Some in boating industry see sales increasing

updated 2:23 p.m. ET May 3, 2009

HAM LAKE, Minn. - The economy was a big part of why Soua Xiong held off buying a new fishing boat for the past couple years. Hoping the worst was over, he was ready to do more than look when he walked into the Rapid Sport Marine showroom.

"It's a good time to buy. It's time for a change and I think things are changing," Xiong said after signing the papers on a shiny new $22,000 Lund fishing boat to chase walleyes in the Land of 10,000 Lakes.

Boat dealers and manufacturers are counting on people like Xiong, 35, an oil refinery worker from Cottage Grove.

As Americans get ready to go fishing this summer, the U.S. recreational boat industry is struggling to stay afloat. Sales of new boats were down 30 percent last year and could fall another 20 percent this year, according to the National Marine Manufacturers Association. Boat makers have shut down or mothballed many factories and laid off thousands of workers. But as summer approaches, some dealers and others in the industry are upbeat, citing low gas prices, plentiful bargains, low interest rates and an uptick in showroom traffic.

The optimism isn't universal.

"Anybody that is in the business of making and selling boats right now is struggling," said Edward Aaron, an analyst with RBC Capital Markets who follows Brunswick Corp., the country's No. 1 boat builder. "The downturn that we've seen in this industry is not even comparable to anything we've seen in the past."

Still, Thom Dammrich, president of the NMMA, said he expects a boom in boating and fishing this summer, citing improving economic signs and consumer confidence. And he noted that national average gasoline prices, which soared to the high $3 range for most of last summer, are back down to the low $2 range.

Dammrich estimated new boat sales in 2008 were around $9.5 billion, a little over 200,000 boats. Dollar sales of used boats were about the same, but at roughly 600,000 units. And the association estimates that employment at boat and engine manufacturers is down 50 percent industrywide.

Irwin Jacobs, chairman and chief executive of Minneapolis-based Genmar Holdings Inc., the country's No. 2 boat manufacturer with 14 brands, is one of the cautious optimists. While Jacobs had no hard data to back it up, he said he felt things were looking up.

"For the first time in several months I have a sense, call it what you will, that we've seen the bottom of these horrible times, at least in our industry. ... We're actually seeing some lift out there, better than it has been in some time."

Privately held Genmar has laid off over 2,000 employees and has about 1,800 left. Jacobs wouldn't give current sales figures, but said sales before the slump had been about $1.1 billion to $1.2 billion a year. While sales of Ranger and other Genmar freshwater fishing boat lines are down only 27 to 28 percent, he said, other Genmar brands are off 50 to 55 percent.

Jacobs said he expects Genmar to be the industry's major beneficiary of competitors going bust because of its extensive dealer network and deep lineup of new models.

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