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A big splash at boat show would buoy hopes of marine industry

THE BALTIMORE SUN

The Chesapeake Bay Boat Show opened at the Convention Center and Festival Hall yesterday, and, in the opinion of show officials and one U.S. congressman, the nine-day show may represent a significant step in the recovery of Maryland's struggling boating industry.

Last winter, the Chesapeake Bay Boat Show drew relatively few people for several reasons -- the Iraq war had recently begun, Congress had passed a 10 percent excise tax on new boats costing more than $100,000, a user fee was to be levied against registered boats 16 feet and longer, and people were hesitant to spend on boats when they were uncertain of the economic future.

Frank Scalpone, manager of operations for the National Marine Manufacturers Association shows, which include the Baltimore show, said yesterday that at five shows around the country in the fall and winter, attendance increases over last year have ranged from 9 to 17 percent.

"The New York show, which is the bellwether, was up about 9 percent," Scalpone said. "But you have to understand that we are coming out of real bad comparisons. We were talking about rock-bottom last year.

"Three of our shows opened last year the week we went to war. So it was a disaster. But we have turned that corner and we are started back up again, which is the important thing."

Jeff Napier, president of NMMA, said that for two or three years the recreational boating industry has been foundering.

"I guess we were one of the first industries to enter the recession," Napier said, "and it has been a pretty tough recession for us.

"Those tough times have been made even worse by a very foolish tax passed by Congress more than a year ago."

As Scalpone, Napier, and Rep. Ben Cardin of Baltimore see it, the excise tax was designed to have an impact on those people who might shell out $100,000 or more for a yacht.

"But guess what happened?" Napier said. "Rich people simply stopped buying boats and a lot of other people who weren't rich also stopped buying the boats. . . . That in turn meant that when sales went down we had a lot of layoffs among the boat builders and the people who made the components that go in the boats.

"So ultimately the tax really hurt blue-collar people all around the country, making the recession still worse."

The NMMA estimates that approximately 25,000 workers at the manufacturing and sales levels lost their jobs nationwide. Napier also estimates that the layoffs cost the government perhaps $30 million in lost payroll taxes and added many of those 25,000 workers to the list of the unemployed.

"[The boat show] reminds us how important recreational boating is to our economy," Cardin said. "In the economy of Maryland, it is a billion-dollar industry when you consider the impact of boats and related activities. There are 175,000 registered boats in Maryland, and that points out that it is important to the people of our state as well as to the related activities of tourism."

Cardin said two boat builders in the state have shut down, 50 or more marinas or dealerships have closed and many marinas are operating at far less than capacity.

"There are many reasons for this," Cardin said. "We know that the recession is hurting our economy. People cannot afford what they used to be able to afford. But we also know that used boat sales are doing all right. It is new boat sales -- sales of the larger boats -- that are particularly hurting.

"You don't have to be too bright to understand that the excise tax that was passed by Congress has really hurt the situation, accelerated the decline of the boating industry."

Cardin said that the excise tax should be repealed because it has not produced significant revenue and has resulted in lost jobs.

"I am very hopeful," Cardin said, "that the Ways and Means Committee, which I serve on, will recommend to the full House of Representatives within the next two weeks legislation that will repeal this tax."

In his State of the Union address, President Bush also mentioned the boating excise tax among those measures he wished were altered or abolished.

So, what does this mean to the consumer who goes to the Chesapeake Bay Boat Show?

Primarily, Scalpone said, it can give them hope that as boaters they will not be singled out for tax purposes. It also might mean that a consumer may expect a boat dealer to be in business long enough to service and maintain the boat it has sold.

"On boats under $100,000, there is now a feeling that people are coming out of their shells," Scalpone said. "Last year we were concerned that people just seemed to have lost interest in boat shows, and many of them didn't even put their boats in the water last summer."

In the previous shows NMMA has staged in the fall and winter, Scalpone said, manufacturers and consumers alike have seemed more positive about the industry.

"They [consumers] might not be ready to write a check," Scalpone said. "But at least they are feeling positive about boating, which is the first step."

Some of the larger builders -- Bayliner and Sea Ray, for example -- did especially well at the New York show. At the Baltimore show, Bayliner and Sea Ray have large displays, as do Boston Whaler, Mako, Maxxum, Sports Craft, Regal, Grady White, Pro-Line, Parker, and a dozen or two other major manufacturers.

If there is a positive outside influence at the Baltimore show, it may be boat loan interest rates, which have dropped below 10 percent for the first time in recent memory at the winter shows.

"Banks are still a little shy, however," Scalpone said. "To get that rate you are going to have to have damned good credit. They are being cautious, just like they are with home loans.

"You see very good rates, but when you go to talk to the guy, he pulls you through the keyhole."

But consumers should not go through the doors at Festival Hall thinking that every deal is a good deal. According to Scalpone, there are good deals and there are good bargains.

"If a dealer owns a boat, he will deal because he has to get it off his floor plan," Scalpone said. "If he doesn't own it, there is no particular incentive for him because he has to order it in anyway."

Placing an order means spending money, something that dealers are still not doing too freely. So, the real incentive to buying a boat at the show -- unless you can make a deal on the display model or a leftover that the dealer already has invested in -- is to get the boat you want when you want it, in late March or early April.

"A year ago, there was no shortage of boats, but now they aren't around," Scalpone said. "So, if you are particular about what you want -- color, power, etc. -- you better get that boat into the pipeline. The manufacturer doesn't want to build unless he has an order, and a dealer doesn't want to buy unless he has an order."

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