By Rick Barrett, Milwaukee Journal Sentinel
May 31–Sales of 18-foot aluminum boats are up 30% from a year ago, a hopeful sign that sales of other boats also could be on the mend.
Often used by anglers, small aluminum boats are a bellwether of the marine industry. When their sales increase, it’s a sign that blue-collar workers are more comfortable with spending and that other segments of boating will improve in following months.
The recent increase reflects sales of boats in the 18-foot range in the first three months of the year compared with the same period in 2009.
The uptick follows one of the worst periods in history for the recreational marine industry, when new boat sales sank 24% in 2009 and an estimated 30% of boat dealerships went out of business, according to the Chicago-based National Marine Manufacturers Association.
“There were too many dealerships to begin with. A little consolidation was probably healthy for the industry,” said NMMA President Tom Dammrich.
The increase in aluminum boat sales, while an impressive percentage, came off a very low point in 2009 and involves a narrow slice of the market.
Still, it’s an early indicator that a recovery is under way in recreational boating, Dammrich said.
“Consumer confidence bottomed out last September and has been increasing for eight months,” he said. “We are hearing that first-time buyers are definitely back,” seeking small, affordable boats.
Overall sales of new powerboats were down 12% in the first quarter of 2010, compared with a 35% decline in the first quarter of 2009. While the downturn has slowed a bit, only sales of aluminum boats have showed much strength.
Some of the strength is based on price, as an aluminum boat, trailer and engine package costing less than $10,000 is much more affordable than a fiberglass powerboat that can cost three times that amount.
Wisconsin ranked fourth in the nation in aluminum boat sales in 2009, behind Texas, Louisiana and Minnesota but ahead of Michigan, Florida, Alabama, Arkansas, Illinois and Georgia in that order.
Even in the worst of times, fishermen and pontoon boat owners — both in the aluminum watercraft category — cling to their recreation and continue to spend money.
Fishing and pontoon boots, the latter often called party barges, are deeply woven into the lifestyle here.
It’s especially true for people with waterfront homes, said Mark Duchow, owner of Duchow’s Boat Center in Pewaukee.
“Pontoon sales have been the strongest segment we have seen this spring, and 95% of those buyers live on the lake,” Duchow said.
Anglers will always be among the last to exit the marketplace, and the recent increase in aluminum boat sales is consistent with an upturn in fishing license sales.
Sales of used watercraft increased nearly 8% in 2009 to 780,300 units, indicating that people are bargain hunting.
“Coming out of a downturn, where consumer confidence has been shaken, people come back cautiously and conservatively,” Duchow said. “That generally means there is a shift toward purchasing used as opposed to new boats. It is usually what leads us out of a recession.”
There are shortages of used boats in some popular categories, including aluminum watercraft.
“A lot of the used inventory has dried up, and prices have risen again,” Dammrich said.
Seventy-five percent of boaters have a household income under $100,000, and 96% of powerboats on the water in 2009 were 26 feet or under, reflecting a marketplace awash in middle-class buyers.
Loan terms, especially down payments, are generally more stringent than before the downturn and won’t return to pre-recession levels. But the terms are moderating, and people are adjusting to the new requirements, Dustin McCoy, chairman and CEO of Brunswick Corp. said in a recent conference call with analysts.
Brunswick, the nation’s largest boat builder, is the parent of Fond du Lac-based Mercury Marine.
After allowing boat inventories to decline dramatically, Brunswick increased first-quarter 2010 production by more than 50% and increased wholesale boat shipments by more than 40% from a year earlier.
“Dealers are starting to see people show up, to begin the discussion about a boat,” McCoy said.
Brunswick said its first-quarter loss was much smaller than a year earlier, surprising Wall Street analysts. And the company said its quarterly revenue climbed for the first time in more than two years.
Sales were up 15% to $844.4 million — the first time revenue increased at the suburban Chicago company since the fourth quarter of 2007. Brunswick said its boat sales increased 19% and boat engine sales were up 30% in the quarter, compared with the same period a year earlier.
It’s too early to say whether boat sales will rebound to the highs experienced before the recession, when the industry produced 300,000 new boats a year and was awash in easy credit.
“I think a lot of people are skeptical about that,” Dammrich said. “The new ‘normal’ could be somewhat lower than what we experienced before. But clearly we are out of the recession, and we are starting to see some positive signs.”
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