2009 has absolutely been the worst economic year that I have seen in the 50 years I have been involved in the boating industry, and I have seen the industry go through and survive a lot of recessions. However, none of the past downturns have had the devastating effect on the overall economy and all recreational industries like what we are seeing now.

Dealers who have survived this economic “perfect storm” so far are now facing a long winter, which means the overhead continues and sales opportunities are even slimmer. The challenge now is surviving the next few months of the off-season. It is not a pretty picture. The latest report shows unemployment just hit 9.8% and is expected to top 10% this winter. And economists are predicting a weak recovery as we slowly climb out of the worst recession since the great depression. The Conference Board’s Consumer Confidence Index revealed that consumers are worried about job security and this is offsetting any positive reports on rising home values and the stock market gains.

The good news is that a lot of dealers have found ways to survive the recession by taking their business focus back to the basics. Here is what four dealers had to say about surviving this winter:

Duncan Marine, Post Falls, Idaho

Kraig Duncan said, “If your business is based on sales right now, you are in big trouble. Dealerships like us that are focused more on service than sales are surviving. Service has been relatively good for us. Nobody is buying anything new. They are repairing and fixing the boats they own.”

Note: This is consistent with what I have seen during several economic downturns over the past 50 years. When committed boaters delay trading for a new boat because the economy is bad, they will repair and accessorize what they have and keep on boating. Parts, accessories and service business has always been pretty good over the years, even when boat sales are down.

Duncan Marine dropped one of their two outboard motor lines this year because the rep tried to pressure them to load up with loose engines. Duncan told the rep he wouldn’t do that now in this economy. He said he asked the rep, “Have you read a newspaper lately?” He was referring, of course, to all the bad economic news that is filling the news. Duncan couldn’t understand why any engine company would take that high-pressure approach in this economy. I don’t understand it either! The outboard brand that he kept is letting him buy engines as needed.

Duncan added, “I am in the midst of winterizing and storing boats right now, which will keep us busy for the next month to a month and a half. I am not inventorying any more than I have to right now.”

Huggins Outboard, Albany, Georgia

Bill Huggins has been a long-time friend and is still active in the business. His son Richard, however, has taken over ownership and management of the dealership. When asked how they were surviving in this economic mess Richard, said, “The only way we are still here is the fact that we are a 68-year-old boat dealership that is 100% capitalized. I don’t have any debt. If I had debt, I would likely be in trouble.”

He added, “I was scared six months ago when I had way too much ‘08 inventory, but I was blessed with assistance from a couple of boat manufacturers that helped us dispose of old inventory. So we have that money in the bank instead of in boats sitting out there fixing to be two years old instead of one year old. Chaparral’s “Cash Advantage Discount” program enabled us to sell year-old inventory, and Tracker Marine also had a program that really helped us. They gave us a cash consumer sales incentive of up to 18% on new boats that we had, depending on how many months we had the boats in inventory. Up to 12 months, 12 to 18 months, 18 to 24 and 24 months and over were the age groups of boat inventory for the cash incentive rebates. This really helped us sell some boat inventory.”

Richard then said, “Our service business is what is keeping us alive now. It pays the bills. And accessory sales are good. Your store has to look like it ought to with gondolas, a good accessory inventory and attractive displays. You have to keep the shelves full, and if you do, a customer will come in to buy one thing and end up with six other things on the checkout counter. I know people can buy an accessory on the Internet with the click of a finger and they can get it in three days. But a lot of them don’t want to wait three days. They want it now. Keep the shelves full and make it look like you are in business and good things will happen.”

Richard’s Dad, Bill, added, “The 2009 boating season is all but over for the year. We landed on our feet, but the profit margin won’t be what we would like. But we’re planning for next year hoping that the economy will improve. We are keeping all of our employees for as long as we can and hope the marine business will return to profitability. I think it will.”

3A Marine Service, Hingham, Massachusetts

I have also known Ed Lofgren, a highly respected, long time dealer, for a number of years. Ed is also Chairman of the Board of the Marine Retailers Association of America (MRAA). Ed said he had five profit centers and that four of them were doing nicely. Ed said, “The key is the service organization. That is our foundation.”

His profit centers are:

1. Service: This is the mainstay of the dealership’s business.
2. Storage
3. Transportation: Ed said, “We have two hydraulic trailers, and we do about 600 round trips per year hauling customer boats and sometimes our own.
4. Parts and Accessories
5. New and used boat sales: Ed commented, “It is the used boat sales that are doing pretty good. It is the new boat sales that we have had trouble with the past two years.”

Ed is still keeping all of his employees and will continue his focus on service as his survival strategy.

Counce Marine, Inc., Memphis, TN

Tandy Counce has turned over the day-to-day running of the business to his son, but he still comes to the store for three or more hours a day.

Tandy said, “We are one of only about three dealers now in the Memphis area, but I can remember years ago when there were more boat dealers in the area than car dealers. We do a lot of service work and sell a few boats and motors, but not as many as we used to. Service business keeps us going.”

Conclusion

Focus on service and winterizing is obviously what is helping many dealers survive. And I hear from many that they plan on reducing the number of boat and motor lines they will handle in the future. One dealer said he had cut the number of boat and motor lines he handles in half. He said he would still handle three outboard motor brands. (That still seems like a lot to me.) Overall, he felt the reduction in product lines would not impact his business but would help in his floor plans.

I applaud the boat companies that are helping their dealers move non-current product.

Dealers are the lifeblood of this industry, and everything possible should be done to help them survive this coming winter as well as until the economy rebounds – hopefully in 2010.