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Steve Karnowski, Associated Press Writer, Published May 08 2009

Tide rising for boat industry

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 – Saturday marks the Minnesota fishing opener for walleyes – 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.

“Oh yeah, we’re definitely seeing (a downturn in sales),” said Steve Moltzan of Moorhead Marine. “Our sales have been level, but that’s only because our watercraft sales are up so high.”

Moltzan added that this year’s flood, which forced the business to close for five weeks, cost Moorhead Marine “half a million” dollars in sales.

In Detroit Lakes, the mood was more optimistic. Although the flood also dampened springtime business at McLaughlins RV & Marine, “boat shows have been good,” said sales representative Matt Christopher. “We haven’t really seen a drop so far.”

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.

Christopher agreed that lower fuel prices could help bolster boating this summer. “Even last year when gas was an issue you didn’t hear a lot of people talking about it,” he said. “It doesn’t really stop people from getting out on the water, although it may cause people to be out there less. It’s funny because around here, especially with the long winter we’ve had, people get so excited to get back on the water.”

Dammrich estimated new boat sales in 2008 were around $9.5 billion, a little more than 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.

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.

Brunswick – whose 17 boat brands include Bayliner, Crestliner, Lund and Hatteras, and also makes Mercury motors – is not expressing much optimism.

The Lake Forest, Ill.-based company has closed or mothballed half the 28 factories it was running in 2007. Total employment in its marine operations is down nearly 50 percent since the beginning of 2008. Sales in its boat segment were down 64 percent in the first quarter of 2009 from the same period a year earlier.

That’s after the company’s boat sales fell 25 percent in 2008, and engine sales fell 17 percent.

Phil Keeter, president of the Marine Retailers Association of America, said there’s still a glut of inventory in the supply chain and in dealer showrooms. He said he’s seeing a little improvement in the Midwest and some other regions, primarily in sales of cheaper boats, but he suspects it’s partly the usual springtime rush.

Moltzan of Moorhead Marine said the demand has shifted from high-end boats to more affordable ones. “It’s going to be the most aggressive companies that put the best boat on the market at the best price,” he says. “That will be the winner.”

Forum reporter Tammy Swift contributed to this report.