. Ill)
And you are right. There are some industries that do tremendious amount of R&D. Aero... Medical... Bio... Fuel.. Solar.. . etc.. but Construction as a "large picture" is responsible for a lot more then most realize. That is the point I was trying to make.
IE. look at Caterpillar and their R&D.

I could be mistaken, but Fountains margins are, or were, VERY weak. I am sure their burn rate is up there, and they would need serious cash reserves to ride this thing out. And as TeamBaja mentioned, SeaRay is struggling, and I believe they are the industry leaders in sales and technology.

plus they have free health insurance there, which would save a FAMILY OF 3 ANYWHERE FROM 400 TO 1000 a month in fees, which would free up money for gas. I hope to get out and am lucky that for about a 160 a weekend will get me to the ramp 35 min ride and 15 mins in the boat to a great sandbar in plymouth mass. I MISS THE MARINA rack was 1200 a year from 94 to 99, then went to 1500, by 2002 its was 2000 and climbing a friend is paying about 4500 this year for 24 superboat at the marina but he goes out 5 or 6 times aweek:(,So its cheaper for me to ramp it for the couple of times a month we go out. in 30 mins I can be in either plymouth cape cod bay, boston, fallriver mt hope bay newport area. onset where the marina is buzzards bay other side of cape. but to go on long trips would get expensive 400 for a tank of gas:hitfan: its to bad that your pay check would go up with gas prices,:p

In my opinion if the curent trends continue. Dozi and Fountain will have to go the custome route to stay in business. Mercury/Brunswick did want the Baja business anymore because it didnt make money.

[QUOTE=Michael1;2546321]Actually, I think the boat industry can survive the oil prices, and the credit crunch. The biggest threat is the government taxing boating out of existence. The government looks at boats as a luxury, and think it's OK to slap tax after tax on them. Everytime they add a "luxury tax", the boat industry completely dries up. The Federal government had to repeal the last one. You can bet the states will try again.
Yeah but boats droped in price with that tax, you could buy a 32 or 33 ft boat for 99,999.99:D and as soon as they lifted it boats shot right up to 150,000 to 175,000 for a 33 footer. in 1990 a 27 foot boat was 35,000 to 40,000 with a single after that tax was lifted they doubled in 2 years . AND NOW ARE OVER A 100,000.