As stir-crazy Americans take refuge on the water, the boat industry is booming

26.07.2020 15:15

Fortune.com

"It used to be that what people did was dominated by their kids' schedules," says one boat purveyor. "Now, their kids are unscheduled, and they have lots of time for boating."

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The Jersey Shore’s empty boatyards bear witness that locked-down leisure-seekers are making outings on our canals, creeks, and rivers the new jaunts to Disney World or Paris.

Over July Fourth weekend, my great friend Dave and I were driving past a boatyard that’s a landmark in Brick Township, N.J., a hamlet on a peninsula just inland from the Atlantic, and around 70 miles south of Times Square. I was shocked to see a mainly barren expanse––part of the creek-front Comstock Yacht Sales & Marina complex––dotted with just a couple of boats in dry dock, and featuring only a few new craft for sale. “Dave, does this mean the pandemic is killing boating?” I inquired. “Are you kidding?” riposted Dave. “I keep my boat at Comstock in the winter, and I visited every week. The place was so chock-full of new boats you couldn’t walk between them. After I put my Blackfin in the water, I go back in June, and the yard’s almost empty. The manager tells me, ‘Everything just sold out.’”

The boating surge in Brick Township illustrates a shift in lifestyles that’s sweeping America from Florida’s Intracoastal Waterway to Missouri’s Lake of the Ozarks to Washington’s Puget Sound. Brick Township, population 75,000, is honeycombed with rivers and canals. Many of its residents live there full-time and commute to work in New York City or Philadelphia, while a large portion come down on weekends and for summer vacations. This was always a boating haven—thousands of Brick Township’s mainly affluent families live on the water in large homes clustered on narrow lots, their private docks lined up cheek by jowl. But the COVID-19 outbreak has taken the craving for leisure on the seas to a whole new level.

“People from here aren’t going to Florida theme parks; there’s no soccer or basketball for the kids; I canceled a cruise to Alaska,” says Don Ditzel, vice president of Comstock, a property his family bought in the early 1970s to build vessels from wood harvested from their cedar farm. “You can’t swing a purse without hitting the water here. People are tired of the four walls of their houses. It’s an awakening, the same thing that’s happening with RVs.” He notes “a huge influx of people” from New York and Pennsylvania who are either buying houses in Brick Township or working full-time from their summer homes there. “They have all day to do things with their kids, so they’ve turned to boating, which is about the most fun you can have while social distancing,” says Ditzel. “We’re seeing just the growth impetus the business has been lacking, a jump in younger, first-time customers.” The water is becoming the chief refuge for stir-crazy Americans.

My friend David’s son Conrad, a 24-year-old marketing manager, is shopping for a new, 17-foot fishing boat. Conrad wants his own craft in part because he enjoys taking his dad’s Blackfin Sportfisherman to F-Cove, a waterway off the nearby Barnegat Bay where people beach their boats and join in a big floating tailgate party while typically keeping a safe distance from the vessel parked alongside. The boaters, who encompass everyone from retirees to college kids, even drop rubber rafts so that they can row around greeting friends.

This writer must confess that he’s anything but nautical, and that his interest in boating arises strictly from studying the industries prospering from how Americans are coping with the pandemic. That I’ve never found my sea legs is surprising, since my father, whom I called “Skipper,” was a licensed “master mariner” who spent his career as a first mate on oil tankers, and while on land, called our home’s walls “the bulkhead” and the floors “the deck.” He dubbed this boat-shy offspring, “the bosun.” When challenged by the bosun, Skipper would respond, “Slack away easy.” A typical description of someone whose reasoning he found less than sound: “He’s not shipping with a full seabag.”

Overall, America’s boating business is showing the strongest growth in over a decade. The Great Recession hammered leisure craft, pummeling units sold from over 300,000 a year in 2006 and 2007 to a low of around 180,000 from mid-2009 to mid-2014, according to statistics from the National Marine Manufacturers Association that represents makers of boats and marine engines. “The Great Recession hit the industry hard,” says Melissa Danko, executive director of the Marine Trades Association of New Jersey. “We went down by 100,000 registered boats in two decades,” a drop of 40%. As personal incomes began a strong run, and the stock market ascended, national sales gradually recovered to the 250,000 range in 2019.

In January and February, the numbers continued their rise from strong 2019 levels. Then, the COVID-driven shutdown hammered sales by over one-third in April and May to around 17,000 a month. Talk about a V––deliveries took a moonshot in May to around 28,000, the best number since November of 2007. In hot categories, sales hit record monthly highs, with personal watercraft, or PWC, jumping 41% in June over last year, and for May, jet boats beating last year’s number by 31%. “We’d stabilized, but what we’re seeing now is a growth opportunity driven by new buyers,” says Danko.

Personal water craft racing in Miami Beach. “No one could have predicted this record resurgence.” one dealer says about sales.”Who knows what will happen when people get back to traveling? I don’t think it will go on for years.”

Powering a trend

The takeoff at Yamaha WaterCraft offers an onboard view of the fresh allure and new customers powering leisure boating. Yamaha WaterCraft, a division of Yamaha Motor Corp. USA, manufactures and sells the two product lines that have benefited most from the romance with boating, personal watercraft and jet boats. Heading sales and marketing is Bryan Seti, a 22-year Yamaha veteran. Yamaha makes its PWCs under the WaveRunner brand, and its Yamaha jet boats sold in the U.S., he explains, at two plants in Georgia and Tennessee. The two lines are both aimed at first-time buyers. The WaverRunners are open vessels, typically 11 feet in length, that in some ways resemble motorcycles on the water, carrying one to three people, all riding on a single seat. The drivers love speeding across the foam, often towing kids on inflatables for tubing. WaveRunner prices run from $6,000 to $15,000.

Jet boats are much bigger, enclosed craft measuring 19 to 27 feet, featuring internal-propulsion motors built into the hull of the boat, and lots of amenities from sound systems to showers and water sports towers. Prices range from $30,000 to $130,000. “Both the WaveRunners and jet boats are versatile, so they’re ideally suited to the new quest for leisure,” says Seti. “You can fish with WaveRunners and jet boats; use them for tubing or wakesurfing; and for jet boats, spend a week cruising the Long Island Sound or Lake Charles to visit friends and stop at restaurants.” On average, buyers until recently have mainly been in their mid-to late forties for both products. “People usually buy after they’ve hit peak earnings years, had kids, and bought a car or two, and a house,” says Seti.

A 2021 Yamaha AR-190. Yamaha WaterCraft, a unit of Yamaha Motor of Japan, manufactures and sells the two product lines that have benefited most from the the romance with boating, PWC and Jet Boats.

For years, Yamaha has held far and away top market share in both PWCs and jet boats. All told, those categories account for around one-third of all powerboat sales. Yamaha’s WaveRunner holds 42% of the approximately 80,000 annual PWC market, and sells nine in 10, or 5,500 of 6,000 new jet boats that hit the water each year. Since 2014, unit sales have been growing at around 5% a year, outpacing the overall industry. “This year got off to a great start,” says Seti. “January and February were very strong months. Then sales fell sharply in late March. Dealers we sell to didn’t know if they’d be out of work in 60 days.” Seti reckoned that Yamaha needed to provide extensive aid to its customers “as a bridge for the next 60 to 90 days so that a whole year didn’t get wiped out.”

Yamaha’s support came in three parts. First, it made sure dealers didn’t stop running ads by covering 100% of their advertising budgets for March and April. “We picked up the tab on ads,” Seti remarks. Second, Yamaha provided the dealers’ customers with financing at 0% interest and no down payment for 180 days for boats and 90 days for WaveRunners. “The summer’s on us,” he told them. Third, Yamaha waived “flooring” fees, the interest it charges dealers for unsold boats on display in their yards and showrooms.

At the same time Yamaha’s backing encouraged dealers to keep reaching for customers, the pandemic was transforming the entire sales process from person to person and kicking the hull to digital. Says Seti: “The old way was, you come to a big boat show in January or February, see one you love and sit at the controls, and meet the dealer in your area selling that model. And in the spring, call or visit the dealer to put in an order.” Many customers, he says, demanded that the dealer take them for a spin before buying. Dealers fretted that customers traditionally liked to meet face to face with a salesperson, and because their offices were mostly closed, buyers would dwindle. “Then, the way they marketed and the way customers purchased totally changed,” he says. “We helped dealers get a lot better at selling over Zoom and providing video tours, and using e-docs for signing the contracts. Suddenly, customers became comfortable buying online.”

For what the industry calls “the season,” the peak months from October 2019 to June of this year, sales of WaveRunners have jumped from 21,000 to 26,000, marking an increase of 23% over the same period spanning 2018 to 2019 and establishing a new record. As for jet boats, its dealers have sold 3,630 units from October through June, 1,047 or 29% more than in the previous season.

For Seti, that this season beats last season by a wide margin, despite the fall in March, proves that the uptrend (unlike the author) has sea legs. “We always focused on first-time buyers, but now we’re seeing a lot more of them, including people in their late-thirties to mid-forties,” he says. “That’s fresh demand. This is a fundamental change. It will spur boating for many years, because once the water life is in your DNA, it stays there.” He predicts that the kids whose families just bought their first craft will get hooked on the romance of boating. Many children will go fishing and surfing every day this summer instead of trekking to camp or going on cruises. “In the pandemic, boating is ultimate staycation,” says Seti.

Younger buyer, he says, are finding that boating is a good deal because they now have a lot more time to spend on the water. Instead of visiting the lake or shore house only on weekends, the parents are living there all spring and summer, and working from home. “Someone who’s 35 can pay $30,000 for a 19-footer and take it out three or four days a week, six hours at a time,” says Seti. “That’s a bargain when you consider that they used to spend $4,000 for two season tickets for pro sporting events.”

I also interviewed dealers, and they confirmed Seti’s view that Internet shopping has taken charge––in a flash. “Our web traffic is up 1,000% in 90 days,” says Dale Law, general manager at the Lake of the Ozarks branch of MarineMax, a publicly traded boat seller whose stock just hit a 14-year high. Law notes that sales are running 15% ahead of last year, and it’s all about e-commerce: “People watch videos then call a salesperson and say, ‘Tell me more about the boat.’ But then they’re buying in record numbers online, without even test-driving.”

Law adds that “no one could have predicted this record resurgence.” He’s encouraged by a surge in first-time buyers, but remains unsure how long the boom will last. “Who knows what will happen when people get back to traveling?” he says. Ditzel of Comstock, back in Brick Township, is upbeat. “What we needed was new blood to make up for the boaters who are aging out faster than new buyers,” he says. “And that’s happening. It used to be that what people did was dominated by their kids’ schedules,” he adds. “Now, their kids are unscheduled, and they have lots of time for boating. We’re selling fun to fill that time.” Sounds so good I’m actually looking forward to an outing on Dave’s Blackfin. I’ll be the one on the fly bridge holding a daiquiri, and telling tales about the time a cargo of circus elephants, bowled over in a hurricane and careening across the deck, nearly capsized Skipper’s tanker into a boiling sea.