Dockside Chat - Which boat builders will make it through this recession?

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Porkchunker
04-05-2008, 09:59 AM
Tight credit, mortgage blues, high cost of fuel, people closing their wallets, inventory not moving...how long before we see some of the boat builders/lines disappear?

I just got back from a trip to Florida. Unbelievable numbers of boats, RVs, pickup trucks and SUVs and other toys (4-wheelers and PWCs) with for sale signs were to be seen along the secondary roads and in people's driveways/front lawns. Saw lots of empty homes with "Bank Owned" out front, and lots of empty commercial property with for lease signs.

Politicians are dancing around the "R" word, but it is clear to me that despite the spin, the "folk" are experiencing it.

How long until we start seeing some of the boat manufacturers cease production, get bought out, or otherwise scale back the models? Which ones are in a bad spot right now, and about to tip over?

Dave

aka


Bugbuster
04-05-2008, 11:08 AM
I don't think the high-end center console guys will go anywhere. I think it's the inexperienced boat buyer and or first timer boat buyer type boats that will, or I shoud say, could go out. All of the builders will feel their share of pain, but the low margin, budget boats will be the ones most at risk. There's really no tellin who might go out. I think it depends alot on where their position was when the economy turned down. Time will show the ones that sat on their cash and it will also show the ones who stretched or got caught not lookin.

ABoater
04-05-2008, 12:27 PM
Quite a few have already gone belly-up.

Plenty of dealers, too.

The ones that played it smart (customer care, backing up their product, etc..) during the good times will weather this storm.

Sadly, it'll be the workin' stiffs that take it in the shorts. The execs will continue with their fat-hog pay, while they determine how many blue collars to lay-off to protect their "profit" sheet.

It IS going to get worse, before it gets better...


kloweree
04-05-2008, 12:33 PM
I believe the "budget" minded manufacturers will weather the storm better than the high end boats simply because
many of the new boaters who might have gone for a Whaler or a Pursuit will get sticker shock/recession shock/ and
gravitate toward the mid-tier and lower tier boats like Sailfish/seaswirls/trophy/Angler/Sea Hunt etc. But I guess time will tell here.

Huntersun
04-05-2008, 01:06 PM
Just the opposite, the high end builders have a far better customer base.
Still this market correction will shake out the weak and/or overextended buyers
and builders. The strong will survive as they did in the 70's, late 80's- early 90's, remember the luxury tax bs??

sinjun
04-05-2008, 04:38 PM
its probably the ones in the middle that will be hurt the most. the rich will still by the high end boats, and the middle class that use to be able to afford the mid tier boats will be forced down to the lower tier boats.

tprice
04-05-2008, 04:47 PM
It will be like the homebuilders, when the economy is great they pop up every where and are a dime a dozen but the ones that react and keep up with the market and keep costs
down while business drops and have held onto their profits the last few years will make it through

Those that are loaded with employees and do not adjust will not make it.

Sad but just the evolution of the business cycle

LI Sound Grunt
04-05-2008, 04:56 PM
This will leave an opening for the Chinese to get into the market. Here is their new boat, the "Somtinwon" aka "chinablojob". You can get a Mautsedinghy. This rig is fu-injected and can be your for less noodoes den you may tink. You see Its all a matter of bawance of payments and twade soupwus. Wawwyworl will be the ownwe deawa.

33632

wow, wow, wou you bough

Just1more
04-05-2008, 05:08 PM
tprice - 4/5/2008 7:47 PM It will be like the homebuilders, when the economy is great they pop up every where and are a dime a dozen but the ones that react and keep up with the market and keep costs down while business drops and have held onto their profits the last few years will make it through Those that are loaded with employees and do not adjust will not make it. Sad but just the evolution of the business cycle

Well put! ../images/emoticons/thumbsup.gif

jigger
04-05-2008, 05:52 PM
I went to pickup my boat at the shop last week. I asked the shop manager how they made out at the Boston show on selling. He told me they only sold 5 boats. We as 2 years ago they were selling 40 or more.

Tireless
04-05-2008, 06:25 PM
Good brands will last, marginal brands may drop. Just as the financially prudent companies (low fixed costs, flexible work force, previously funded capex program, debt free, working capital flush, strong brand recognition) will survive.

CMP
04-05-2008, 07:01 PM
Survival of the fittest, something so antithetical to the leftist imbeciles around us that they can't deal. I guess it's because most of them are far from the fittest that they'd not survive...

CMP

Porkchunker
04-05-2008, 07:15 PM
It will be interesting to watch the next 12 months. By then, we'll know which ones are smart.

Dave

aka

CMP
04-05-2008, 07:30 PM
Hunter is 100% right. Just as in housing, buyers of $1mm+ boats pay cash, no financing, so they will do well as it always is. Ot's no surprise that the largest fortunes in the states were born out of the depression when ppl bought real estate. It cannot lose long-term, trust me, I'm not like the others...

CMP

Kajun
04-05-2008, 07:38 PM
i love it...watching the same people that stuck their nose up at me....foreclosing on their houses..having to sell their boats....I say..bring on the recession and lets watch the survival of the fittest...:)...HELOCS for everyone!!!!

Eyeball
04-05-2008, 11:04 PM
Porkchunker - 4/6/2008 11:15 AM

It will be interesting to watch the next 12 months. By then, we'll know which ones are smart.



It will be interesting to see what is still around in 6-mons. Projections say Oct 2008. For the first time ever they are specific.

49erJim
04-05-2008, 11:23 PM
Kajun - 4/5/2008 7:38 PM

i love it...watching the same people that stuck their nose up at me....foreclosing on their houses..having to sell their boats....I say..bring on the recession and lets watch the survival of the fittest...:)...HELOCS for everyone!!!! "I LOVE IT" What do you love??? Are you kidding me?

surfncnow
04-06-2008, 12:25 AM
talk about doom and gloom. After reading this thread you would think the sky is falling..........

ctoolman
04-06-2008, 04:58 AM
makes you want to put 1 in the chamber... :(

joenew61
04-06-2008, 07:16 AM
One way or the other, things will miraculously "get better" the day after election day.

okletsfish
04-06-2008, 08:57 AM
Joe ain`t that the truth!!One thing for sure I`m not hopping out of any window.

Brett1
04-06-2008, 09:03 AM
joenew61 - 4/6/2008 7:16 AM

One way or the other, things will miraculously "get better" the day after election day.

There is a lot of thruth in that statement. The fact is that many people are just adding to the problems because of a lack of confidence in this administration. Rightfully so, they have failed in almost every regard. A change will probably bring about a boost in confidence which will result the economy turning somewhat, regardless of actual policy change.

bobb
04-06-2008, 10:08 AM
d-hlaw - 4/6/2008 12:03 PM

joenew61 - 4/6/2008 7:16 AM

One way or the other, things will miraculously "get better" the day after election day.

There is a lot of thruth in that statement. The fact is that many people are just adding to the problems because of a lack of confidence in this administration. Rightfully so, they have failed in almost every regard. A change will probably bring about a boost in confidence which will result the economy turning somewhat, regardless of actual policy change.

"People adding to the problems because of a lack of confidence in this administration?" ;?

Now that's a first.

LI Sound Grunt
04-06-2008, 02:41 PM
bobb - 4/6/2008 1:08 PM

d-hlaw - 4/6/2008 12:03 PM

joenew61 - 4/6/2008 7:16 AM

One way or the other, things will miraculously "get better" the day after election day.

There is a lot of thruth in that statement. The fact is that many people are just adding to the problems because of a lack of confidence in this administration. Rightfully so, they have failed in almost every regard. A change will probably bring about a boost in confidence which will result the economy turning somewhat, regardless of actual policy change.

"People adding to the problems because of a lack of confidence in this administration?" ;?

Now that's a first.

I think this is another way to blame the left wing liberal media - (the messenger) :grin:

Yet another neocon newspeak euphemism :grin

Porkchunker
04-07-2008, 07:47 PM
Credit fundamentals are not good...regardless of who (left or right) puts the spin on it. Bankers and economists say we are only 1/2 way through the bloodletting.

I'm not jumping out of any windows either. I've had my house since '84 and I'm down to my last 5 years of mortgage payments. Boat is paid off. Vehicles are paid off. No credit card balance. Except for high cost of fuel, life is good.

Can't say that about my neighbors or peers who seem to be in over their heads...bought too many toys on credit they couldn't afford. Now the chickens are coming home to roost.

Regardless of the cause (mostly greed in this case), neither the left or right will be able to fix it. Going back to 10%-20% down and verified income is more likely to fix it in the long run than having taxpayers bail out banks and homeowners.

Back to the question...if I wanted to buy a boat from a manufacturer that will still be around to service it in a few years...which ones should I be leery of?

Dave

aka

wbyrnes
04-08-2008, 03:46 AM
This is much different times than the late 80's early nineties.Yes the dollar was weak but not like today.Also fuel price was not the issue it is today. The next 3yrs will unfortunately break the entire industry. The backbone of the industry, you and I will be forced to cut back spending. The industries profit margion can not survive. The com. fishing industry is already on the brink of colapse because of fuel prices. The rec. boating industry will follow. As stated above when the dust settles some people will shine, it just wont be anyone involved in the boating industry on the retail or service end. Enjoy every trip out this year. ;)

joenew61
04-08-2008, 01:47 PM
I don't think what happens to the industry is going to affect the majority of boaters for the worse - it just means there will be 20% fewer of us. While it makes it harder to sell a boat, it makes it cheaper to buy a boat, and whether you are trading up or down, that means it will cost relatively less to do it. Slip spaces and pricing will be better. There will be fewer boaters clogging up the fishing and cruising spots. Boat manufacturers will have to compete on service and support or go out of business. Even the parts suppliers that sell to manufacturers and boaters will have to lower prices and be rationalized.

That's why my answer to the OP's question is that the survivors are going to be the companies that provide value - whether it be low cost and decent quality, or medium high cost and superior service. The ones in the middle are in trouble, especially the large sized boat manufacturers (30'+) that do not compete on quality and service. The latter will be competing against used boats from companies with upper end service and quality, where there will be a relative glut - few boaters trading up and many trading down or out.

Companies like Luhrs, Silverton, Rampage, Carver, Riviera will have a hard time adjusting and finding buyers for their new boats. I think the CC and small express builders should be able to downsize their operations, but the ones that don't have strong dealer networks that can survive on their service revenue will scramble to keep their distribution channels. Any company that is known as a pure price boat with "me-too" styling will be in trouble.

Companies like Cabo and to a lesser extent Viking will have to recalibrate their pricing strategy, but aren't going anywhere. Grady White, Pursuit, Tiara, and the other independents that are built on a commitment to customer service will likely contract, since the trade-up velocity of their loyal customer base is going to be much slower.

Even with the higher cost of fuel, I didn't hesitate to buy a new boat, because in the big picture, it is still less than 20% of the cost of owning a boat, and there are offsetting advantages as I mentioned above. I am not going to make a decision based on the assumption that things will be bleak for years, because they never are. However, I went with a new boat from Tiara in order to insulate myself from the potential reaction to the market of a builder that was less than fully committed to customer service.

For the record, my previous point about things getting better after the election (note I said election and not inauguration), refers to the exaggeration of the problems we have. For the vast majority of Americans that did not speculate on real estate or buy with no money down at 2.9% introductory rates, there is no problem other than the fear being spread by the media. The only upside we have in getting Bush out of office is the remote chance of someone doing something about the artificial bubble in oil prices, which at almost $400 billion a year is costing the average American far more than the bursting of the real estate bubble did.

bmkshort
04-08-2008, 01:58 PM
I'm no expert on this but my guess would have alot riding on the builder's dealer network.

The stronger dealers will continue to sell as the weaker ones will fall . I don't care what boat builder
it is, if they don't have good dealers, they may fall with them. The dealers are the ones on the front
lines. If they can't sell, the builder can't build.

iguana
04-08-2008, 04:30 PM
The only sure thing about this thread is that baoting is highly cyclical and will see amplification of any economic downturn. I would speculate that structurally this downturn, if it happens (i.e. the liberal media pulls it off haha), will spank the middle class and the upper class will skate through relatively unscathed and may come out better. Poor don't buy late model boats anyway. This would seem to agree with the consensus here that lower tier brands would suffer the most.

There is no doubt that the large companies like Brunswick are feeling the pain now. The question is how bad will things get? I doubt that anyone can answer this question definitively, but if I were in the market for a new boat right now I would be looking very hard at what boats were tied up at docks in places like Nantucket since the brands the rich are loyal to are the most likely to survive.

One thing is for sure, the economy, tight credit and fuel prices are the perfect storm for the industry. At $1500 to fill the tank I am starting to consider what offshore trips are worth. Slip are suddenly easy to come by in the Northeast. And I guarantee that most bayliners used to be bought with credit.

Porkchunker
04-08-2008, 05:22 PM
By Brett Rowland
for The Northwestern

Mercury Marine laid off 50 salaried employees Wednesday as the boating industry continues to founder.


There are other signs that the tide is running the wrong way for Mercury Marine’s parent company, Brunswick.

Brunswick announced plans last week to shut down production of Baja boats in Bucyrus, Ohio, by the end of May. Some 285 people will lose jobs when the plant closes, according to the company’s Web site. The shutdown came in advance of plans to sell the Baja to Fountain Powerboat Industries, Inc., of Washington, N.C.



That is one...and the economists tell us we are only 1/2 of the way into this downturn.

Dave

aka

Lat25
04-11-2008, 08:37 AM
With the exception of ultra high end such as Bertram and Hatteras, all will feel a degree of pain in the coming and inevitable shakeout. My guess is a solid third of the current builders simply will not be around three years down the road. Niche products such as Albury, Intrepid, and Chris Craft have a much better shot, imo. Suffice it to say the 33CC with trips leveraged out with home equity loans are a thing of the past. Storm clouds ahead for every facet of this industry.

kloweree
04-11-2008, 10:51 AM
So if marginal brands will fall how do we explain brands like Bayliner/Angler/Luhrs/Sea Fox /Trophy.....
all suriving many many years through good and bad economies......in fact Bayliner/Angler /and Luhrs have been around over 30 years through thick and thin. I believe the custom lines for billionaires will do fine...but the High end lines will be going through a real downturn like Contender and Regulator.......Grady even will take a hit because those who wanted a Grady will have to settle for a Seaswirl....or a Sailfish........My neighbor was looking at the Pursuits last year.......now he is looking at Wellcraft and Sailfish. I guess it will all shake out soon though....over the next 6 months the boat manufacturers
will be either making it or not. just have to wait and see.


P.S. I think lines like Steiger and Parker will survive fine because they were never ridiculously overpriced to begin with.

bquick
04-11-2008, 01:28 PM
I'm thinking (and hoping) that small builder like STAMAS (oldest independant in US)will survive. I think they are more resilient. Easier to cut back and wait it out as they have had to do in the past.

Redfish44
04-11-2008, 05:10 PM
I think Fountain will survive. I got a flyer from Reggie and his brochure compared his boat against Grady White. It did compare fuel consumption between the two boats. His 3 Mercs getting better gas "hourlage" than a boat the same size with 2 motors.

LI Sound Grunt
04-12-2008, 05:35 AM
Redfish44 - 4/11/2008 8:10 PM

I think Fountain will survive. I got a flyer from Reggie and his brochure compared his boat against Grady White. It did compare fuel consumption between the two boats. His 3 Mercs getting better gas "hourlage" than a boat the same size with 2 motors.

Wow did they really use the word hourlage!!??

Anyway that makes sense. Of course. But at what cost? If the 2 engine rig costs 20000 for 1000 hours and the 3 engine costs 30000 for 1500 hours, the cost per hour is the same. Does the tre set up get 50% more hours? If you add the extra cost of the extra fuel the breakevenpoint is even higher.



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