Boatbuilding hits the rocks
Weak economy, gas prices take wind out of industry's sails
CHICAGO - Since 1973, Hunter Scott had made sailboats, powerboats, and custom-made lobster boats.
But he decided to close his Bourne, Mass., shop in December, lay off half his staff, and switch to cabinetry work as orders for the $300,000 vessels all but dried up.
"I had a lot of fun in the marine industry," he said. "But the economy has taken its toll."
Across the country, the $40 billion boating industry is struggling to weather a season of gloomy news.
"When a recession first hits, the boating industry - like many of the other leisure industries - is the first to get hit and the last to bounce back," said Scott, 57. "Until that happens, it's going to be a little slow around the marinas."
A triple threat of falling consumer confidence, rising gas prices, and the nation's economic downturn has pummeled the industry, changing the boating habits of recreational skippers while forcing layoffs, plant closures, and corporate reorganizations the likes of which haven't been seen in nearly two decades.
"It's a challenging time," said Bill McGill, chairman and president of Clearwater, Fla.-based MarineMax Inc. The nation's largest recreational boat and yacht retailer recently laid off 10 percent of its workforce as profit fell nearly 50 percent during the last fiscal year.
Industrywide, sales of new boats have been slipping virtually every month since mid-2004, when the nation's consumer confidence began to dip. Sales closed out the year down nearly 15 percent compared to last December, according to market research data.
Even more troubling: souring sales, which began with smaller and cheaper boats and progressed to 30-foot midsize models, are beginning to infiltrate the yacht market, where yearslong waiting lists for the 50-foot-plus multimillion dollar vessels are evaporating, said Marisa Thompson, an analyst at Morningstar.
That's an ominous sign that even the wealthy are beginning to watch their pennies.
"A lot of people are holding out hope that things will turn around, that in another six to eight months they'll get a glimmer of a turnaround," Thompson said. "But that's up in the air right now. I don't see the catalyst on the horizon."
Since the beginning of 2007, Lake Forest, Ill.-based Brunswick Corp. - which manufactures more than a dozen boat brands including Bayliner, Sea Ray, and Hatteras - closed or revealed plans to mothball seven factories and laid off more than 1,300 workers as it realigns its business and cuts boat production by more than 10 percent.
The company's boat segment lost $81.4 million in 2007, weighed down by a hefty one-time charge and anemic sales.
"We're running our company as if 2008 is going to be down and when we get to midyear, we'll begin to look at 2009 and we'll do what we have to do," said chief executive Dustan McCoy.
