Founded in 1966, the International Council of Marine Industry Associations is a global organization composed of national boating federations and other bodies involved in the recreational marine industry. ICOMIA works on such issues as breaking down trade barriers, improving boating safety and promoting recreational boating worldwide.
Darren Vaux became president of ICOMIA in December after serving on the executive committee since 2018 and as the Australian delegate to ICOMIA since 2011. He owns and operates Empire Marinas Group, with locations in Sydney and Lake Macquarie, Australia.
Soundings Trade Only connected with Vaux to discuss supply-chain issues, boat-sales trends, labor shortages and more. His responses have been edited for space and clarity.
When you look at the recreational marine industry worldwide, have you seen similar pressures everywhere?
The common thread is constraints to the supply chain across the broader economy, and those constraints driving inflation. This is coupled with increases in demand for a wide range of outdoor activities, including recreational boating, during the years of Covid restrictions. Travel options remain limited and expensive due to capacity challenges within airlines and other travel providers. Consequently, demand for boating products has generally remained strong, although eased from the peak in 2021.
Supply-chain constraints continued to be a challenge for the industry. Many products ordered in 2021, particularly larger products, are yet to be delivered. Labor shortages across the whole supply chain have resulted in reduced capacity in production, higher production costs and reduced deliveries.
In simple terms, the market generally hasn’t been able to ramp up production sufficiently to meet the increased demand, both in terms of new product and for maintenance and repairs. Some companies and countries have been able to adapt better than others, but no market has been left untouched.
What external factors do you see as being the most challenging in 2023?
As we move into 2023 and beyond, we should see an easing of the supply chain and labor shortages, and an easing of demand for our products. This will be in part from normalization of travel, but more likely from increasing interest rates, reduced consumer confidence and reduced discretionary spending.
Do you see interest rates as a key indicator to watch?
Central banks globally have been using their lever of increasing interest rates to blunt consumer and business confidence, and to try to rein in inflation. There are two problems with the effectiveness of this.
The first problem is that inflation has been driven primarily by supply-side constraints, as a consequence of Covid labor shortages, shipping disruption, the conflict in Ukraine, energy shortages and decarbonization of the energy markets, to mention a few. Increasing interest rates does not effectively address these issues.
The second problem is that government stimulus during the Covid years pumped billions of dollars (and other currencies) into global economies. It will take a while before this is exhausted. This lag in effect will likely see interest rates go higher until they have a recessionary brake effect. There then may be a need to reduce interest rates again if the impact is too great.
All these machinations will have an impact on confidence. We can expect a trend toward falling demand for recreational products like boats if travel and other discretionary recreational opportunities remain available.
Research points to a continued decrease in global boat sales in 2023. What are your association members doing to prepare?
The overarching strategy doesn’t change. We need to retain our existing boaters and attract new boaters. Globally, the average age of boaters continues to get older. In attracting new boaters, strategies need to recognize, for example, that the older Gen Ys or millennials are now over 40. The nature, message and style of communication, marketing and engagement that attracts millennials and Gen Z is evolving. So are the industry’s programs to attract these consumers.
Products are developing, as well. Increased electric and hybrid products are available to attract carbon-sensitive consumers, and alternative ownership and use models are on the rise, such as rentals, charters, clubs and syndicated ownership. We also have to focus on access and infrastructure to make sure our boaters have the storage, maintenance and services they need, and access to desirable destinations and activities to keep them interested in boating.
Are your members continuing to face shortages of skilled labor?
Labor shortages continue to be an issue across the industry. Many industry associations are making a concerted effort to create training academies where the government-run programs are failing to deliver. There are also a number of associations that have created industry-specific online job marketplaces like marinejobs.org.au. Production technologies are also continuing to be developed to increase productivity and automation.
Attracting and retaining young people and women in our industry is a worldwide problem that we all need to focus on. Our industry offers attractive and rewarding careers in a wide range of fields.
In-person boat shows were back on a global level in 2022. How much of an effect do they have?
Boat shows remain the best place to see and experience the wide range of products our industry has to offer. During the Covid years, there were many attempts at virtual shows, which failed to deliver the true experience of real boat shows. There was also a lack of product to display and a reluctance among some manufacturers to focus on selling since order books were full and the main challenge was delivery. For 2023, we will see shows continue to grow and be one of the most important platforms for showcasing the boating lifestyle and the products that deliver it.
Inventory levels are normalizing, but interest rates are up, and dealers are back to floorplan financing. Do you see this is as a significant headwind?
Most manufacturers are still carrying solid order books and have long delivery times. There will be some abatement of demand from 2021 and 2022 levels; however, cash flows in 2023 will be held up by the delivery of already-ordered product.
Given the higher average age of boat buyers, our customers have more financial resilience than other sectors of the recreational consumer market. The economic uncertainty associated with increasing interest rates lowers consumer confidence, but at this stage, we would see it as a breeze, not a strong headwind. A few strategic tacks will keep us moving forward.
What positive signs do you see on the horizon?
The Covid years created a reset for many people as they reassessed what is important in life. Boating makes people healthier, happier and more connected with friends and family. There has been a general awakening and reawakening to the pleasures of the boating lifestyle.
The days of 9-to-5 in the city office five days a week are gone for many businesses and many people. The use of video technology brings people together from all over the country and all over the world. Many people are now working from their boats in marinas.
Our challenge in this environment is to make recreational boating available to as many people as possible. I believe, as an industry, we are well-positioned to achieve this. We can help people get out into the world and explore the wonders of being in, on or around the water. The growth in the explorer yacht segment is a testament to this desire in us all. I am excited about the opportunities that these changes present for 2023.
This article was originally published in the February 2023 issue.
