Looking back, it was one year ago that our sense of financial security was shocked in the same way September 2001 shook our confidence in our national security. In September 2008 we were already experiencing a housing meltdown and a less-than-robust economy when . . . zap! The free fall of ’08 hit. Lehman Brothers tanked, AIG needed $85 million, Freddie Mac and Fannie Mae crashed, the auto industry and bank bailout plans were being rushed and massive amounts of Wall Street wealth disappeared with the nightly news.
We hoped most of that would be behind us by now. Unfortunately, a year later, despite a $700 billion TARP, a $1 trillion TALF, a $787 billion Stimulus Plan, $2.88 billion Cash for Clunkers among others, we’re still mired in the financial debris of rising unemployment, bank failures and bankruptcies.
But these are exciting times, too. We’re entering a period when we’ll redefine our industry and our position in the American life style. As we rebuild our economy, likely slowly and deliberately, we’ll have the opportunity to reset our marine businesses for future success. It’s predicted we’ll face a “new” America and, in fact, it’s already emerging. The free-spending, easy credit, caution-to-the-wind mind-sets of pre-2008 are gone. A leaner, meaner, frugal, tight-fisted generation is at hand and predicted to be with us for a long time.
For example, we’re suddenly saving in a big way. The savings rate has jumped from 2.6 percent a year ago to 4.2 percent and some economists expect a 6 percent rate soon. This is in spite of the fact that millions of people who’ve lost jobs or seen pay cuts are hard pressed to save anything. So, it’s obvious the majority still has disposable income but simply isn’t spending like they used to. They’re reducing excess, moving back toward basics, accepting the idea of living within their means and finding out life can still be satisfying.
Good business textbooks tell us there is no better time to reset and retool than during a recession. It’s the ideal opportunity to find things that don’t work or don’t sell and throw them out. Then, create and replace them with new ways to succeed. Sadly, our human nature reportedly prevents us from making major changes when things are go well. We get hung up with the old “if-it-ain’t-broke” thinking and we also fail to see the challenges or opportunities ahead.
So how will we redefine our industry? More specifically, how will dealerships be redefined? Sure, fewer manufacturers and dealers – that’s a given. But will the industry boil down to a few major production brands with all others more or less custom? Will the number of models be reduced? Will the race to build larger and larger models end? Will any manufacturers build affordable entry level boats to appeal to the new frugal spenders? Will dealers inventory more or less . . . small boats, large boats? Will single brand dealerships be more common? Will manufacturers go to just-in-time production – could they even survive doing so? Will builders sell direct? Will model years finally disappear? Will dealer agreements look more like franchise agreements? Will dealer territories be enlarged, clearly defined and guaranteed? Will consignment inventories become necessary? Will new credit sources and dealer floorplan programs emerge?
Fascinating questions, all. And now’s the right time to explore ideas and answers.