For close to 20 years, marine businesses boomed in Maryland and around the country. But in the late 1980s, the bottom fell out, and the boating industry is just starting to be refitted.
The reason, of course, is money. Boating money is drawn from discretionary income, those dollars put aside for recreation.
Those who have it, analysts and lenders say, are hesitant to spend it. Those who want to borrow it have had a hard time qualifying for loans.
So the recession has hit the boating business harder than most.
"In Maryland, there are at least 200 fewer marine businesses than there were at the beginning of the recession," said David Morrow, president of the Marine Trades Association of Maryland. "And it is not just the sale of boats . . . it trickles down all over the waterfront.
"How bad has it been? All you have to do is walk through a marina and count the empty slips."
Yet, despite the depressed state of the industry during the past four years, there is optimism.
"We are encouraged that things are going to be improving," said Mr. Morrow. "But even with the economy coming around, income spent is going to be spent first on the necessities, and being discretionary dollars, we are going to be among the last to see it."
Boat shows such as the Chesapeake Bay Boat Show, which opens at the Convention Center today, have been the traditional barometer by which retailers gauge the coming year.
Henry Brehn, who tracks the winter boat shows for the National Marine Manufacturers Association, said attendance has been up at the shows in New York and Philadelphia, but the interest of consumers seems to be directed toward smaller, less expensive boats.
Bob Moyat, who compiles an annual report of the boating industry for the trade association, said the industry was severely depressed through the end of 1992 in all areas except small boats and accessories.
"Housing starts are up, car manufacturers are building more for the spring," Mr. Moyat said from his office in Chicago. "I think that, as the economy gets going better, we will pick up as well. We are looking for about an 8 to 10 percent increase over 1992."
David Pilvelait of BOAT/U.S., a national group that tracks the consumer side of the industry, said, "We're pretty skeptical, although we would like to be optimistic. . . . But the latest figures we have indicate that if there is 5 to 8 percent sales growth this year, they are going to be doing real well."
Mr. Pilvelait and Mr. Moyat agree the trend continues toward smaller powerboats and accessories that update boats purchased previously.
"I think the consumers are holding on to what they have, which has been the trend," Mr. Pilvelait said. "But they are buying accessories, particularly electronics. Everybody wants to have the latest gadget out there."
Power vs. sailing
In the 1970s, when the oil crisis made diesel fuel and gasoline increasingly expensive, the sailboat market was driven by a gale of increasing popularity. New builders sprang up almost overnight. Established builders expanded, and new business coasted into the following decade.
In the 1980s, with fuel costs at more reasonable levels, powerboating again became a popular pastime, and fishermen, water skiers and cruisers spent freely. In 1988, consumers laid out $18 billion for boats and gear, the peak year in boating history, according to National Marine Manufacturers Association statistics.
In 1989, the recession hit the marine industry, and sales of powerboats and sailboats plummeted. Maryland and other coastal states took the biggest hits. By last year, total retail sales were down to $10.3 billion, off 45 percent since 1988.
Even as analysts point to signs of a recovery, growth in the sailboat market probably will be slower than in the powerboat market, Mr. Pilvelait said. Of the 11 million registered recreational boats in the country, only 4 million are sailing craft, he said.
"While sailing still has a little bit of that elitist air, powerboat manufacturers are coming out with good marketing schemes, low-cost package deals with boat, motor and trailer at a reasonable price," Mr. Pilvelait said.
"The power side of the industry has designed boats that will let you use the boat as a fishing platform, a ski boat -- or you can take the family for a cruise," he added.
Another boost for the power side of the industry has been personal watercraft. Approximately 79,000 jet skis were sold last year -- a growth rate of 16 percent for a sport vehicle with an average cost of $5,000.
"Again, that reflects that the powerboat section of the industry has done its homework and is trying hard to recover," Mr. Pilvelait said.
So where does that leave the business of sailing?
Mr. Moyat projects a 2 to 4 percent rise in sales of sailing boats and accessories in the coming year. Mr. Pilvelait believes the increase may be less.
Tony Smith owns Performance Cruising of Mayo, Md., a company that builds a line of Gemini catamarans. He disagrees with Mr. Moyat and Mr. Pilvelait. "In the 25 years I have had my own business, last year was my best-ever year," Mr. Smith said, "and so far this year looks like it will be just as good."
Mr. Smith said the sailboat industry had its boom cycle in the 1970s during the gas crisis and slowly has gone downhill since. But he also sees a corner of the market that should grow during the next decade as the baby boomers pass through their 50s and enter their 60s.
"I firmly believe that I am in the retirement or relaxation business," Mr. Smith said. "That happens when people are probably 50 years of age, their kids have left home and they have a little bit of money behind them."
Mr. Smith, who said the inquiries from sailors in their 40s have increased four-fold over the past few years, is looking beyond the racing boats and keel-boat cruisers. He builds a roomy boat that sails upright and will reach easily into the cruising backwaters of retirement.
Taking the plunge
The past few years, potential buyers have shied away from the boat market for two reasons: They worried about getting a good return on their investment, and they had a hard time borrowing money to make the investment in the first place.
Pat Miller, owner and president of Anchor Financing and Insurance, a Maryland-based company, said that the money picture is better than it was a year ago.
"Rates are good," Ms. Miller said, "but the lenders are very tight. They are looking for extremely good people to buy a luxury item, which a boat is. Marginal credit isn't really acceptable anymore."
Ms. Miller said her business is seeing more entry-level boats, and there continues to be heavy interest in used boats.
"There are fewer large boat purchases, and there probably will be until the luxury tax is repealed." (A federal law enacted in 1991 requires a 10 percent tax on boats costing more than $100,000.)
"That hit us right when we were down, and it just about buried us," said Mr. Morrow. "People just aren't going to spend that 10 percent, and even though there is all this talk about [the tax] being repealed this year or next year, no one wants to be the last person to pay this tax.
"People I know who have bought new boats every five years for the last 30 years haven't bought boats for going on eight years."
For those who will buy boats this year, fixed-rate loans can be found from various banks and lenders for roughly 11 percent on amounts between $5,000 and $15,000, 9.75 percent on $15,000 to $25,000, 9.25 percent on more than $25,000 and 8.75 percent on $50,000 and more. Variable rate financing also is available at 2 to 3.5 percent over prime.
Bill Cox, sales manager at Anchor Bay Yacht Sales in Middle River, said his firm, which deals exclusively in used boats, enjoyed record turnouts at the New York and Philadelphia boat shows this winter. He expects a similar response in Baltimore, he added.
"People seem to be in a little bit of a frenzy, trying to grab up what's available," Mr. Cox said. "I think they realize that the pricing on the boats has kind of bottomed out and is starting to go up slowly."
Mr. Cox said that lenders his firm deals with seem to be relaxing their stringent standards of the past few years, and people are eager to take advantage of the low interest rates.
"We are seeing a very big turnaround in the [used] market. It is across the board -- power, sail, all different sizes and all different ages. There is no hot item; there is no cold item. Everything seems to be getting very good activity.
"There's not enough of it to make it wide open like it was in 1986 or 1987, but I don't think the banks ever want to see that again."
Baltimore Chris Craft of Brooklyn is a family-operated business that has been part of the Chesapeake Bay Boat Show for 38 of its 39 years in Baltimore. Owner Rick Boulay said he has seen several changes in buying and manufacturing patterns over the past few years.
"Quality is selling," Mr. Boulay said. "People aren't buying a boat just to own a boat because they are there. They are buying a boat that if they ever do have to sell, investment-wise, they have one with name-brand recognition. They feel safer with their purchase."