Expecting growth but watching the weather
On the eve of the American Boating Congress, the Recreational Boating Leadership Council met for five hours on Tuesday to chart progress and hear from the six committees working on key components of the industry’s 10-year growth plan.
Between breaks in the meeting, I spoke with leadership council secretary Thom Dammrich and chairman Matt Gruhn, along with Grow Boating chairman Joe Lewis, to get a snapshot of growth in the here and now.
Although sales at his Mount Dora Boating Center dealership slowed in March, Lewis said business was up nicely for the first quarter and that February was the strongest “in 10 years, at least.”
Interestingly, the growth his central Florida dealership experienced bucked some industry product trends. “It was all fiberglass recreational sterndrives,” said Lewis, a co-chairman of the leadership council’s marketing committee. “I can’t give away a pontoon boat.”
If things break right, Lewis said growth in new-boat sales industry-wide could hit 10 percent again this year. “The only wild card is the weather,” he said, echoing a sentiment I heard from a number of people. “People’s attitudes are a lot better.”
On a day in which the Dow Jones industrial average set a new record, closing above 15,000 for the first time, there were plenty of nods given to the impact of the bull market and the related wealth effect on boat sales.
“They see the stock market gains, and it leads to a sense of security. When it’s up, people feel good, even though,” he noted, expressing the caution of one who hasn’t forgotten the market trough that occurred in March 2009, “it’s the most unstable thing in the world.”
NMMA president Thom Dammrich reiterated the outlook that the strong start the industry had this year was tempered in March and April by the late spring across much of the country.
He, too, believes new-boat sales could finish up somewhere between 5 and 10 percent, although he cautioned that he was starting to hear “rumbles” of a possible economic slowdown in the second half of the year. That certainly would make it more difficult to reach the upper end of the current industry growth estimates.
Dammrich listed the improvements in housing and the surging stock market among the factors driving boat and equipment sales. “Housing is a huge one,” he said. “Housing prices are up, and inventories are down. Foreclosures are down. Housing will lift the entire economy.” Growth in the automobile and RV industries, he noted, is also a positive indicator for recreational boating.
I asked Dammrich whether the biggest hurdles the industry is facing are short-term and cyclical or long-term and structural.
“I don’t think our biggest challenges are cyclical,” he said. “Our biggest challenges are diversity and youth” — in other words, the impact of tectonic demographic shifts on the industry and the ensuing aging of our core market, which in one way or another is the focus of the leadership council and the Growth Summit initiatives.
MRAA president Matt Gruhn said lousy weather has hurt spring sales across the Midwest and elsewhere. There is still ice on some of the lakes in Minnesota, he said. The ice-out on Lake Minnetonka last year, he said, was the third-earliest on record. This year, he noted, it is the latest ever.
“This is a setback, especially when you look at things year over year,” Gruhn said. “There’s been such an extreme in weather between the two years. We’ve got some ground to make up.”
He remains cautiously optimistic that 2013 will be a good year. “There are a lot of positives,” he said. “Let’s get rid of this weather, and let’s hope the economy holds.”