Minn. boating industry focusing on survival, not profitsby Martin Moylan, Minnesota Public Radio
Minnesotans love their boats. The state has one of the highest rates of boat ownership in the country. But people in Minnesota and the rest of the country aren't buying new boats like they used to. Not in this recession. And that's causing great pain for boat manufacturers and dealers in the state.
St. Paul, Minn. — The recession is rocking most players in Minnesota's boating industry, including Minneapolis-based Genmar Holdings, which filed for bankruptcy this week.
Genmar boasts it is one of the world's largest builders of recreational boats. Its brands include Larson, Seaswirl and Glastron.
Irwin Jacobs, Genamar's founder and top executive, said just about everything that could go wrong for boat manufacturers and dealers is going wrong.
"It's the perfect tsunami," Jacobs said. "There's everything imaginable and then some. The economy has had a big impact on it. People are not buying boats as they have."
But there's more to it than people just not buying boats. Manufacturers and dealers have too many boats on hand, and that surplus of boats is made even worse as repossessed boats hit the market. That further depresses prices. When dealers do find buyers, they're often having trouble finding banks that want to make boat loans.
Jacobs said Genmar's sales are off about 50 percent. They'll fall to about $450 million for the fiscal year that ends June 30, and he expects Genmar will have a net loss of about $55 million.
As sales have fallen in recent years, the company has cut about 3,000 jobs. That's about two-thirds of its workforce overall. At Genmar's Little Falls Minnesota manufacturing operation, employment has taken an even greater hit. The company once employed about 800 workers there. Now, it employs just 200.
Genmar's dealer network has also shrunk about 10 percent.
Jacobs said he's seeing a surge of support for the company since it filed for bankruptcy. He said the folks who buy and sell Genmar's boats want to see it successfully reorganize its business in bankruptcy and emerge to grow and thrive.
"The dealers are having a rough time to say the least," Jacobs said. "But I will tell you I'm getting literally hundreds of e-mails from our dealers, vendors, customers. Two were from dealers who said, 'Tell me how many boats I need to order to do my part to help you.'"
The National Marine Manufacturers Association estimates new boat sales dropped about 24 percent nationwide last year in 2008. Some dealers said, in recent months, sales have been falling at an even faster rate.
"Sales for us are roughly about 50 percent off," said Bob Steinway, owner of Link Recreational.
Link Recreational sells boats in Minnesota and Wisconsin, and Steinway said business has never been this bad. The problem is people may want boats but they don't need them, certainly not in the midst of one the country's worst recessions ever.
Steinway has closed four of the six stores he had in Minnesota and Wisconsin.
"Consumers, they're scared," Steinway said. "Even the people who are employed, they're worried about the new president, the economy, the stock market, their jobs."
Steinway said lenders have been reluctant to finance boat purchases. He said big national banks are especially tight on credit for boat loans, but he said regional banks are looking more favorably on boat loans.
Kathy Hjelle, owner of The Boat Shop in Bemidji, said sales are down for her, too.
"A little slower than usual. I'd say 25 percent," Hjelle said.
But Hjelle said business isn't all bad.
"We're selling a lot of docks and lifts. They're selling very well," she said. "You can't predict the boat business, ever."
And a bad year for some doesn't mean a bad year for all.
Some dealers report business is actually pretty good. Salesman Eric Graham said that's the case at Miller Marine in St. Cloud, where pontoon boat sales are going strong.
"We're having a record year, we're doing real well," Graham said. "I think people have less places to go to buy a boat, and I think that has helped the remaining dealers that have survived."
For now, survival, not profits, is what many boat manufacturers and dealers are hoping for these days, as they try to navigate their way through a recession that could well sink them fast.
- All Things Considered, 06/02/2009, 5:50 p.m.