Mixed Messages - Understanding the Economy

Replies to This Discussion

Permalink Reply by Tom Treadgold on August 30, 2009 at 2:42pm

Jim, I feel the significant unemployment rates, pressure on borrowing, and the normal seasonal end of summer and unprecedented liquidation pricing has lead to a dramatic lack consumer confidence. For the next months I think we will continue to see a very skeptical customer who will need all our attention to help rebuild their confidence in our deaelrships and boating generally. Folks just do feel good about spending money right now. Until the employment recovers substantially over a longer time frame it is my belief we will see an erosion of business. So we need to knuckle down and involve cusomters in our businesses - We all need ideas to help us survive! Please share yours.

Permalink Reply by Dale Wentzel on August 30, 2009 at 5:47pm

Employment is the last thing to recover in a recession and this recession is expected to have a "jobless" recovery. We can already see just from the latest "Bellweather Report" that new boat sales bottomed out in January 09 and have been on a very slow but steady uptrend since then. Prices for homes in many areas have bottomed or are very close to bottoming and other areas have actually seen minor increases in the last 2 months. As people purchase foreclosed homes at much more reasonable prices, these new homeowners will not be burdened with payments they can't meet, but instead will have money left over for things like furniture, electronics, dinner's out and recreation. The sooner that all the foreclosures work out through the market the sooner each affected area will have it's own recovery. Places like Fort Meyers and SW Florida felt the effects of the housing crisis a full year before many other areas --- and they will likely recover a year sooner than areas that felt it later as well. People can not depend on others for employment and must start thinking about what they can do on their own to earn a living. Not everyone can do this, but we must encourage more to try.

A tremendous number of people who are wealthy today invested all the money they had into property and businesses during the 1990 - 1991 recession. Recessions are the only real opportunities given to us in a developed country to build real wealth. While it may be very difficult for many of us to focus on opportunity when we're doing all we can to survive, we must try to gather resources and convince those more fortunate to invest with us in the opportunities now all around.

Permalink Reply by Jim Sabia on October 3, 2009 at 3:15pm

Hi Tom, I just requested all members answer your question. It will be interesting to see what answers we get...

Permalink Reply by Chris Lyons on October 5, 2009 at 12:44pm

The good news is that there is a huge pent up demand for BOATING. I see more people buying boats in partnerships, people buying used and smaller boats that fit in there financial profile and more people boating together (more than one family on a boat). How do we tap into that pent up demand?
1. Is it financing? Buyers are still being put off on the purchasing becuase they can't get a letter from the pope to to the bank for a loan. If everyone remembers in the last 20 yrs. more than 50% of all boats sales sold was with financing. I could not tell you want the national rate is but in my area the dealers and brokers that I work with everyday tell me it less than 20%. WE STILL NEED A SOLUTION TO THE FINANCING PROBLEM!
2. Old inventory is still being dumped into the market. This is not getting our boatbuilders back to work. Financial instution needs to just take it in the shorts now rather than just siting on the unit for months and then taking the offer that they received six months ago. I see it everyday.
3. Keep people boating. Many RV dealers have a rental program. One RV dealer in my area will take the money from the rental and apply it to a new purchase if they buy 60 days from the rental. What happened to factory DEMO boats? Ok don't slam for all the reason why not to have a rental or charter program. I know all those reasons but I give you one reason why dealers and builders should have a program. YOU SELL MORE BOATS IF YOU KEEP YOUR CLIENTS CLOSER.

What I suggest is for us as a group of stake holders in our industry to form a national committee from every segment of the industry. The purpose of this committee is to find and share solutions to today's issue's. I understand that the NMMA, MRAA and other trade association boards must be working on finding solutions and I think that is great. What I am suggesting is a non political group from every segment of the industry that can have input in finding solutions.

With today's technology we all could meet on the internet via mysalesmeeting.com or any the others that is out there.

I'll be the first one to toss my hat in the ring. I'll even donate a few bucks to the effort. Anybody with me?

Permalink Reply by Peter Houseworth on August 31, 2009 at 2:05pm

With respect to the Bellwether Report it is true that the negative slide has stopped but we think it premature to call it a "turnaround". In another quarter or so, this will be a three year down market and it is in our view not over yet. The Bellwther Report is a moving average compared to the same period the prior year, and while the percentage decline has decelerated, from an abosolute units perspective things are very weak. Moreover, we also monitor another metric which is the age of inventory moving through the pipeline. Historically for all 16' plus power vessels this has averaged around 220 days. The industry made production adjustments along the way and was managing to keep things relatively speaking "between the lines" until the third quarter of 2008 when a renewed and strengthend decline began and inventories apparently balooned. At this point the average inventory days is nearly 400 days which would suggest that the some of the more recent activity would likely be attributed to highly distressed inventory. We will want to see that number start to decline (supply and demand are moving towards equilibrium) in order to confirm that things are improving.

Permalink Reply by Chris Lyons on August 31, 2009 at 3:32pm

It would be great if the latest buz was that we as a nation are going into recovery mode was correct. Don't get me wrong I want things to get better sooner rather than later. I try to filter out the hype that the news gives us and stick with the facts. I think we are in a "false recovery". Yes the stock market is doing much better, the jobless rate is starting to slowdown, gov. programs like "cash for clunkers" are working and NEW housing numbers are showing positive signs. I tend to look behind that information for the facts.

1. stock market is normally works on future 6 to 11 month growth. Corp. numbers are reflecting jobs cuts and other cost saving moves to pump up the stock. The true measure is sales revenue. We have not seen better numbers yet.
2. When I see job numbers gain we will see the economy get better.
3. Cash for clunkers boosted the economy but that came to an end.
4. Many builders, like in my area are selling new homes to finish up there developments. Standard Pacific started a huge development in my area 4 years ago. The only reason why are finishing these tracks is becuase if they don't the county will fine them. Look around. Have you seen any NEW developments started or are they just finishing up what they started.

I hope that I am wrong about a "false recovery".