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Boat dealers: Gulf oil spill crimped burgeoning recovery

The gulf oil spill hammered Florida's already beleaguered recreational boating industry during what was supposed to be the start of the industry's comeback this summer.

Instead, Florida boat sales dropped like an anchor, as much as 40 percent in June, according to a major retailer. Fewer people ventured off on boating vacations, undermining the need for prep service. And tourist-related businesses from parasailing to fishing remained stuck at the dock, meaning less need for maintenance and parts.

In terms of chilling sales, the spill's impact extended far beyond potential buyers turned off by thoughts of plowing through tar balls.

"It has caused so much uncertainty about people's livelihoods and businesses — restaurants, hotels, anything that relies on the water and tourism — that they just locked up at the idea of buying a boat," said Bill McGill, chairman and chief executive of Clearwater's MarineMax Inc., the nation's largest boat retailer with 56 stores in 19 states.

"We hear that not only in our Gulf Coast stores where there was oil on the beaches, but all over Florida and up the Atlantic Coast to the Carolinas where they feared they might get oil."

Other dealers pointed to effects of oil in the gulf.

"The spill impact has just been devastating," said Troy Morgan, general manager of Boat and Motor Superstores, which operates showrooms in Palm Harbor and Tampa.

"We spent the past year carefully cutting costs to survive and pinning our hopes on a recovery during what's normally our busiest season. The oil spill hit at the absolute worst time."

The business tried to shore up profits by loading up on less expensive used and repossessed boats. That shifted sales of new boats from 80 percent to less than 10 percent of the floor plan.

Steve Wacker, general manager of Thunder Marine in St. Petersburg, hesitated to pin too much blame on the spill after a June that improved over the doldrums of last June.

"Everything is slow," he said. "So how can you know why, when so few people come in the door?"

Indeed, oil is hardly the boating industry's only stiff headwind. Banks are hesitant to bankroll purchases and particularly new inventory for boatyards. Repossessed boats have flooded the market — not only from overextended boat owners, but more than 1,400 dealers that went out of business the past two years.

"I think you'll see that many more boat dealers go out of business within a year," McGill said.

He also expressed concern about the end of tax cuts that would hit prospective boat buyers who earn $250,000 or more a year. He at first told analysts in a conference call Thursday: "Don't get me started."

Customers "are scared to death about the end of the Bush tax cuts and what Obamacare will do to their businesses," he said.

MarineMax reported that sales already depressed by the slack economy dropped 24 percent in the quarter ended June 20 to $115 million, down from $151 million a year ago.

Thanks to cost cutting and nine store closings last year, the company generated net income of $512,000, compared with a loss of $9 million a year ago. Companywide, sales in stores open more than a year dropped 17 percent.

Boat dealers say news of the BP well being capped should help restore buyer confidence, but they have not seen it at the cash register.

Mark Albright can be reached at albright@sptimes.com or (727) 893-8252.

Boat dealers: Gulf oil spill crimped burgeoning recovery 07/29/10 [Last modified: Friday, July 30, 2010 2:55pm]
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