Boat U.S. - March 2008 - (Page 45)

but the marine industry has been slogging through its own private recession for the past year. There is little indication that things will change anytime soon. Headlines in the boating press during 2007 reflected the grim reality: “Boat Repossessions on Rise in the Rust Belt,” “Flat Is The New Up,” “Anxious Industry Hopes for Strong Lauderdale Show,” “2006 Fuel-Price Spiral Left Its Scars on Industry.” Signs of growing turbulence were common throughout 2007. Some boatbuilders — even major players like Brunswick and Genmar — laid off workers because declines in boat sales reduced the demand for new product. Manufacturing plants were closed or moved to areas — sometimes outside the U.S. — where labor rates and the cost of doing business were lower. As if that’s not enough bad news, Bank of America Securities analysts weighed in last fall with, “Factors such as the housing slowdown, increased incidents of mortgage defaults, growth in the used boat market and low consumer sentiment are affecting the overall marine industry. “The current expectation in 2007 for industry boat retail sales is roughly 260,000 units, which is below the lowest level of 277,000 units in the early 1990s, and 11% less than the 296,000 units sold in 2003, the last trough year,” Bank of America reported. According to statistics published by the National Marine Manufacturers Association (NMMA), the industry typically operates in a five-year cycle of three “up” years and two “down” years. However, the most recent cycle was three down years and two up years. A bit of marine industry history helps to put the present situation in perspective. The last major recession to hit the marine industry occurred in the late 1980s and lasted through the early 1990s. At the time, the industry looked very different, populated as it was by conglomerates Brunswick, Genmar, Tracker Marine and Outboard Marine Corporation (OMC). Many small, independently owned boatbuilders filed for bankruptcy. Other small independents, like Cobalt, Grady-White and Catalina Yachts, rode out the bad times through a combination of consistent product quality and creative responses to dealer and consumer needs. As the recession waned, Brunswick, Genmar and OMC strengthened by buying up boat makes so their product lines cover the gamut of low, middle and luxury fishing boats, runabouts and cruisers. Rather than trying to perfect the niche market, the thinking was that the conglomerates could offer something to appeal to every boat buyer. OMC went bankrupt and disappeared from the scene in 2000, but Genmar and Brunswick, along with Tracker, remain dominant. A few smaller conglomerates have formed: American Marine Holding (Donzi and Pro-Line), Luhrs Marine Group (Luhrs, Hunter, Mainship and Silverton) among them. In addition, many independent builders have allied into buying groups to take advantage of the kinds of discounts available only to the likes of Brunswick. So, is the industry healthier going into this latest recession? Lessons learned the hard way during the early 1990s recession include the importance of diversity in product lines, consolidation of physical plants and cost-cutting measures like group purchasing power and even overseas production. American builders are also exporting more boats than ever before, a trend that will probably continue as the dollar weakens against foreign currency. Along the way, the marine industry in general has revamped its customer service philosophy as a way to build loyalty and a repeat customer base. Positive change is most evident where consumers experience the lion’s share of their contact with the industry: at the retail level with their local boat dealerships and repair yards. Intense effort has been made to give customers what they want and this largely mirrors what they’ve come to expect from auto dealerships: stem to stern service. NMMA has responded by creating a dealer certification program and many forward-thinking dealers are using successful customer service models based on how auto dealers do business. Multi-site organizations like Westrec-owned marinas, which are found worldwide, Marine Max, with 85 locations throughout the U.S., and Passport Marine, with 10 locations along the East Coast, cover every aspect of boat ownership, from financing to one-on-one training, storage, repair and boat transport. Consumers are, of course, being hit by the same economic hardships faced by the industry. But, one segment that may not be feeling the pinch are baby boomers whose kids are grown and whose mortgages are all but paid off. That second home or a larger boat may be within reach. For these folks, this could be the year to sail away. — By Caroline Ajootian Consumer Alert Federal laws require marine manufacturers to issue defect recall notices when boats or related equipment contain “defects which create a substantial risk of personal injury” or when they do not comply with boat manufacturing regulations. The U.S. Coast Guard recently published the following defect recall notices. For more information about these campaigns, contact the manufacturers directly or go to the Coast Guard’s web site, uscgboating.org, or call 202-3721073. New recalls are listed monthly at the BoatU.S. National Recall Alert Registry, BoatUS.com/recall. American Honda Motor Co., 310-783-3402 (Recall 070050T) 2003-07 BF15D & BF20D outboard engines (19,454 units): Surface cracking of plastic fuel chamber material of Honda BF15D and BF20D outboard engines requires replacement with chamber made from different specification material. Cracks create risk of fire or explosion. Volvo Penta, 757-436-5100 (Recall 070045T) 3.0, 4.3 & 5.0 liter carbureted engines (non-sequential s/no range 4012177265 — 4012204622) equipped with Holley carburetors. These engines are installed in 2006 and 2007 model year boats. Holley Performance Products, Inc. informed Volvo that the metal alloy used to manufacture certain carburetor castings did not meet its specifications, allowing accelerated corrosion. The corrosion may cause particles of oxidized metal to mix with fuel inside the carburetor and block or open the fuel passages. Corrosion may also occur under the sealing gaskets and lead to leaking fuel, creating a risk of fire and explosion. Volvo is not aware of any fires or injuries that have occurred as a result of this defect, but owners should not operate engines until they are inspected by an authorized Volvo dealer. Carburetors must be replaced if they are marked with date codes between 3355 (Dec. 1, 2005) and 2436 (Aug. 31, 2006), see Volvo service bulletin 23-119 01. Replacements will be made at no expense to owners. BoatU.S. Magazine March 2008 45 http://www.BoatUS.com/recall

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Boat U.S. - March 2008 Contents Behind the Buoy BoatU.S. Reports Member Forum Cap'n Drew Sailing the Sidewalk Aviators Ahoy Docking and Duffing Waterfront Living: Charleston Waterfront Marketplace Grady Right 2nd Time Around DIY: Keeping the Water Out Hot Tips Boat Smart Ask Chuck Foundation Findings Tangled Line At Your Service Good Foundations BoatU.S. Exchange Behind the Boat Where Our Flags Fly

Boat U.S. - March 2008

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