A BIGGER, BETTER IBEX P. 46

®

INSIDE: CEO Laurie Phillips is shaking things up at Xtreme Companies, hoping to reverse a pattern of red ink. She is confident she can turn things around. p. 30

THE BOATING BUSINESS NEWSPAPER VOL. XLIII, NO. ⁴ OCTOBER 2006

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www.tradeonlytoday.com

Slump has dealers scrambling to make sales

Estimates vary, but volume is down everywhere; Marinas one segment that’s doing well

By Gary Beckett

Marine dealer Glenn Mazzella is hardly surprised when told retailers nationwide are complaining about sluggish sales.

“It’s not a secret,” acknowledges Mazzella, whose Glenn Marine operates out of three locations on Long Island, N. Y. “Obviously, 2006 was a flat year at best.”

At best is right.

In fact Thom Dammrich, president of the National Marine Manufacturers Association, in September predicted final returns will show a decline of 4 to 5 percent at the retail level. However, some dealers say Dammrich is being optimistic.

“I’ve heard that the industry [at retail] is down as

Consumers aren’t rushing into
dealerships.Second-quarter sales
figures show a continuing decline.
See the numbers, p.94

much as 15 percent,” said J.R. Means, owner of Bayport Yachts in Newport Beach, Calif.

While the final tally on the pace of model year 2006 wholesale and retail sales won’t be available for several months, it’s clear this will be a down year overall, according to most dealers and manufacturers, as

well as the forecasts by many of the industry’s publicly held companies.

Brunswick Corp. pointed to declining consumer demand for marine products in reporting results for its fiscal 2006 second quarter, in late July. Sales of its boat companies owned for at least a year declined by 7 percent in the period, while net sales at its Mercury Marine engine division fell by 2 percent. Faced with increasing inventories, the company also has cut production — and workers — in anticipation of sluggish sales going forward.

Even once-high-flying Marine Products Corp., maker of Chaparral and Robalo brand powerboats, is taking it on the chin because of a marked slowdown in con-

See Estimates, page 54

BETTING ON CHINA

Cost of nickel

nearly doubles

By Melanie Winters / Associate Editor

m.winters@tradeonlytoday.com

Marine hardware manufacturers are feeling the effects of the rising cost of nickel alloys, a primary component of stainless steel.

Nickel prices have more than doubled since September 2005 — from $7 a pound last year to almost $15 a pound today, according to www.metalprices.com, an industry Web site that tracks prices on the London Metal Exchange.

Nickel is the ingredient that puts the stainless in stainless steel. A drawdown in nickel inventories has raised the price of some stainless steel products by 15 percent to 18 percent during the past year, according to one hardware manufacturer. Stainless steel is commonly used in everything from propellers to hardware to steering wheels.

Fountain Powerboats calls it the world’s “most exciting economic development area.” It is projected that by 2015 nearly a third of global luxury products will be sold in China. But the big question is: Will the newly wealthy Chinese buy boats? Fountain and other U.S. boatbuilders are betting they will. Some of them showed their products at the China International Boat Show in Shanghai. See stories, pages 62-63.

“The majority of boats in the industry could not be put together without stainless steel,” says Matt Bridgewater, president of Gem Products, a marine hardware manufacturer based in Orange Park, Fla.