`Yacht index' shows clear sailing ahead for big-ticket items
In what could be a barometer for other big-ticket items, such as major appliances, electronics, and automobiles, the yachting industry is recovering from a sharp ebbing of boat sales after October's stock market plunge. Yacht builders at the New York National Boat Show, which opened last weekend, report a sales spurt at the end of December which is continuing into January. ``People drew back and it was pretty slow in November, but we had a very strong December,'' says Chuck Resevick of O'Day boats in Fall River, Mass.
Vinton Sommerville, president of Bayliner Marine Corporation, manufacturers of small to medium-size powerboats, says, ```Black Monday' frightened people over the short term, but did not really hurt sales.''
December was Bayliner's best month of the year. And Mark Brickman, of Mark's Athletic Soles, says the first public day of the show, Jan. 9, was the best day he's ever had at a boat show.
Such sales are critical for the industry. New boat sales here and at the boat show coming up in Miami will determine whether the buying spurt will continue, since 40 percent of the industry's sales are made at such shows.
Economists will be watching these industries carefully for clues to consumer spending patterns on such goods as televisions, appliances, furniture, autos, and even new houses. ``Evidence about such spending is very slim,'' says Donald H. Straszheim, chief economist at Merrill Lynch & Co.
For that reason, economists watch shows like the Consumer Electronics Show in Las Vegas, Nev., (the mood there was reported to be fairly subdued), the National Association of Home Builders show going on this week in Dallas, and the boat shows.
Dealers at the boat show here are convinced 1988 will be a good year. ``The idea is not to talk ourselves into a recession,'' says John Arceri, a dealer with Boatland Inc., a Long Island powerboat dealer.
Other than the fall in the stock market, dealers and manufacturers see few signs of a storm ahead. ``Interest rates are low,'' says Gene Kohlmann, president of Ericson Yachts in Irvine, Calif. Indeed, financing for new boats can be wrapped up for about 9 percent, or less than that of a mortgage on a house.
Lending for boats has become such a profitable business it is even attracting the Wall Street firm of Shearson Lehman Brothers, which has begun providing financing for buyers of Chris Craft powerboats.
The boat industry also breathed easier when Congress was unable to garner enough votes to eliminate the interest deduction for yachts declared as second homes. ``If we lost that battle, I think we would have had a serious problem this year,'' Mr. Kohlmann says.
Thus, manufacturers are optimistic for the full year. Powerboat sales have been riding a wave for the past several years and appear poised to continue the surge. One positive sign is full order books for marine engine manufacturers. Richard Toone, sales manager of Johnson & Towers Inc., a Mount Laurel, N.J., distributor of Detroit Diesels, says sales last year rose 40 percent and are continuing at the same rate.
Sailboat manufacturers are likewise optimistic, even though sales have been in the doldrums for the past several years. Pearson and Sabre Yachts are both budgeting for 15 percent sales increases. Pearson is hoping to grow with the addition of a new 37-foot sailboat that has the amenities of a powerboat, including a microwave and air conditioning.
Richard Hinterhoeller, production manager of Hinterhoeller Yachts of St. Catherines, Ontario, says the company experienced only ``minor turbulence'' from the stock market dive.
``I certainly don't see any gloom and doom,'' says Mr. Hinterhoeller, whose company manufacturers the popular Nonsuch sailboats.
Exports have become a mainstay for the US industry, points out Frank Scalpone, executive vice-president of the National Marine Manufacturers Association, sponsor of the New York Boat Show. Bayliner sold $35 million of its boats overseas, compared with $11 million in 1986.
And Bruce Donaldson, the president of Chris Craft, says overseas growth is exploding. ``It's gone from 2 to 3 percent of our business to 10 to 15 percent,'' he explains.