Boating boom: Retailers, manufacturers ‘flushed out’ of watercraft

A year of record sales and supply-chain constraints has cut into new and…

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The booming boat business is back — again. 

The COVID-19 pandemic led to a 13-year record high in new powerboat sales nationally in 2020, according to the National Marine Manufacturers Association. Michigan, which ranks third in the nation for boat sales, saw a 12% increase in purchases of new powerboats, engines, trailers and marine accessories. And a similar trend is shaping up for this year.

Last year’s era of social distancing led to less travel, more staycations and folks finding boats as their new form of recreational fun, according to industry trade groups and experts. Stimulus money encouraged that investment. The Census Bureau found that 2.6 million American households spent their checks on recreational products, the NMMA said. That demand isn’t stopping in 2021, despite dwindling inventory after a year of record sales coupled with supply chain constraints on boat materials.

As new customers are looking to enter the lifestyle, behind-the-scenes boat brokers, retailers and manufacturers are trying to deliver watercraft in time for prime boating season. Business has been nonstop since the start of the year, with retail new powerboat sales up 15% as of February, according to NMMA. 

“There’s still stuff coming in right now; it’s not like we’re down to zero, so we’re still able to provide for our customers, but we don’t have the level of inventory that we’re accustomed to this time of year,” said Brad Wilson, general manager of Brighton-based Wilson Marine, a boat retailer.

Pam Hoye, 49, of Brownstown Township was lucky to find a new pontoon boat from Wilson Marine in just a little over a week. Hoye and her family wanted to upgrade from the smaller pontoon they had at their cottage on Bird Lake in Hillsdale County. 

“We didn’t have a lot of the pain points the way people are experiencing right now,” she said. “We just got pretty lucky. It was the right place at the right time.”

But Hoye did want a different boat, at first, and would have had to wait until August for it. She opted instead for a version that was pretty similar and would be ready to hit the water by Memorial Day. The old family pontoon sold through Facebook Marketplace in a day. 

Hoye, a lifelong Michiganian, grew up going to a lake cottage and boating all day. She gets why people are turning to the lifestyle: “It’s just calming … and it’s enjoyable to be out on the water.”

‘Never stopped coming’

Before the pandemic, Michigan’s boating industry was seeing an aging demographic of boaters, said Nicki Polan, executive director of the Michigan Boating Industries Association.

Getting new people into boats proved difficult. Boating was seen as time-consuming, operating a boat sounded intimidating, and there were concerns of how to even access the water, Polan explained. (The Great Lakes State has 1,200 boating access sites.)

Then came a pandemic. People were stuck at home, unable to travel and all of their kids’ activities were off the calendar.

“What we were up against was all of these travel sports that would send families in separate directions every weekend with the father taking two of the kids and the mothers taking two the other way,” Polan said. “Finally with these sports being canceled and paused, and these families who aren’t able to travel and go to Disney World or Cedar Point, boating came to the forefront.”

And with that came a record year at Wilson Marine. Not once in a 70-year history had Wilson Marine run out of boats. Not until 2020. 

On average, the business with its multiple locations across the state would sell 1,500 boats in a year. Last year, it made 2,400 sales. 

The boom was a shock to an industry that had to shut down from March until May. 

“It was kind of hold your breath a little bit, see what the consumer demand is like,” Wilson said. “But luckily for us … they just came in, and they never stopped coming in until we sold out of boats.”

Canadian company BRP Inc., owner of the Manitou pontoon boat brand manufactured in Lansing, saw “an unexpected surge in consumer demand” last year, said Karim Donnez, senior vice president of the marine group for BRP, in a statement to The Detroit News. 

“Our 2021 summer product season looks very promising with the continuing trend of first-time buyers and the impact of the staycation phenomenon on sales,” Donnez added. “We are off to a very good start, seeing strong retail demand, and we are happy to say that our bookings for the season are exceeding expectations.”

The demand hasn’t stopped, and the supply base is trying to keep up with it on top of dealing with interruptions. At least one manufacturer, Polan said, has stopped taking orders as dealers have claimed production through 2024.

In 2020, more than $1.3 billion was spent on new boats, motors, trailers and accessories in Michigan. That makes the state the third-largest marine market behind No. 1 Florida and No. 2 Texas. The industry supports Michigan’s economy with $7.8 billion annually and supports more than 1,400 businesses and nearly 60,000 jobs. There are 1 million registered boats on file with the state.

Between 40% and 50% of boats sold last year went to first-time or lapsed boaters, said Mark Swartz, an analyst for Truist Financial Corp. The industry grew by 13% last year and is expected to expand in the mid- to upper-single digits this year.

“The real question is how many of these people, when things return to normal, whatever their normal is, will come in after two years and sell their boat or RV or whatever it is and move on?” Swartz said. “Tens of hundreds of thousands are experiencing boating, fishing and camping who otherwise never would have done so if it weren’t for COVID. Some portion of that, and we don’t know what that percentage is right now, will. We do know the industry going forward will be larger relative to pre-COVID.”

‘Flushed out inventory’

Used boat broker Paul Zvonek, owner of Temptation Yacht Sales based at MacRay Harbor in Harrison Township, had 210 listings for boats in January and February 2020. A year later, in April 2021, he had just over 20 listings. 

“This year, the bigger problem for the industry as a whole is the lack of inventory, similar to the real estate market … we’re finding we really flushed out our inventory,” he said. “When we capture new products, we very rarely are bringing them to the mainstream marketplace.”

As new boats come in, Zvonek and his team already have a list of potential buyers. It’s a different market from a decade ago, when they were shipping boats out of the state to sell them. Now they are shipping in boats for customers from other states because the product isn’t available in Michigan.

As with anything, the lower supply and high demand means customers are paying more. 

“It’s hard for us to get a lot of these folks that we’re selling these boats for to engage really in any element of an aggressive negotiation,” Zvonek said. “This is a market right now where it doesn’t work for everybody. It’s the wrong time for certain people to try to buy a boat.”

The high demand in 2020 tightened supplies on both used and new boats, and supply chain issues this year have exacerbated the situation.

At the forefront of some of the challenges in manufacturing new boats is a shortage of certain parts and supplies stemming from the blockage of Egypt’s Suez Canal in late March and the February cold snap in Texas that shut down business, including refineries.

The resulting scarcity of certain raw materials and chemical byproducts used in fiberglass hulls and gel coats makes it “a race to get product to the market,” said Swartz, the Truist analyst. Larger and public manufacturers often have the advantage, he noted, as they may manufacture major components themselves or work with larger suppliers.

BRP is dealing with the supply challenges “that need constant monitoring and attention in order to keep our manufacturing running at full capacity,” Donnez said. “We are on plan to meet our Manitou dealer orders in time for the peak retail season.”

Operating on a just-in-time delivery schedule may mean more business, but Wilson would prefer to have the inventory and provide exactly what customers are looking for in their first boat or next boat.

 “This year would have been fine with the exception of foam shortages,” he said, which “really put a put a delay in everything.”

Twitter: @bykaleahall

Twitter: @BreanaCNoble

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