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disappearing boat manufacturers

5K views 32 replies 21 participants last post by  Minnesail 
#1 ·
I spoke to someone who went to the Annapolis show and he mentioned that Bavaria announced they were leaving the US market, is that true? Their website appears to be down. I know they have been struggling in recent years, and cut back a lot fo their dealers, including one local to me. I doubt I would be interested in one, but it is sad to see yet another manufacturer leave our market. Especially with the disappearance of Island Packet (though there are likely enough of them made for the market out there) and the questionability of Seaward Yachts.

Then to add to that Marlow Hunter was a no-show at the show? That can't be good at all, are they on there way out as well? Same guy said they filed for bankruptcy. Funny all of the above are boats I would not be interested in, but it is sad to see the companies seem to disappear, makes me wonder what it might do to the market I will be in a few years when I go to move up, not that I would be likely to buy new.
 
#2 · (Edited)
#3 ·
I was poking around the Travel Talk Online forums in anticipation of an upcoming charter and did see a post stating that the HQ in Germany informed the U.S. Bavaria dealer that they were severing ties. Ten minutes before the show started. I'll post the link after I retrace my path through the forum.

Found it:

Traveltalkonline: Bavaria Yachts USA Ceases Operations
That is cold, I hope that Bavaria USA is able to recover its costs from the parent company.

That is one ugly design on that forum! i don't think I could stare at that for very long, looks like sites from my original Compuserve dial-up.
 
#9 ·
I would think the American market very diifficult to make much profit.

A boat needs many imported expensive items. The hull itself, and the basic furniture, are not worth a huge amount.
The Americans ate super litigious and harsh on getting deep discounts.

Transport cost for European boats.

Warrantee issues on a complicated boat combined with the litigious society.

One bad design can let a competitor get a huge advantage.

Scurrilous internet lies about new build quality.

Yes, boat builibg in or for the USA would not be easy.
 
#11 ·
Im not surprised at all by the dwindling number of boats, skiing, golfing and other 'recreational time stuff' that depends mostly on 'disposable income'.
Especially when in most places of USA/Canada/EU as well as worldwide, the average 'standard of living' is and has been in a nosedive for quite some time.
One simply cannot have massive rises in government spending, increasing regulatory costs, as well as massive hidden currency devaluation (ie. quantitative easing), etc.; without seriously affecting the confidence of a consumer economy by such a razors edge & sustained 'liquidity crisis'.
 
#12 ·
One simply cannot have massive rises in government spending, increasing regulatory costs, as well as massive hidden currency devaluation (ie. quantitative easing), etc.; without seriously affecting the confidence of a consumer economy by such a razors edge & sustained 'liquidity crisis'.
Well, yes, you are right.
Without getting into a geo-political argument Henry Ford said something like manufacturing at a price low enough for a person working hard can buy.
That's manufacturing... not a service industry to manufacturers in low salary countries.

And now Ford anounces a new plant in Mexico.

He must be turning in his grave!
 
#13 · (Edited by Moderator)
Well, yes, you are right.
Without getting into a geo-political argument Henry Ford said something like manufacturing at a price low enough for a person working hard can buy.
Perfect answer in my opinion. The industry caters to the needs of wealthy retirees only. Neither Hunter nor Beneteau offers an entry level cruiser below 30'. Catalina only has the 275.

Ford would not survive on the Town Car and Expedition alone. If you want to build brand loyalty you need to get people into a Fiesta or a Ranger first, then convince them they need an Expedition to make a safe and comfortable trip to Walmart.

Imagine if Fords entry level Vehicle was a Lincoln Continental?
 
#14 ·
Well this thread could go political very easy. Facts are that the large corporations have never had it so good and for so long in America. The elites have never had it so good for so long and then there is everyone else who have paid the bills for these groups and are not seeing any real improvement in incomes. Not a good situation for those in the middle.
 
#15 ·
"That is one ugly design on that forum! i don't think I could stare at that for very long, looks like sites from my original Compuserve dial-up."

Yeah, but I'd prefer that design any day if it meant getting rid of all these adverts.
 
#16 ·
High end sailboats will continue to sell - but I think selling the typical 30 footer to a typical family in the US is very difficult. First just the cost of a new boat is way to much for the average family, the costs to keep a sailboat in a slip anywhere along the coast keeps going up, also tons of used sailboats at cheap prices - in Florida you can buy a used 19070's era 30 footer for $5K

There seems to be interest in smaller boats for adventure type races - Everglades Challenge in Florida , Alaska Challenge on the west coast, one design racing seems to be doing OK, but I think the market has hit rock bottom for selling new sailboats under 35 feet.

Would be interested to hear more about Marlow - obviously Hunter filed BK and got bought by them - maybe it turned out to be a bad acquisition.

Great time to be a buyer of a used sailboat under 35 feet -
 
#18 ·
As a percent of the final sales price, how much do you think the manufacturer keeps? I doubt it is an astonishing amount. Further, whatever it is, has to ultimately be measured as percent of the million (hundreds of millions) invested in the factory and it's fixtures, as a return on investment. Otherwise, the owners would be better keeping their money in a savings account and not running the business.

I bet this later point is the rub. Many boat manufacturers can figure out how to sell at a profit, just not one that is worth the investment and risk.

As for entry level new boats, the product would have to be scaled down significantly, but I bet labor, factories and jigs just aren't that different between a bare bones model and a souped up one. Therefore, they are motivated to make more profit on more fittings, to justify the investment.

Further, all industries are motivated to reduce price and sell more volume, if the resultant is higher return on investment. In the case of new boats, I suspect, as you reduce price to reach a less affluent group, that group wouldn't respond with sufficient increased sales to "make it up in volume". Compared to the past generation or two, fancier cars, bigger houses, cell phones, cable TV, etc, etc, all use up the discretionary income of the upper-middle class now. They don't have the surplus to respond to lower new boat prices.
 
#19 ·
As a percent of the final sales price, how much do you think the manufacturer keeps? I doubt it is an astonishing amount. Further, whatever it is, has to ultimately be measured as percent of the million (hundreds of millions) invested in the factory and it's fixtures, as a return on investment. Otherwise, the owners would be better keeping their money in a savings account and not running the business.

I bet this later point is the rub. Many boat manufacturers can figure out how to sell at a profit, just not one that is worth the investment and risk.

As for entry level new boats, the product would have to be scaled down significantly, but I bet labor, factories and jigs just aren't that different between a bare bones model and a souped up one. Therefore, they are motivated to make more profit on more fittings, to justify the investment.

Further, all industries are motivated to reduce price and sell more volume, if the resultant is higher return on investment. In the case of new boats, I suspect, as you reduce price to reach a less affluent group, that group wouldn't respond with sufficient increased sales to "make it up in volume". Compared to the past generation or two, fancier cars, bigger houses, cell phones, cable TV, etc, etc, all use up the discretionary income of the upper-middle class now. They don't have the surplus to respond to lower new boat prices.
In the world we used to know, pre-2008 interest rates ran about 3% above inflation, give or take. You could still make a few bucks on bank interest or savings bonds. Now we have some banks that have negative interest rates and some bonds are also negative.
Once the Wall Street boys got finished they pretty much inoculated the whole world with next to worthless investments and it was a complete game changer.
With interest rates at all time lows it makes sense for companies to borrow money and make things because you don't need the same ROI as you would have in the past.
These current interest rates are bracing both the stock market and the housing market and look out if and when that changes.
There is no question that margins are much better on higher priced luxury items like larger boats, both monos and multihulls. The smaller product is just good infill to keep some people working and produce products that these buyers will want with the hope that when the day arrives that they want to buy a larger boat they will have retained some brand loyalty . The real question is just how many folks have the income to buy new when there is a glut of used boats in the market. There is always an elastic between the new and used markets. The biggest competitors for the builders are the boats they sold 3-5 years ago so there is constant pressure to keep designing "new and improved" models that will leave the buyers unsatisfied with last year's models. It's a game that gets tougher to play each year but play they must unless they want to end up like Island Packet. Currently the demographics are favoring these companies because the baby boomers are retiring in huge numbers and many of them have some wealth that allows them to make choices. It's one of the main reasons their are so damn many of us out here right now. There are still lots more to come so this wave will last for a while longer.
 
#21 ·
IMHO boats are labor intensive to manufacture. Molds are loaded with gel coat, FG cloth, and resin by people. People then pull stuff out of molds and trim the edges. People then fasten the modled parts together. Some of the internal furniture even in production boats is hand built. Systems are installed by hand. Plumbing is by hand. Electrical wiring is by hand. Engines are put in by people.

Forget material cost and just try to add up total employee hours per boat, then multiply by any reasonable or even unreasonable hourly rate.

Add to this that pretty much everything is low volume, making it hard to justify further automation. There might be even a reverse Moore's law for boats.

It's a tough business. I think people who go into any type of marine business must be driven by love not money.
 
#22 ·
IMHO boats are labor intensive to manufacture. Molds are loaded with gel coat, FG cloth, and resin by people. People then pull stuff out of molds and trim the edges. People then fasten the modled parts together. Some of the internal furniture even in production boats is hand built. Systems are installed by hand. Plumbing is by hand. Electrical wiring is by hand. Engines are put in by people.

Forget material cost and just try to add up total employee hours per boat, then multiply by any reasonable or even unreasonable hourly rate.

Add to this that pretty much everything is low volume, making it hard to justify further automation. There might be even a reverse Moore's law for boats.

It's a tough business. I think people who go into any type of marine business must be driven by love not money.
Crazy Love, but "love" indeed!:crying

While I realize that things change over time, but perhaps they remain somewhat the same. Back in 1980 I decided to sell small sailboats for a small builder in the NW. Dinghies up to a 24' performance cruiser. My "gross profit" on any and all was about 17%.
What with advertising, the occasional boat show, delivery trips, and other expenses, in order to show any 'income' my time was valued at a tad above zero.
I liked sailing a lot, and still do.... but after three years I gave it up.
It was a Good thing I had a day job.
I have no regrets, but in talking to others in the industry, there was little profit sloshing around for any of them! :)
 
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#23 ·
We gripe and moan, but think about the size inflation. 40' is the new 35', or even 30'. Don't even talk sailing dinghies--they don't think that is dignified sailing.

We need 5-10,000 integrated electronic nav. Perfect fit and finish. All the latest. Unfortunately, unlike other goods, production costs have not been reduced by modernization.

What do we expect? We did it to ourselves.
 
#24 ·
I'm pretty sure CapeCodda nailed the big part of it. Labor costs are the anchor strapped to every business's waist, and sales volume is the PFD. If you're lucky enough to make it to land (profit, in this ridiculous metaphor), your competitors are there trying to shove you back in the water.

The second problem is that yachting is in fact super popular. So popular that buying a yacht is little more than the price of admission. Marina costs, and marine service costs, have zoomed to the moon, pushing the cost of ownership out of reach even of those who can afford to buy. That's a function of demand, which is directly related to the number of people involved in yachting -- a growing number. People buy a used yacht as much as anything in order to move some of their budget from the purchase price to the ownership costs. So to some extent, the slowdown in some yacht sales is a direct result of the popularity of yachting ...

To be fair, boat ownership seems to be what is popular, since so many rarely actually leave the marina and go sailing ... but of course this still qualifies as demand, pushing the costs up. And the costs push entry level buyers out.

It's kind of a push-pull scenario that will thus always seek equilibrium. And I wonder if the highly constrained supply that is even growing smaller in some areas is a large factor. (Only so much coastline; only so many places for marinas; and marina real estate use often loses out to more profitable condos or homes with docks.) This is even true inland on fresh water reservoirs.

-
 
#26 ·
Somewhere reported that Bavaria Yachts GMBH got a court order and had the sheriffs seize the boat(s) that the US distributor was going to show at Annapolis. If that is true, this is probably because of payments for boats going astray. Boat dealers and manufacturers have always been a thin market industry. A hiccup in the economy, tax laws by 'politics of envy' legislatures, ocean front property being way more valuable as a condo than a marina, and expensive slip rent for those marinas still around make it really hard to get people to buy boats Couple that with the outrageous prices for new boats and boating is becoming the province of the super rich only.
 
#27 ·
Niche markets... they come and go.

I don't think we should see the closures of sailboat manufacturers as an indicator of the boating market.
It seems by these closings that sales of monohulls are going down, multis may be going up or steady.
Also, with low fuel prices, I bet the motor boat market isn't hurting either.
 
#29 ·
I spoke to someone who went to the Annapolis show and he mentioned that Bavaria announced they were leaving the US market, is that true? Their website appears to be down. I know they have been struggling in recent years, and cut back a lot fo their dealers, including one local to me. I doubt I would be interested in one, but it is sad to see yet another manufacturer leave our market.
Bavaria indeed has a problem. Its call Hanse.
 
#30 ·
When we were building our Westsail 32 in Costa Mesa, CA it seemed like there was a boat manufacturer on every corner, Islander, Ericson, Cal, Yankee, Columbia, Alajuela, Westsail, and probably some more. None of those companies are still in business. California's anti business attitude, Politics of Envy by State and Federal Government, skyrocketing real estate values and a changing market has wiped out those businesses. There were little boatyards scattered throughout Costa Mesa and a lot of boats being built in backyards but those yards and backyards are now high end condo's or mamoth residences. The US boat building industry has moved to lower labor and real estate states and the ranks have been greatly thinned. The few remaining US boat builders are either small custom yards or hanging on by the skin of their teeth, Pacific Sea Craft. Costs for entry boats has gone through the roof and bigger boats are out of sight. The market for older boats is soft even though they are typically a 1/3rd or less of a new boat. At least in SoCal marina slips are expensive, $370 a month for a 29' slip seem typical, and the marinas have a wait list especially for slips over 40'. Virtually no new marinas have been built in the last 30 years thanks to the Coastal Commission and highest and best use of water front for condominiums. San Francisco Bay has been somewhat better for cost though forget living aboard as those slips are scarce as hens teeth thanks to the government. Even there there is constant pressure on the marine industry. In Alameda, Svendsens yard, the adjoining marina, boat storage yard and marine commercial area is up for redevelopment as high end condo's with virtually none of the marine use remaining. Several other of the older, funkier marinas are probably going to go soon as the City Fathers want the tax revenue and don't care about the maritime history and use of the property. Given all these negatives, little wonder that there is a dwindling number of boat builders and boat ownership.
 
#32 ·
I just read a book, written by Gallop, on the differences between Millennials, GenX, Baby Boomers and Traditionalists.

One that was striking (among many) was the percentage of Millennial's income they devote to vacations and entertainment. It was higher than all the others. I've seen this personally with our 20 somethings. They will spend thousands flying to an all-inclusive Caribbean or Mexican resort, almost annually. When I (a boomer) was their age, I never made that choice. I would drive to someplace very inexpensive, split a crappy rental with my siblings or just have a stay-cation at home. The money they spend on these more extravagant vacations would easily afford a small coastal cruising sailboat.

Folks are spending their money differently now. I've noted (not in Gallop) that recurring expenses today far exceed the burden from years ago: cell phones, internet access, cable TV, etc. Add fancier cars and housing too.
 
#33 ·
This site Number of registered recreational boating vessels in the U.S. from 1980 to 2015 (in millions) shows boat ownership steadily increasing from 1980 to about 2000, when it levels out. It declined with the recession through 2014 to about the level from 1995, then 2015 shows an increase.

This site Facts & Figures has some more numbers:
An estimated 171,500 new powerboats were sold in 2014, an increase of 6.4 percent over 2013.
Boats are uniquely made in America: 94.9% of powerboats sold in the U.S. are made in the U.S.
Of course they're talking about mostly smaller powerboats.
 
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