Dammrich: Boat Makers Face ‘Cold, Dark Winter’
Editor’s Note: Thom Dammrich, president of the National Marine Manufacturers Association (NMMA) and current board chairman of the American Recreation Coalition (ARC), spoke this week at a National Marine Bankers Conference. The following account of his speech appeared in Soundings Trade Only e-newsletter. NMMA’s more than 1,400 member companies produce every conceivable product used by recreational boaters. An estimated 80% of marine products used in North America are produced by NMMA members. The association was formed in 1979 but traces its roots back to 1908.
Gross domestic product grew at an annualized rate of 3.5% in the third quarter,” said Thom Dammrich, president of the National Marine Manufacturers Association, Tuesday (Nov. 10) at the National Marine Bankers Association’s 30th annual conference in Hilton Head, S.C.
“That’s very positive,” Dammrich said.
In past recessions, the time lapsed between the peak in consumer confidence to the trough has been 26 to 35 months. “At the end of October, we’re in the 27th month (of depressed consumer confidence),” he said. “Sometime in the next three to eight months we’ll see consumer confidence turn up.”
Home prices rose 1.4% on a seasonally adjusted basis in the second quarter of 2009, the first increase since 2006. Auto sales are increasing over last year, as are recreational vehicle sales.
“We tend to follow the recreational vehicle industry by six months, and they started picking up in July,” Dammrich said. “We should begin to see boat product sales pick up in 2010.”
That said, Dammrich predicted dealers and manufacturers face a cold, dark winter ahead because so few boats are sold in winter.
“Some dealers and manufacturers are not going to make it,” he said.
He projects the industry will sell 135,000 boats in 2009 and about the same volume in 2010, but he says production should increase 160% to 135,000 in 2010, up from 52,000 this year.
He says manufacturers are going to have to figure out how to build for the peak selling season so dealers don’t have to carry a lot of inventory (floorplanning costs have soared.)
This will challenge both manufacturers and their suppliers. Lenders, who have tightened credit requirements to the point that many can’t qualify for loans, will have to help fuel the recovery.
“In fact, many believe the recovery of new boat sales and manufacturing will be paced by the availability of credit,” Dammrich said. “Without credit, the recovery won’t happen.”
Dammrich says manufacturers are looking for new business models: keeping dealer inventory low, selling larger models direct to the consumer, building to order, developing dealers who own more equity in their business, and cutting back boat shows from 300 to perhaps 30.
He says they are expensive and often don’t return to exhibitors a good return on investment. “We don’t need any more than 30,” he said.
“Ninety percent of boat shows need to go away.”