For the past few years, making progress has felt a bit like skiing over moguls. Yes, the marine industry has managed to stay upright while racing down the slopes, but there have been some fairly hefty bumps along the way. Looking to 2023, experts say the industry can expect a somewhat smoother course — one that’s at least more predictable, if not as easy or fast-moving as everyone might hope. Here’s what industry leaders see coming this year in the areas of technology, engines, boat sales, political advocacy, mergers and acquisitions, and the workforce.
Technology
This past November, Mettawa, Ill.-based Brunswick Corp. did a media presentation of its development vessel for autonomous docking. Among other things, the event demonstrated ways that connectivity is poised to become more specific to boaters’ individual needs.
“We have a vision to personalize that,” says Alex Cattelan, Brunswick chief technology officer. “If you are a novice boater, you may want our system to do the most within the automation. If you’re an experienced boater, you may want to limit what the system does but still have it assist you. Those are some of the true opportunities in boating that are incredible as well as incredibly challenging.”
Cattelan says to watch in 2023 for developments in low-power electrification, such as small electric outboards from Mercury Marine, and Navico Group’s Fathom e-power system working in tandem with Mercury’s new V-10 engines to charge large battery banks while the boat is operating. “That system will replace generators,” she says. “With the V-10 [outboards], we’ve incorporated the ability to charge that [Fathom] battery pack. It’s enough to charge the system in less than two hours, if you need to, depending on the size of the battery pack. And you’re doing that while you’re moving.”
Cattelan also says to keep an eye on intuitive displays, app connectivity and digital-switching systems. “Those things exist today — the displays, the connectivity, the digital switching — but you’re going to see those become more integrated and enhanced,” she says.
Engines
Mack Boring in Somerset, N.J., distributes Yanmar, Scania, Isuzu, Oxe, Suzuki and ePropulsion engines. The company deals daily with everything from gasoline and electric outboards to diesel inboards. “What you’re seeing is a lot of change,” says company president Patrick McGovern. “The real question is how quickly it can get rolled out and how much will actually happen in the next year.”
In every engine segment, McGovern says, discussions center around the shift to electric and hybrid propulsion, as well as to sustainable fuels compatible with higher-horsepower engines. There are plenty of ideas, and some prototypes and early product rollouts, but very little is ready for wide-scale production. “We’re starting to see, with the electric outboards, some pontoon and bass-boat manufacturers producing one model with electric,” McGovern says. “They are doing that because the mass-produced batteries and systems are just a small sliver of the industry.”
He expects the year to bring more announcements about new products and one-off projects, but with no larger-scale production for another three to five years. McGovern does look forward to seeing prototypes at larger boat shows this year, including a diesel-electric option from Scania. “They’re going to launch the first marine prototype in Europe in March or June, and then that’s going to be available for demos and further validated,” he says. “That’s a big production investment they’re making, so there’s no doubt it’s coming, but it’s likely going to be two or three years before it’s a production offering.”
In the electric-propulsion space, he says, Mack Boring currently distributes 1-, 3- and 6-kW ePropulsion motors. “By the end of 2023 or early 2024, we’ll have a 10-, 20-, 40- and 100-kW system exclusively for marine products,” he says. “It’s a huge jump.”
Boat Sales
Eric Wold, senior analyst at B. Riley Securities, says that when it comes to boat sales, headwinds such as inflation and rising interest rates are going to continue to affect different demographics in different ways. “The impacts we’re seeing are not impacting everybody equally, and some people not at all,” Wold says. “The individual who is buying a half-million or million-dollar boat is not the same individual who is worried about the price of bread going up in the grocery store. So I’m hearing from dealers that the value end of the spectrum is being pressured.”
A big question heading into 2023 is how these headwinds will play out when the industry emerges from its traditional winter slowdown. Wold says people who may have, in previous years, bought an end-of-season model for $25,000 or less, may be waiting until spring to see where things stand. “It’s more the uncertainty that’s hitting people the most,” he says.
With higher-priced boats, he adds, “unless there’s a really, really deep recession that impacts consumers across all walks of life, I think for the most part, these dealers and manufacturers are pretty well-insulated. There may be existing boat owners who may stop and think about upgrading, but they’ll still spend on maintenance and services even if new-boat sales lag at the lower end.”
Political Advocacy
The National Marine Manufacturers Association is planning to focus on three policy areas for 2023, according to Callie Hoyt, senior director of government affairs. The first is manufacturing. “This year, we’re taking a targeted, strategic approach about what marine manufacturers need, whether that’s R&D, tax issues, potentially workforce as an issue, and looking at opportunities where we can be getting resources and funding to create a better climate for marine manufacturers,” she says.
For instance, Hoyt says, even with a split Congress, appropriation bills always get passed. The farm bill, for example, is geared toward helping the agricultural industry but can include opportunities for marine, such as tapping into funds for rural economic development. “In a lot of those areas, people would go there for recreation opportunities,” Hoyt says. “So we see that as a way to potentially get more dollars redirected to communities that want to develop themselves as recreation communities.”
The second area of focus will be public recreation access, including a controversial regulatory proposal that could require boats to reduce speed along much of the East Coast to protect endangered North Atlantic right whales from vessel strikes. “Because this rulemaking will have such a detrimental impact on the boating industry, we are going to employ a multiprong approach,” Hoyt says, adding that NMMA will be working with regulators, as well as Congress and attorneys. The next steps specific to the whale regulation are expected in the spring.
The policy area of public recreation access also includes things like getting marine-industry needs included in legislation such as the recent infrastructure bill. “We want to make sure that there’s enough boating public access points,” Hoyt says. “If we’re going to see electric boats in the next five or 10 years, we have money to rebuild a boat launch or marina — maybe it’s time to think about upgrading that electrical infrastructure and maybe putting in a charging station.”
The third area of focus will be next-generation propulsion and working to ensure that the industry’s transition to newer technologies will be market-driven, not government-imposed. “We’re trying to prevent somebody from coming in and saying, ‘Let’s decarbonize the marine industry without really understanding what that means,’ ” Hoyt says. “I see these next two years as being really pivotal for widespread education among policymakers so that they understand where the technology stands and what is actually possible right now.”
Mergers and Acquisitions
The industry is coming off a busy few years of mergers and acquisitions, particularly on the dealer side. Chad Lyon, managing director of marine and RV for Wells Fargo Distribution Finance, says that leading up to 2023, there’s been a shift away from outside investors and more of a focus on existing OEMs and dealers acquiring complementary businesses.
Lyon sees that trend continuing for two main reasons. “The performance of the industry has been such that the companies that are in it now are very strong and have excess capital to make those investments,” he says. “And marine is a cyclical business. I think people were a little bit nervous [who] didn’t make investments from the outside. That created opportunity for companies in the industry that appreciated the cyclical nature of the industry.”
Lyon foresees rising interest rates and a normalizing economy next year, as well as a drop in new-boat sales — but healthy companies still wanting to make M&A deals. “People will be a little more prudent in the face of uncertainty, but the companies that have been acquiring are doing so well that I don’t see them being uninterested in opportunities,” Lyon says.
He adds that more of those opportunities may start to materialize as boat sales decline. “A lot of people had some great runs through Covid, from the spring of 2020 forward, whether you’re an OEM, a supplier or a dealer,” Lyon says. “I think that run is going to be more normalized, so it will be a more traditionally challenging market. People may say, ‘I’ve had a great run, maybe it’s time.’ ”
Workforce
The American Boat & Yacht Council Foundation sees addressing workforce challenges as a core initiative. Sarah Devlin, accreditation director, says marine businesses are far from alone in trying to overcome a shortage of skilled workers. “When we expand our perspective beyond the marine industry, we’re looking at over 2 million jobs remaining unfilled by 2030, according to the National Association of Manufacturers,” Devlin says. “The competition for skilled techs is going to be pretty intense.”
To alleviate some of that need, her primary focus for 2023 is on growing the ABYC Foundation Marine Trades Accreditation Program. The MTAP is a designation for secondary and post-secondary schools with a marine service technology program. The MTAP designation indicates “that the school is graduating marine service technicians who are knowledgeable about ABYC standards, best practices, processes and industry expectations,” she says.
The ABYC Foundation is also now getting calls from manufacturers and dealers looking for staff training through ABYC — whether for customized programs, internal training or other options, she says. It’s all part of what she sees as a culture shift, with manufacturers realizing that investing in future technicians is almost as important as investing in things like product research and development.
“Obviously, a quality product is the target, but quick, competent and accessible service will always be a cornerstone of a great boating experience,” she says. “I also fully anticipate the marine industry to continue ramping up their training efforts in order to keep their employees, and I absolutely see the industry engaging with schools and training facilities to make sure they have access to those graduating techs.”
This article was originally published in the January 2023 issue.
