James Nolan Associates Inc.

One of the more important indicators of the current market downturn is the number of dealer casualties but it is also the one of the hardest to find out with any degree of accuracy.  The big failures, like the bankruptcy filing by Olympic Boat Centers (A very big Bayliner/Maxum dealer in the Pacific Northwest), are reported on the marine newswires and national publications but the smaller casualties are not.  

Anecdotal evidence suggests about 10% or some 500 boat dealers have already closed their doors with another 10% likely to do so.  The Minneapolis based Crystal-Pierz Marine announced at the end of July it was closing six of its 12 stores.  The Sacramento Bee newspaper reported at the end of October that “more than a half-dozen Northern California boat dealers have sunk into bankruptcy or closed their doors this year.”  Talk to marine bankers involved in inventory finance and floor plans and they tell of large repurchases of boat dealer inventory by the builders.  Read Brunswick’s third quarter earnings report and see they have marine receivables owing to them of U$ 275 million.  It is not a pretty picture and it is likely to get uglier so what does it portend for 2009?

Boats will still be sold in 2009 but they will include a disproportionate amount of 2007 and 2008 models.  Boat builders are already experiencing the consequences of this as is evidenced by the number of plant closures and temporary closures.  Brunswick has reduced their pipeline by about 1600 boats compared with this time last year but now have 31 weeks of inventory in the pipeline compared with 26 a year ago.     The unavoidable consequence of this year’s dealer casualties is collateral damage to boat builders next year.  It is no wonder then that the funds destined for the Discover Boating campaign have been re-routed to builders and their dealers.