A View from Here

Bill's Sisson's weekly Trade Only blog

The math behind the new normal

Large numbers can be difficult to put into perspective. For example, we all know that the fleet of recreational boats is aging, but it might surprise you to see just how many older boats are out in the field, versus new ones.

Jack Ellis of Info-Link helped put that question into a context that I found illuminating by way of this simple chart.

What you quickly realize is just how many boats built in the late 1980s and ’90s, for instance, are still registered, an indication of the large production numbers from that period. Scroll over 1988, and you’ll find that there are roughly 369,000 boats built that year that are still registered and presumably still in use or capable of being put back on the water. That’s twice the number of registered boats from the last two model years combined.

And that vast herd of model year 1988 powerboats knocking around out there is 25 years old. From the large production years of 1995 and 1996, roughly 415,000 boats from each year are currently registered. They’re old enough to vote.

The average powerboat today is about 21 years old and the average sailboat about 28, says Ellis, managing director of the Miami-based market research and analytics firm. The average boat owner is in his or her early 50s.

The aging fleet and scarcity of late-model used boats is helping to drive new-boat sales, which climbed to a healthy 10 percent in 2012. For 2013, projections are between 5 and 10 percent. That’s all good.

Despite the large number of old boats still on registration rolls, we’re not adding new boats fast enough to offset the equally large number of older boats being sidelined, scrapped or mothballed.

As a result, the number of registered boats is in decline. They fell for the second consecutive year in 2011, to about 12.17 million, a decrease of about 265,000 from 2010. Since the high-water mark of 12.9 million boats in 2005, we’ve seen a drop of about 700,000 registered boats. The exact numbers vary for a variety of reasons, Ellis says, but there is no mistaking the general downward trend. Nor should there be any real surprise.

“It’s a simple matter of mathematics here,” he says. Once upon a time, the industry was losing about 400,000-plus boats a year, but they were being replaced with an equal number of new boats. We had stasis. Not any longer.

Ellis suspects that the number of registered boats for 2012 will dip to less than 12 million, which takes us back to 1996 levels, according to Coast Guard figures.

That’s still a ton of boats on the registration rolls and on the water — to service and maintain, to sell and resell, to store and berth, to upgrade and repower, to wave your freak flag from, and so on.

Bottom line: We will be smaller but healthier. Going forward, successful companies will continue to reposition and right-size themselves, as the math and the numbers dictate. The recent headlines certainly suggest as much.

Look for more on this subject in my Editor’s Letter in the February issue of Trade Only.

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