Troubled waters seen for pleasure-boat industry

The bad news from MarineMax was the latest sign the industry is taking on water. Late last year, Brunswick Corp., the world's largest manufacturer of recreational boats, said it would cut more than 600 jobs as it responded to falling demand for its products brought on by higher interest rates and energy prices and deteriorating consumer confidence.

The cuts came after the Lake Forest, Illinois-based company reported in October that its third-quarter earnings dropped 59 percent from a year earlier as the woes of the Detroit auto industry translated into "significant declines" in sales in the upper U.S. Midwest -- a key market for the pricey toys Brunswick makes.

Scanning the horizon, Dammrich at the NMMA says there are signs of light. Chief among them is the recent dramatic plunge in oil prices, which promises to lower the cost of all kinds of petroleum-based products the industry relies on, including fiberglass, resins and foams.

Lower crude prices also translate into lower fuel costs at the dock -- a small part of overall ownership costs, but one that can discourage first-time buyers from taking the plunge.

What's more, while the overall industry saw sales decline in 2006, some segments did quite well, including the ski- and wake board boat market, as well as the jet ski and wave runner markets.

While personal water craft typically sell for less than $10,000, the ski boats can easily top $70,000.

Looking out to 2008, Dammrich said manufacturers are optimistic the industry will rebound. That will mark the third year of the "Discover Boating" campaign, the industry's first- ever TV ad campaign.

Since the boat ads began airing in early April on CNN and other cable networks, Dammrich said about 6 percent of the target market has moved from being "not interested in boating" to "interested."

Since it typically takes two to three years for would-be buyers to go from "interested" to outright ownership, 2008 could be the year the campaign starts lifting sales.

In addition, Dammrich is confident the Federal Reserve will have eased rates and the economy begun to grow by 2008, if not earlier.

"The combination of those two things bodes very well for '08 and '09," he added.

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