Impact of economy on CC and the industry?

[SkiTundra]

What impact will the economy have? How will the sales of new and used boats be impacted? How will dealers be impacted? Is CC in danger of going under? Will CC retool for significantly less expensive boats? Will we see an increase in used boats for sale by people who can no longer afford them?

I think that things are rarely as bad (or as good) as we expect. The markets will recover, but it could take a few years (it took 26 years for the markets to recover from the '29 crash), my guess about 5 - 7 years before we'll reach the peak value we were at a year ago. For some people this is primarily a paper impact and will just wait it out. Others may have more short-term liquidity problems if they were counting on investment income to make payments on their boats.

[M3Fan]

RE: Impact of economy on CC and the industry?

Most of CCs buying demographic will probably not be phased by the economy such that they would avoid buying a boat.

Edit: However, if anyone "stretched" their finances or took out a huge HELOC to purchase their boat, they might be in trouble. The used market might get a bit diluted as you see these boats go up for sale. This may, in turn, make it harder to sell new boats.

[SkiTundra]

RE: Impact of economy on CC and the industry?

I'm not so sure that their buying demographic hasn't been hit hard. Many executives and other higher paid folks receive a significant chunk of their compensation in stock options and more and more are required to hold thos options for several years. Almost all stock options in the US are currently under water - eg, worthless. Other investments have taken a huge hit. I think that by every measure the people who've been hit the hardest, in percent of income affected, are thus far the wealthier of society. The average working stiff still takes home the same paycheck they always have, the average executive takes home about half.

[AuMDLST]

RE: Impact of economy on CC and the industry?

Stock options are going to be paid out for less than one percent of the upper management work force. The average working "stiff" maybe still getting the same take home although he cannot get the loan to purchase a boat. The banks have all but stopped lending. The majority of banks do not issue loans on boats that are 5 plus years old. The average "stiff" was using equity loans to make these purchases. Now that most banks have reduced or even closed most lines of credit, the average "stiff" cannot get the used boat. (Ski tundra - I know several execs and I assure you that there will be many average "stiffs" out collecting cans before they give up 50% of their take home pay)!

[DanielC]

My boat is paid for, and I plan on using it for a long time more. It is a 1997 ski with 2070 hours on it. I am glad when I bought it new, I chose to go with a proven quality product, rather than some newer companies offering that was loaded down by bling, and such important things as stainless cupholders with little led lights in the bottom of them. (that last half sentence is sarcasm)
I do own some stock. A year ago, it was over $160 a share, it is around $60 today.
The price of a stock means absolutely nothing unless you are buying, or selling. I am not planning on selling any stock soon. Wish I had some money to buy some stock.
I am no financial wizard. I had to look up what a HELOC was. (Home Equity Line Of Credit)
It appears to me, that at least some of this was caused by a few simple things.
Too many people buying things, to impress people they do not know, with money they do not have.
Then we have too many banks willing to make risky loans.
Now I hear that in the interest of being "politically correct" many banks were encouraged to make risky loans to many people who simply should not be buying a house. It was assumed that everything would be OK, because real estate prices were always going up. Apparently, that is not always the case.
I wanted a Ski Nautique long before I finally got to buy one. I took test drives, and ski behinds. In 1996, I got to a point where I could easily afford the monthly payments, but not the down. Then I remembered I has bought stock in a company I worked for, and it had been (literally) laying around, doing nothing, but gaining value. I bought the stock with an employee stock purchase plan, and got a good discount on it. After finding the stock certificates in old tax records, I could of paid cash for the boat, if I sold it all.
When I bought my boat, the purchase was backed by stock I had, so I did not feel I was putting myself in financial danger.
Would I buy a boat now? Probably not. I would have to sell shares of stock for $60, and a year ago they were worth $160. That is my case
Would somebody use a HELOC to buy a boat now? I would think not. The price of a house is way down, banks are probably being much more conservative with loans, and I would not want to risk my house for a toy.
Maybe the river will be less crowded next year. It seemed a little down this year.
Not even the so called experts know what the economy is doing.
I think boat sales will go down. You might see silly sales gimmicks appear. ($25000 rebates?)
I think it is going to be a tough year for dealers. Their sales probably will go down, they might have to become more service orientated.
I do not think CC will go under, but who knows. Who thought Meloon's would be selling Mastercrafts.
Maybe Correct Craft will have to figure out ways to reduce the cost of manufacture. They have innovated many other things in our boats.
If you are looking for a boat, now is a great to think about buying a used one. I think there will be some boats become available as this money crunch tightens up.
Just do not get in over your head.
If you know somebody who has a boat, you could probably fill their boat with gas each time you went out in it, fill their tow vehicle with gas each time you went to the water, and buy them dinner, and do this two or three times a week, and still be paying less than a monthly boat payment.

[NCH2oSki]

I agree, the CC customer has been affected, and this will definatly affect the amount of new and used boats of all kinds including CC's and other NICHE boats sold. My comunity has several boat companies, and Searay (brunswick) just anounced it will close 3 plants in other locations and stop production at the 3 plants here in a week. They are supposed to start back up the first of the year. I think I remember the number of jobs affected being 1600. One of the towboat companies made the management take a 5% across the board pay cut to keep their job. The hourly guys are now down to 32 hours a week or so. One of the big three is also only working 4 days per week, (8-10 hours) and have cut back their engineering dept along with some other personal.

Harley Davidson is another NICHE product much like CC's and the local dealership is pretty much deserted compaired to where it should be.

Even if you have the means to purchase a new or used toy or other major capital expenditure, would you make the cash outlay at this uncertain time in the economy? I'm by no means a doomsday economist, just a little conservative when it comes to unecesary purchases. Untill the economy has a brighter outlook, I'd hold onto my cash and reduce my debts incase the economy takes longer to rebound then expected.

On the other hand the economy sure could use some cash influx from durable purchases and capitol expenditures to help stimulate it. So everyone that is not cash strapped should go out and buy new or remodel their houses, purchase new cars, new CC's and turn the economy around.

[RLS]

Boat manufacturers as most of us became greedy and raised prices too high. I talked to my local dealer and he is very concerned. The Team 216 V is $72,000. The new boat that few can afford. He indicated that CC was still raising prices for 2009. I bet boat sales are no more than half between 2006 and 2009. This is a time when prices will be re-set. If you can't lower your price and costs you will not make it. I would say all the boat companies are at risk. Those that make it will be the ones with deep pockets or cut cost fast. CC needs more than just the rich to buy boats.

[Nautiquehunter]

I have been looking at new and used all summer.
I finally decided on a 09 210 team. I have the
order all ready to go but after the recent down turn
of the economy I think it would be best to wait .
I will see what happens in the next few months.
I don't need a new boat I still have my paid off
89. I can afford the new one but if things go bad
I know I wont be able to sell it and get any kind
of price for it. I don't know if CC will have any incentives
for new boats. I do know I can get 10000.00 off sticker on
a new Dodge diesel truck now and they still cant move
them.

[SuperSquirt]

I think CC is probably already feeling the impact right now. CC dealers, whether financially stable or not, are not going to be ordering as many boats this coming year, which in turn will affect CC's profits. Lower profits means less income=>less production=>less jobs, you know how it works. A lot of dealers are going to have to survive on their service department for a while and I hope they don't get too greedy and clumsy as a result.

As for the end consumers like us, you should know if you can afford a new Nautique or not. If you're in an industry where your job may not be secure, don't risk it. If you are relying on your brokerage investments to help pay off a boat down the road, its going to take longer than you think to get back what you lost this year alone. I have had my *** handed to me in the financial markets lately, as I do a lot of investing and trading. I know it will recover, but I'm not too optimistic about the time frame to get there, I honestly don't think the market will be better until the next presidential election.

[SkiTundra]

My thoughts.

Scenario I: Equity markets begin a recovery and gain back maybe 20% of value, some recovery in home prices, credit markets begin to recover (The loose consumer credit we've seen for the past 20 or 30 years won't be seen again for decades, if ever), consumer confidence increasing:

- More used boats on market than normal with many being sold by people with no immediate replacement plans. Used boat prices apprx 15% below normal.
- New boat sales down by 40% from 2008's low numbers.
- A few boat mfr's disappear (both CC and MC survive).
- Approx 20% of boat dealers close.
- Slightly less crowding on waterways.

Scenario II: Equity and housing markets remain relatively flat. Credit markets remain tight.

- Significantly more used boats on market than normal with most being sold by people with no immediate replacement plans. Used boat prices apprx 25% below normal.
- New boat sales down by 70% from 2008's low numbers.
- Several boat mfr's disappear (MC survives, Brunswick consolidates to 4 lines; Hatteras, Lund, Correct Craft, SeaRay)
- Approx 40% of boat dealers close.
- Noticably less crowding on waterways.

[2gofaster]

I think you're overthinking this, SkiTundra. Some very smart economists say the market will bottom at 7200 and then be back to 11k by the end of spring. 09 may be a down year, but this is far from the death knell for boating as we see it now. The housing market will take a while to come back. And I don't foresee it being at the inflated levels it was at. But this won't be a 5-7 year turnaround, IMO. We're already 9 months into a recession and most recessions have worn themselves out in 18 months or less.

[kevfran99]

I traded in my boat and bought a new 08 210 yesterday in hopes that my (big purchase to me) small contribution might somehow help the economy a bit. I'm lucky enough to be able to afford one and also have good job security(even in a recession) I also think we have been into this recession for several months and hope we come out of it soon!

[raygunclan]

i just saw this article on orlandosentinel.com about nautique's bill yeargin


http://www.orlandosentinel.com/busin...,196953.column

[DavidG]

I believe I can say with confidance that CC is planning on laying off 50-60 employees. I don't work there but live in Orlando and know people that do. I also have heard rumors of a short (up to one month) shut down of the the assembly line to balance supply. None of this is confirmed though.

[AuMDLST]

I made a stack of cash in the market today and am planning on several more really good days to come. Did not think I would let the 06 go but people do make money in the market wether it is up or down, it just has to move. The 09 line is BA and I will be looking in a few days. It is a shame however that the banks are keeping the money to themselves and not loaning to consumers - just think of the interest rate they might get - good thing the dealers accept cash (AMEX - good for the points).