The Rising Cost of Boating and the Middle-Income Buyer
By Steve Morrell
In a blog I read a couple years ago, “The Rising Cost of Boating,” by Bill Sisson of Soundings’ TradeOnly Today—someone whose comments I many times enjoy—I read what turned out to be some true and funny comments about the subject. And other comments, I didn’t agree with.
Sisson traded comments with a friend about the cost of boating. His friend said the cheapest cost of owning a boat was in the purchase, and that it was all the other hidden costs of ownership—from maintenance to insurance and everything in between—that are “killing people.” He talked about how high the costs are even if you don’t use the boat. So True.
His friend, mechanic Erik Klockars, made a statement that made me laugh out loud as I read it: ““When you get a $300 bill in the marine industry, people bend over and kiss the ground.” Isn’t that the truth? There’s no such thing as a cheap boating product or service. Even if you do it yourself, I guarantee you will spend many more dollars than you first figured on gas going back and forth to a supply store—and those marine stores keep becoming fewer and bigger—and farther away.
The article quoted someone else who talked about available credit being restrictive. I thought of the loose credit in years leading up to the 2008 crash and laughed to myself. During the economic boom/bubble, boats were selling like hotcakes—both sail and power—to the middle-income buyer. But how many dealers out there pushed boat sales as more important than whether or not a buyer should be given a loan, contributing to the crash? After all, the lender took the real risk. Of course, they would not have pushed sales so enthusiastically if they’d known that it was leading to a huge crash. Everyone was acting independently. Who would have guessed that everyone acting in unison like that would create a huge problem? Well—some did, but they were put down as naysayers.
The article continued on, quoting another member of the boating industry that it was the high-net-worth people who were buying the boats these days, and that so many others had too many other expenses in their lives to think about buying a boat. The final solution to this problem promoted by this person: The boatbuilding industry must, in design, engineering, and manufacturing, bring down the cost of boats.
Really? I would definitely like to see them bring the costs down, but I will say definitely this: The cost of boating will not come down enough to make any noticeable difference in boat sales. For one, they keep improving boats, which is a good thing, but the improvements alone will balance out any incremental cost savings. You just can’t squeeze much more out, and I use the term squeeze intentionally.
Do you want to lower costs with cheaper labor? That’s easy. Just build them in another country where labor is 10 percent of what labor is in the United States—hoping that shipping of a boat to the United States will still be low enough to lower the overall cost of the boat. Plus, that competition will force workers in this country to accept lower wages, also helping lower the cost of boating. But where will the buyers come from then if we squeeze the middle-income buyer out—the buyer that everyone is talking about selling to? That middle-income buyer needs to be the person that builds the middle-income boat.
Boats are already being manufactured overseas. Right now, most of those are the high-end boats, but how long before the smaller boats are built elsewhere? Many boat factories have already moved to states with the cheapest labor, the cheapest rent, the lowest taxes. How long before they move to the cheapest country?
I sometimes think that there are people out there—and many who are running the world—who hope that the lower-income buyer will buy the middle-income boat and everything will be fine and dandy.
It reminds me of a quote that many attribute to Mark Twain (it’s in dispute): “Sometimes I wonder whether the world is being run by smart people who are putting us on or by imbeciles who really mean it.”