Steady as she goes is a pretty apt description of industry growth at the midpoint of this year, not to mention where we’ve been since the Great Recession ended and where we’re likely headed in the short term.
“Slow and steady has been good,” says NMMA president Thom Dammrich, whom I interviewed at the ICAST show in July. “We’re still looking at continued growth through the first quarter of 2019. Anything can change, but that’s the forecast right now.”
The 2017 forecast for new-boat sales pretty much mirrors last year’s. “Six percent in units and probably double digits in dollars,” Dammrich says.
In 2016, new-boat sales topped 250,000 for the first time since the recession ended. “If we get 6 percent growth this year, that will be another 15,000, and we’ll be at 265,000,” says Dammrich, who believes this post-recession period will, in hindsight, be viewed as a “golden era” in modern recreational boating. “People are busy. People are confident. I think you see it in general-business confidence polls. You see it in some of the polls MRAA does on dealer confidence. Manufacturers are doing well.”
And after the first quarter of 2019? ITR Economics, the Manchester, N.H., economic consulting and forecasting company that the NMMA uses, is calling for a “very mild dip” sometime in 2019, with growth returning in 2020, according to Dammrich.
“You always have your bears and your doomsayers,” Dammrich says. “But the Fed has just started raising interest rates, and, historically, expansions continue for three to four years after they start raising rates. So we’ve got at least a couple of years to go.”
Short of a black swan event, he says, “It’s looking pretty good.”
Signals are strong across a broad swath of the industry, with a number of boat, engine and accessory manufacturers expanding capacity. “That says there is a great deal of optimism that things will continue to be strong,” he notes. “I feel really good about 2017, 2018. You have to make hay when the sun shines.”
Of all the positive factors, consumer confidence is the principal driver of new- and used-boat sales. “Consumer confidence is still nearly at a 12-year high,” Dammrich says. “New-home sales are gaining momentum. Consumer spending remains strong. Disposable income is growing. Unemployment remains low. There are just no negatives right now. A lot of tailwind.”
And inventory levels remain healthy. “I remember when I first came into the industry — I think the industry maybe did one-and-a-half or fewer turns a year,” Dammrich recalls. “And a really good dealer did two turns a year. Now the whole industry is doing two turns a year. That’s amazing. I think GE would tell you that’s really healthy.”
The biggest challenge to the industry right now? “Probably labor shortages,” Dammrich says. “Labor shortages are affecting manufacturers, dealers, everybody. You talk to dealers. If they don’t have techs, that begins to affect the customer. And that begins to affect the future.”
Big picture, Dammrich says the two biggest inhibitors of economic growth are unnecessary government regulation and the lack of a coherent immigration policy. “Our engine manufacturers met with EPA Administrator Scott Pruitt, and our message was we want a strong EPA,” Dammrich says. “We want an EPA that is the model for the world. We want clean water, we want clean air, but we want sensible regulations.”
He also says future growth is predicated on immigration reform. “We need immigrants to grow this country and to grow our economy,” Dammrich says. “It’s not just immigrants working in low-wage jobs that nobody wants, but it’s also immigrants who are bringing a lot of intellectual capital to this country. We need a sensible immigration policy. We need immigration to solve the worker shortages.”
Stronger growth is possible if those much-bandied-about initiatives become policy. “If we can get tax reform, if we can get immigration reform and some regulatory relief, 3 percent growth is doable,” Dammrich says.
One thing that won’t change moving forward is the role that technology and innovation play in moving new product. “I think the pace of change and innovation is probably as fast as it’s ever been,” he says. “It’s amazing. With the push of a button, you can reconfigure the seating in a boat on the fly and you get shade on demand.
“The recession certainly generated the need for innovation. It’s new product that drives new-boat sales,” says Dammrich, repeating a familiar mantra. “If you’re not coming out with anything new, then people are just going to buy your preowned product.”
This article originally appeared in the August 2017 issue.
