Boat profits underway as builders say pandemic-era demand is here to stay
U.S. boat builders are eagerly climbing aboard the pandemic-fueled boom in outdoor recreation.
The recreational boating industry saw sales hit a whopping $56.7 billion in 2021, the second-highest year for spending on boats in nearly two decades, according to the National Marine Manufacturers Association (NMMA), a boating trade group. (NMMA has not yet released statistics for 2022.)
Boat builders expect that momentum to continue into 2023 and say supply chain snags aren’t enough to weigh down the wave of demand.
“There were massive shifts in consumer spending and behavior throughout the pandemic,” Frank Hugelmeyer, president of the National Marine Manufacturers Association, said in an interview with Yahoo Finance (video above) at the New York Boat Show at the Javits Center in New York City. “When you’re sitting there having a little bit of an existential moment, going ‘Oh boy, how long am I gonna live, how long is my family gonna live,’ health and wellness industries and quality-of-life industries exploded during that time.”
Boat 'supply chain was awful'
Despite the industry's growth, some builders say a combination of high demand, missing parts, and even freak weather all conspired to jam up production, making it difficult to capitalize on the overwhelming demand.
“The supply chain was awful,” Joan Maxwell, president of Regulator Marine, told Yahoo Finance. “We couldn’t tell our customers when we were going to deliver a boat because we were running out of things.”
To fight shortages, Maxwell's company sourced parts from as far as Australia and tracked certain parts and supplies to discover what shortages were holding up manufacturing. For instance, Maxwell explained that Regulator once found a shortage of the resin it used in waterproofing its boats originated in Texas.
“Who would’ve thought in the middle of a pandemic you would have an ice storm in Texas that would disrupt a boat process,” she said.
Still, builders agree the pandemic provided a boon for recreational boats.
“The biggest spike I can remember in my 40-year career was the pandemic,” Ann Baldree, senior vice president of Chaparral Boats, said in an interview with Yahoo Finance. She added that demand far outstripped her company’s ability to build new vessels, and for the first time in its history, Chaparral had to shift to allocating boats to dealers to ensure fair distribution.
“What we thought was going to be a disaster turned into the biggest opportunity I’ve seen,” Baldree said.
There are some hints of a pullback, however. The National Marine Manufacturers Association noted that 2022 sales of new powerboats have returned to the growth rates seen in pre-pandemic years, and the trade group expects 2023 to bring more of the same.
Nevertheless, NMMA’s Hugelmeyer says demand remains strong, with orders placed for boats despite external pressures like fuel prices, inflation, and wait times of up to two years.
“Those customers can afford them, and they’re willing to wait for them,” Hugelmeyer said.
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