Sailboat Sales Catch Wind After Spell in Still Waters
| ATLANTIC CITY, N.J.
MASTS ahoy! The sailboat industry is finally showing some signs of vitality.
After five years of trimmed sales, this battered segment of the marine-products business is starting to enjoy smoother waters. Sailboat manufacturers at Sail Expo '94 here report that sales are running 15 to 20 percent over last year.
``Sales trends look positive and people are spending more, which is making the industry more confident,'' says Everett Pearson, president of the American Sail Advancement Program (ASAP) and an owner of TPI Inc., a sailboat manufacturer. Mr. Pearson says sales are up 20 percent at J Boats, which is based in Warren, R.I.
The picture is even brighter for Valiant Yachts, a custom yachtmaker based in Gardonville, Texas. ``We've sold out production through September,'' says David Cavett, a Beaufort, N.C., sales representative for Valiant.
A new boat design is the sales stimulus for the Melges Boat Works in Zenda, Wis. Sales Manager Andrew Burdick reports that the company has sold 135 of the company's 24-foot yachts in the past year.
At the boat show, the company took orders for eight of the high-tech, super-fast sailboats. ``That's incredible for a new boat,'' Mr. Burdick says.
This apparent pickup in sail boats follows a modest increase in power boat sales. Jill Krutick, an analyst with Salomon Brothers Inc. in New York, says she sees some signs of a ``modest turnaround.''
``Consumers are still focusing on cars, housing, and furniture instead of boats, which are highly discretionary items,'' she says. She adds that she expects 8 percent to 12 percent sales increases for power boats this year.
Last month at the New York National Boat Show, which is primarily a power boat show, sales were disappointing. ``They were not good,'' reports Robert Healey, chairman and chief executive officer of Viking Yacht Company, located in Mount Holly, N.J.
The weather played a large part in the poor turnout. On the first weekend, the show, sponsored by the National Marine Manufacturers Association (NMMA), was hit by a snowstorm. The second weekend, frigid weather kept buyers away.
Attendance at the Atlantic City show was also restrained by the weather. An ice storm in southern New Jersey shut down the Atlantic City airport for nearly two days. And a snowstorm dropped 13-19 inches of snow in the northern part of the state and in New York. The bad weather canceled flights with 600 people coming to the show from Detroit and 400 from Buffalo.
Now the industry is gearing up for the Miami Boat Show, which started yesterday and ends Feb. 23. ``Our expectations are positive,'' Mr. Healey says.
One boost to the boating industry is the relatively low rates for financing yachts. Fixed-rate, long-term loans have dropped to 7.5 percent, down from 8.75 percent last year. With the prospect of rising interest rates, lenders are expecting buyers to have more incentive to act this year.
Boat builders are also heartened that Congress removed the luxury tax on yachts last August. This 10 percent surcharge hit the industry just when the economy started sliding.
Now builders are concerned that the higher income taxes will bite into sales. ``We have higher taxes on the people who buy our boats,'' Healey says.
Despite higher income taxes and the slow show in New York, Healey says his company is backlogged in large part because the company has introduced new boat lines. ``Historically, new boats represent 65 to 70 percent of our sales,'' he explains.
To fill the orders, Viking has hired 400 new employees since August and is still adding people for another production line. By the spring, the factory in New Gretna, N.J., is expected to be running at full production.