Miami International Boat Show, recession ruminations
I jetted away from the Miami Boat Show (on a half-empty plane!) with loads of coming Panbo electronics material, but first I’ll discuss the behind-the-booth question of the show: How bad will 2009 be? Attendance numbers aren’t available yet (update: 28% off), but the aisles often seemed emptier than usual, and the Miami Herald reported way low hotel occupancy. Note, though, that the Shelburne sales guy quoted there has bigger problems than the recession, to which I can personally attest…
Ever had to ask, twice even, for soap and shampoo at a premium price hotel? How about one without coffee or newspapers, even in the lobby, but with odd odors? Well, stay away from the Shelburne Beach Resort! But it is a good example of how not to do business these days, and will likely be under new management or ownership, or shuttered, next year. Surely the marine companies which for years signed on to high group rates and guaranteed nights there will now be looking for better deals and service; and the hotels that respond well may win their business for years to come.
Isn’t that what’s happening everywhere? A reliable source guesses that marine electronics sales will be off 30% this year, and boat sales will be worse. But all brands won’t suffer the same, and weren’t equally prepared for the suffering in the first place. Rumors flew of builder “X” defaulting on loans, retailer “Y” shutting down, and manufacturer “Z” demanding credit card payment from major dealers. I don’t know that any were true, but am sure that the recreational marine business is pretty uncertain and scary. Still I’d rather think about the electronics and boats that will be sold and enjoyed, and a nice dawn moment had in the hotel I guess this rant is largely about (click on photo ;-).
Hey Ben, thanks for your observations from the front lines of the old economy. It’s going to be some time before we really know the extent of the damage, but the boating industry could well be the miners’ canary. Keeping our fingers crossed, keep the reports coming.
The Toronto boat show was the same (and the economy here is more dinged than crumpled so far, although this could change). Light attendance, cynical stares at certain boat types, but still a lot of line-up at the giant motor cruisers that start at a million bucks (bathtub with gold taps optional).
The NMEA2000 and broadband radar and solar panel technologies are changing so rapidly that I deferred finalizing my purchases until next year (we are doing a circ starting in 2011…we hope). It was pointed out to me that I could simply “pre-wire” all my systems and then cap off the ends with marrettes until I really need to buy more gear; this seems prudent, esp. as the plunging price of copper should work its way down to the reels of 12 ga. I need to buy shortly.
Good to see you again in Miami on the FLIR Cruise, Ben. I’ve finally given in and registered, if only to give my skewed perspective on the economic effects on the marine electronics industry and the quality of the Shelbourne dump.
First off, although I’m in the business and hear throughout the industry the constant rumblings of financial crisis, I still hold on optimistic outlook on 2009. While sales are down across the whole industry, never underestimate the pent up demand of the American consumer. The economy has been bad for years, it was the crash in October that sent everyone running to the hills to prepare for the second Great Depression. Boaters will continue to use their boats, continue to upgrade, because that is what they enjoy. That is why we’re all here in the first place. This is our passion, and while rumors fly, keep in mind this has been happenening long before our ‘recession.’ Call me idealistic and naive, but this is in my mind is what economists call a ‘market correction.’ You can’t keep us wharf rats off the water forever, so I’m cautiously optimistic that 2009 will be the beginning of a market turnaround as the demand of the boating community takes advantage of the drop in pricing for boats and equipment across the board.
As for the Shelbourne, with the turnout down in Miami you could have stayed at the Delano for $75 a night. I’ve been to that Pink Monstrosity on Collins before, and aside from the easy walk to the beach it has the amenities and carpet stains I would expect from a Waffle House Bed’n’Breakfast. Either way, I’ll email you a list of top-notch South Beach hotels, including Gianni Versace’s former mansion-turned-luxury -hotel in which you can get a tour of the estate for a mere $250, including a free cocktail! Such a deal.
I’ll wait anxiously for your upcoming posts regarding the latest and greatest premiered in Miami before I submit further banter. Once again it was great seeing you down in Miami, let me know when you want to get together for Cohibas and mojitos on City island to discuss the State of the Industry.
PS: Marc, I actually heard good things about the Toronto Show, although the gate wasn’t spectacular, sales were up across the board, as it also was at the AC and Hartford shows. It will be interesting to see what will happen as we approach the season here in NY if fuel prices continue to stay static.
There is an old joke that a recession is when your neighbor losses his job, a depression is when you lose your job. Maybe we can expand it to now say that a “market correction” is when you hear that somebody lost their job.
My opinion, apparently shared by many and backed up by quite a bit of objective data, is that this is a very serious economic recession. After 20 years of cheap money from Greenspan, the fuel pump turns out to not be connected to a tank, the valve is rusted, and the station owner emptied the register and left the country.
Look around! People have lost their jobs, lost major portions of their retirement savings, lost major portions of their interest income (notice the lower interest rates?) and are afraid. They have less money to spend. People will spend less on boats, and the electronic gadgets that go in them, just like they’ll spend less on every other discretionary purchase. It would be naive to think that someone will buy a new plotter rather than pay for their kid’s college education or their spouse’s health care.
Retailers will go out of business (remember Jack Rabbit Marine?), marginal manufacturers will fail and Navico will probably be forced to consolidate some brands (like GM).
The silver lining is that sometimes in these situations vendors are forced to make tough decisions and confront the issues they’ve avoided. When Apple was on the ropes, Steve Jobs came back and dumped all the proprietary hardware in the Macintosh that didn’t add real customer value and adopted industry standard hardware. By doing so he broadened his supplier base, reduced his manufacturing costs, service/support costs and inventory/WIP and improved his cash flow.
Marine electronics manufacturers are awash in proprietary solutions which do not add any value over industry standard solutions and should take this opportunity to do the same thing.
And someday marine electronics manufacturers will figure out standard form factors and cabling make it easier for customers (as in existing customers) to upgrade and that leads to increased sales. By the same token, if the new equipment won’t fit in the old hole, or requires a completely new cable run through the bowels of my boat (or up my mast) I’m a lot less likely to buy it!
End of rant.
We have two sides and I would rather hear more like Chris and a positive outlook than the post about the sky is falling (again). Bottom line is we have regular recessions about 7-10 years and everyone claims this one is worse than the last. I can attest the one in the late 80s early 90s was no picnic for me.
I love boating and will always be looking at the newest electronics as they come out as always and use the boat as much as possible. People in general have short memories and when this is all over they will be spending all out again. People get tired of not buying.
Regarding Marc Dacey’s comment earlier, I am curious to see how consumers will react to all of the new technology coming out such as continued NMEA2000 Support and “HD Digital” transducers. Will this spur new purchases and upgrades, or will people adopt a “wait and see” attitude, combining thoughts on the recession (price) with a desire not to be test dummies and Guinea pigs, or buy before prices stabilize?
I’m certainly hoping for the former!
Ben,
Re: Miami, Yes the gate was down but that made it easier for serious buyers to get around. There were boat sales to both existing clients and to people “off the street.” It’s the numbers on the check that are important! There were good sales at Riviera, Marlow, Regal and Sunseeker, just as an example of the diversity.
I suppose you don’t want to hear that I got a room at the Miami Beach Resort and Spa smack in the middle of the Yacht and Brokerage show for $99 per night at hotels.com and the place was packed. As one of the newest members of LXR resorts chain, it had the expected amenities you were missing. I think I got more than I paid for, and no funny smells.
Cheer up, Ben!
The recreation boating industry is clearly taking the full force of the recession. Boat sales, dealer sales and certainly marine electronics sales are all down across all sectors of the market. This will be a tough time for companies like Navico and Raymarine who are totally reliant on the recreation customer base. Both have developed new products due for release this spring (Navico broadband radar and Raymarine’s new A & CW series). I wonder if they have deep enough pockets to maintain their focus and market position to offset their investments in these new product lines? Their competitors like Garmin and Furuno have other market sectors to keep sales going in tough times. Garmin virtually owns the ICN market and are cashed up whereas Furuno has a massive high seas and commercial range with good market share to carry them through these tough times. Raymarine’s share price has been smashed and shows no signs of recovering. Navico is owned and run by investors (bankers) not passionate marine people. After their aggressive acquisition path of the last 2 years and restructuring their brands they would have needed a few good seasons to make it all worthwhile. I think they would have anticipated a huge amount of growth but the market is heading off 180 degrees in the other direction.
It will be an interesting summer to see if everyone get’s through the next 12-18 months?
Navico will go down the tubes due to sheer lack of decent customer service these days, lack of communication, and lack of understanding their own product. Although, hiring on some old Raymarine folk may help in that area. It’s become almost impossible to deal with them. As for Raymarine, they are certainly walking a fine line.