Archive for » September 20th, 2013«

Boat sales in U.S. confirming a rising economic tide

More Americans took to the water in new boats this summer, often buying smaller, less expensive models, as the industry is showing signs of a recovery.

Purchases of powerboats which include yachts, pontoons and fishing vessels rose 18.9 percent in July from a year earlier, according to figures from Statistical Surveys Inc., a research company based in Grand Rapids. Even with mild summer weather and a cold winter, year-to-date sales are up 3.1 percent, the data show.

The industry is performing pretty well again after bottoming in 2010, with smaller boats those less than 30 feet in length showing particular strength, said Tom Walworth, the companys president. This category has rebounded about 13 percent since 2010, outpacing the 9.3 percent growth rate for larger craft, a sign theres been a lasting shift in consumer preferences since the 18-month recession ended in June 2009, he said.

What really stands out in the economic recovery thus far is that demand for smaller boats is coming back pretty nicely, said Michael Swartz, an analyst with SunTrust Banks Inc. in Atlanta. Thats partly because very lax lending standards before the recession have become more restrictive, so people are buying what they can afford, he said.

Boat purchases are highly correlated with consumer confidence and gross domestic product, according to Thom Dammrich, president of the National Marine Manufacturers Association in Chicago. Sales arent near the previous peak yet because the economy is growing only modestly and the industry performs best when annual GDP exceeds 3 percent, he said.

Federal Reserve officials project the U.S. will expand 2 percent to 2.3 percent this year, according to their central- tendency estimate released Sept. 18, which excludes the three highest and three lowest estimates. In June, the range was 2.3 percent to 2.6 percent.

If you believe GDP will further accelerate in this expansion, then boat sales should also grow faster, as theyve done in past economic cycles Dammrich said.

Many buyers are trading down to less expensive alternatives including pontoons and aluminum fishing craft both of which have experienced strong customer interest recently, Swartz said. Brunswick Corp., the leading U.S. boat manufacturer, has responded by increasing its production of these vessels, he said.

Theres also a psychological aspect at play, according to Robert Dye, chief economist at Comerica Inc. in Dallas. As the economy hit a very tough patch, some people didnt want to flaunt their money, he said, adding that this helped to curb spending on expensive, non-essential goods and services. There was some pushback against those types of public displays of wealth.

Even though many affluent Americans were insulated from the impact of the slowdown, they just didnt feel it was prudent to buy an expensive boat, said Debbie Reynolds, owner of Passage Yachts, which operates two dealerships in the San Francisco area. This made for a very odd environment for selling compared with the two previous recessions she has weathered during her 30 years in the business.

Some consumers justified their purchase by choosing a used yacht or powerboat, helping to propel the companys brokerage business up 25 percent during the past five years, Reynolds said. Now the market for new boats is slowly recovering, she added.

The boost in demand has been helped by the rebound in stocks, housing and consumer confidence after discretionary spending was hit hard by the recession, Dye said.

The Standard Poors 500 Index has risen 155 percent since it bottomed in March 2009, while sentiment measured by the Bloomberg Consumer Comfort Index has improved almost 25 points since its mid-recession trough. Meanwhile, the median price of an existing house jumped 14.7 percent to $212,100 in August from a year earlier, the biggest increase since 2005, according to data from the National Association of Realtors.

Americans spent about $13.9 billion on new and used pleasure boats in July on a seasonally-adjusted annualized basis, up 28 percent from a year earlier, based on the most- recent data available from the Commerce Department. Since the recession ended, this category of personal consumption rose 29 percent, compared with 19 percent and 14 percent following the eight-month slumps in 2001 and 1990-1991.


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Enjoy boats, live music at 4th annual Boating & Outdoor Festival



Bob and Judy Bitchin are sailing personalities who travel the world and publish a lifestyle magazine a perfect fit for the 4th annual Boating Outdoor Festival at Lake St. Clair Metropark that runs through Sunday.

Weve sailed the world and people are nicer on the water, said Bob Bitchin, 69, a Californian who pointed out Macomb County has the third largest registered number of boaters in the U.S.

When youre on the water you say to yourself: This is a dream.

To continue the good times at the festival that started Thursday, Bitchin will host a Cruising Outpost Party at 7:30 p.m. Saturday at the festivals Tiki Bar where free pizza, pop and beer will be available while supplies last.

But thats just one thing to do out of at least a hundred other events at this weekends show.

All these boats are beautiful, said John Palmer of New Baltimore, who was joined by his wife, Paulette, for Thursdays opening day. A lot of them are more than I can afford, but we are looking. You get an idea of what you want and the prices in the fall are good. If you like boats, this is the place to be.

Marinas such as Beacon Cove in Harrison Township, boat manufacturers such as Freeman Eckley and yacht sales such as Galati based at MacRay Harbor are everywhere at Lake St. Clair Metropark.

Theres also a Kids Zone, live music (Charlie Salaz and Caribbean Blue Duo), great food and a beer tent.

Boat shows are the greatest marketing tool we have, said Nicki Polan of Michigan Boating Industries Association, the sponsor of the festival who noted the South Marina is filled with hundreds of boats on land and water. There are floating docks in the South Marina this year because of the demand for boat slips.

Folks attending the festival this week start with a tour of must-see organizations under one tent, including Save Our South Channel Lights, which will be renovating its second Civil War-era lighthouse.

This is the smaller of the two lighthouses its been listing for a year and about ready to fall in the water, S.O.S. volunteer Todd Brady said. Weve been working on getting the funds for four years. We raised $60,000 and the state matches that.

Gerry Santoro and Brad Simmons from Lake St. Clairs Tourism Initiative Circle the Lake Tour handed out free brochures showing where to go for recreation on Lake St. Clair.

Circle the Lake Tour is working in concert with (County Executive) Mark Hackels Blue Economy initiative, Santoro said. We have a world-class lake here and the brochure shows why.

The Michigan Department of Natural Resources has the new Park Visitor Welcome Map for 2013-14; the Macomb County Sheriffs Marine Patrol is handing out stickers and advice; and the Huron-Clinton Metropolitan Authority is showing off its Mobile Learning Center this week.

We go to events and schools in the five-county area where our Metroparks are, said Victoria Sluder, noting the mobile truck has been around since 1996. We have Michigan-related themes from nature to cultural events.

The queen of the show the largest and most expensive boat at the Boating Outdoors Festival is a 62-foot Azimut from St. Clair Yacht Sales in Detroit with a price tag of $1.395 million. Attendees must take their shoes off before entering the boat that is a beautiful floating condominium with three bathrooms.

Hopefully we sell everything we brought, St. Clair Yacht Sales owner Jay Cooper said.

Dave Wilson of Port Huron summed up his feelings about the Boating Outdoor Festival on Thursday.

Im looking for a pontoon boat, Wilson said. The dealers have been friendly; they have some really good deals; and next years models are here.

And dont forget the good food, live music and beer tent.

Admission is $10 for adults; children 12 and under are free. Parking is $5 or free for those with Metropark permit. Hours are noon to 7:30 p.m. today, 11 a.m. to 7:30 p.m. Saturday and 11 a.m. to 6 p.m. Sunday.

For more information, visit www.boatingandoutdoorsfest.com.


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Boat Sales Buoyed as Americans Downsize Fleets: EcoPulse

More Americans took to the water in
new boats this summer, often buying smaller, less expensive
models, as the industry is showing signs of a recovery.

Purchases of powerboats — which include yachts, pontoons
and fishing vessels — rose 18.9 percent in July from a year
earlier, according to figures from Statistical Surveys Inc., a
research company based in Grand Rapids, Michigan. Even with mild
summer weather and a cold winter, year-to-date sales are up 3.1
percent, the data show.

The industry “is performing pretty well again” after
bottoming in 2010, with smaller boats — those under 30 feet in
length — showing particular strength, said Tom Walworth, the
company’s president. This category has rebounded about 13
percent since 2010, outpacing the 9.3 percent growth rate for
larger craft, a sign there’s been a lasting shift in consumer
preferences since the 18-month recession ended in June 2009, he
said.

“What really stands out in the economic recovery thus far
is that demand for smaller boats is coming back pretty nicely,”
said Michael Swartz, an analyst with SunTrust Banks Inc. (STI) in
Atlanta. That’s partly because “very lax” lending standards
before the recession have become more restrictive, so people are
buying what they can afford, he said.

High Correlation

Boat purchases are highly correlated with consumer
confidence and gross domestic product, according to Thom
Dammrich, president of the National Marine Manufacturers
Association in Chicago. Sales aren’t near the previous peak yet
because the economy is growing only modestly and the industry
performs best when annual GDP exceeds 3 percent, he said.

Federal Reserve officials project the U.S. will expand 2
percent to 2.3 percent this year, according to their central-tendency estimate released Sept. 18, which excludes the three
highest and three lowest estimates. In June, the range was 2.3
percent to 2.6 percent.

“If you believe GDP will further accelerate in this
expansion, then boat sales should also grow faster, as they’ve
done in past economic cycles” Dammrich said.

Many buyers are “trading down” to less expensive
alternatives — including pontoons and aluminum fishing craft —
both of which have experienced strong customer interest
recently, Swartz said. Brunswick Corp. (BC), the leading U.S. boat
manufacturer, has responded by increasing its production of
these vessels, he said.

‘Very Tough’

There’s also a psychological aspect at play, according to
Robert Dye, chief economist at Comerica Inc. (CMA) in Dallas. As the
economy hit a “very tough” patch, some people didn’t want to
flaunt their money, he said, adding that this helped to curb
spending on expensive, non-essential goods and services. “There
was some pushback against those types of public displays of
wealth.”

Even though many affluent Americans were insulated from the
impact of the slowdown, they “just didn’t feel it was prudent”
to buy an expensive boat, said Debbie Reynolds, owner of Passage
Yachts, which operates two dealerships in the San Francisco
area. This made for a “very odd environment for selling”
compared with the two previous recessions she has weathered
during her 30 years in the business.

Some consumers justified their purchase by choosing a used
yacht or powerboat, helping to propel the company’s brokerage
business up 25 percent during the past five years, Reynolds
said. Now the market for new boats is slowly recovering, she
added.

Rebounding Confidence

The boost in demand has been helped by the rebound in
stocks, housing and consumer confidence after discretionary
spending was hit hard by the recession, Dye said.

The Standard Poor’s 500 Index has risen 155 percent since
it bottomed in March 2009, while sentiment measured by the
Bloomberg Consumer Comfort Index has improved almost 25 points
since its mid-recession trough. Meanwhile, the median price of
an existing house jumped 14.7 percent to $212,100 in August from
a year earlier, the biggest increase since 2005, according to
data from the National Association of Realtors.

Americans spent about $13.9 billion on new and used
pleasure boats in July on a seasonally-adjusted annualized
basis, up 28 percent from a year earlier, based on the most-recent data available from the Commerce Department. Since the
recession ended, this category of personal consumption rose 29
percent, compared with 19 percent and 14 percent following the
eight-month slumps in 2001 and 1990-1991.

Below Peak

Even so, total expenditures on all new and used watercraft
— which includes sailboats, canoes, powerboats and yachts —
are more than $4 billion, or 23 percent, below the 2007 peak,
based on Commerce data. The market for new powerboats also is
sluggish, as 2012 total marine sales — at about 196,000 units
— were almost half of the nearly 384,000 sold in 2006, Walworth
said. This segment has been marked by “one of its slower
recoveries,” Swartz added.

Nationwide sales have been “a bit choppy” this year
primarily because of bad weather early in the selling season,
Swartz said. While purchases started to pick up later in the
summer, dealers and manufacturers may have to wait until 2014
for consumers to unleash more pent-up demand, he said.

That will help fuel revenue for Brunswick and MarineMax
Inc. (HZO)
, the leading U.S. boat dealership, said Swartz, who
maintains buy recommendations on both.

Expanded Products

Brunswick, based in Lake Forest, Illinois, has successfully
expanded its offerings of smaller, less expensive watercraft —
a category that’s started to recover — while MarineMax is
largely dedicated to stocking the largest boats, sales of which
haven’t suffered as much as their mid-sized counterparts, he
said. “These companies have been rejiggering their portfolios
to meet the shift in demand from consumers.”

This hasn’t gone unnoticed by investors. Brunswick shares
have outpaced the Russell 2000 Index (RTY) by about 10 percentage
points since Dec. 31, while Clearwater, Florida-based MarineMax
has led the benchmark group by almost 15 percentage points.

Boating is one of the “ultimate gauges of discretionary
spending” because it requires a financial and lifestyle
commitment, said Jack Ablin, who helps oversee about $66 billion
as chief investment officer of BMO Private Bank in Chicago. Even
if consumers are opting for less-expensive models, this still is
an encouraging sign that middle-class Americans are feeling more
confident again, he said.

Middle-Class Activity

Three-quarters of U.S. boaters have household income of
less than $100,000, making this a “predominantly middle-class
recreational activity,” Dammrich said, adding that 95 percent
of watercraft in use are less than 26 feet long.

In addition, vehicle sales bode well for this industry,
even if “the boat has to take a back seat” in terms of
purchasing priorities, Ablin said. Cars and light-duty trucks
exceeded a 16 million seasonally adjusted annualized pace in
August for the first time since 2007.

A powerboat with an outboard motor and trailer could retail
for an average price of $30,000 to $32,000, according to
Dammrich. “It’s not a small purchase for most Americans,”
which helps explains why the share of pre-owned sales has risen
to 82 percent, up from a pre-recession average of 72 percent, he
said.

The average age of a boat in the water is more than 20
years, so the prospect of consumers upgrading to newer models is
encouraging for manufacturers and dealers, Swartz said. “At
some point, owners can’t justify putting additional money into a
boat that old.”

‘Really Popular’

Business is improving at Passage Yachts, with sales already
doubling compared with last year, Reynolds said. Boats between
41 feet and 45 feet — which retail for an average price of
$250,000 to $350,000 — have been “really popular,” driven by
consumers who put off purchases for several years. Reynolds
estimates about 65 percent of her company’s customers pay cash.

Accelerating sales nationwide late this summer suggest the
slowdown that rocked the industry could be over. Purchases of
pontoons — which can carry up to 16 people and offer features
such as grills or built-in coolers — are approaching pre-recession levels again, Swartz said. In addition, if attendance
at boat shows is any indication, there are better days ahead,
Dammrich added.

A recent show in Tampa was “very successful,” marked by
strong sales leads, he said. “People are really interested in
buying boats again, and they’re asking questions a buyer would
ask.”

To contact the reporters on this story:
Anna-Louise Jackson in New York at
ajackson36@bloomberg.net;
Anthony Feld in New York at
afeld2@bloomberg.net

To contact the editor responsible for this story:
Anthony Feld at
afeld2@bloomberg.net


Enlarge image
Boat on Display

Boat on Display

Tim Boyle/Bloomberg

Visitors sit in a boat on display at the 83rd annual Chicago Boat, Sports and RV Show in Chicago.

Visitors sit in a boat on display at the 83rd annual Chicago Boat, Sports and RV Show in Chicago. Photographer: Tim Boyle/Bloomberg


Enlarge image
Fishing Boats

Fishing Boats

Mark Elias/Bloomberg

A pair of Rybovich Sport Fishing boats sit in dry dock awaiting final completion during maintenance visits in North Palm Beach, Florida.

A pair of Rybovich Sport Fishing boats sit in dry dock awaiting final completion during maintenance visits in North Palm Beach, Florida. Photographer: Mark Elias/Bloomberg


Enlarge image
Boat Sales Buoyed as Americans Downsize Fleets: EcoPulse

Boat Sales Buoyed as Americans Downsize Fleets: EcoPulse

Shopping for a powerboat in North Miami, Florida. Photograph by Joe Raedle/Getty Images

Shopping for a powerboat in North Miami, Florida. Photograph by Joe Raedle/Getty Images


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Sailing

Oracle won the start with a shrewd manoeuvre that pushed New Zealand away from the line, and then showed impressive speed on the critical upwind leg before dashing home for the victory.

New Zealand has mostly dominated the best-of-17 finals series and now holds an eight to two lead.

“We know the nation is watching us, but once you get into the start box you don’t really think about that,” said Grant Dalton, managing director of the New Zealand team and a grinder on their 72-foot catamaran.

The Kiwis turned in the latest of several textbook performances in moving to the brink of victory on Wednesday, and seemed to have beaten back an Oracle revival that saw the U.S. boat win two thrilling races over the weekend.

But Thursday’s first race suggested the momentum could be shifting once again as Oracle showed the speed, tactics and boat handling it needs to match the polished Kiwi team.

“It’s quite unbelievable that the two boats are so close in performance across a wide range of conditions,” New Zealand skipper Dean Barker said after Wednesday’s match-up.

New Zealand was forced to wait for a final crack at the Cup after a second race scheduled for Wednesday was canceled due to a strong sea breeze and outgoing tide that made conditions on San Francisco Bay unsafe for the high-performance but fragile AC72 catamarans.

Ellison’s team won the America’s Cup in Valencia, Spain in 2010 and with it the right to set the rules for this year’s competition, including choosing to race on the AC72s and to hold the regatta on windy San Francisco Bay.

The Kiwis first won the America’s Cup in 1995 and successfully defended it in 2000 before losing the trophy three years later to Swiss biotechnology billionaire Ernesto Bertarelli’s Alinghi in a disastrous campaign that left the team in shambles.


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