Boat Manufacturers Try to Stay Afloat as Sales Plunge
CHICAGO (AP) _ Two large boat manufacturers are trying to stay afloat after sinking sales hurt quarterly earnings and forced one company to send pink slips to 20 percent of its work force.
Brunswick Corp., the nation’s largest recreational boat manufacturer, based in Skokie, Ill., last month laid off 4,000 employees because of declining sales.
Also last month, Brunswick reported a 75 percent plunge in second-quarter earnings from $68.3 million, or 78 cents a share, in the same quarter a year earlier.
Outboard Marine Corp., based in Waukegan, 40 miles north of Chicago, reported fiscal third-quarter net income of $6.8 million, a 76 percent drop from the same period last year.
Boating industry officials can’t pin down exactly what happened, although they have some theories.
Rainy weather in the East, the industry’s largest market, a late spring in the Midwest and cooler weather in the South are partly responsible for the slump, said William McManaman, Brunswick’s vice president for finance.
A 14 percent interest rate on boat loans also may have kept away potential buyers, he said. Fear of a recession also may be a factor.
″Consumers aren’t spending on big ticket items such as cars, boats and real estate because of economic uncertainty,″ said Greg Proteau, a spokesman for the National Marine Manufacturers Association, a Chicago-based trade organization that represents 400 boat builders.
There had been indications that 1989 would be a banner year. There was record attendance at boat shows in January, February and March. High consumer demand at dealerships followed the shows.
″A lot of people shopped, but few bought,″ said Gordy Smith, a boat dealer at Waukegan Marine Co. ″Dreamers filled the showroom.″
He said his sales dropped 50 percent in June and July.
Outboard, the nation’s third-largest boat manufacturer, has 10 subsidiaries, including Lowe, Chris Craft, Sunbird and Sea Nymph. The company also makes Johnson and Evinrude outboard motors and Cobra stern drive engines.
Recently it laid off nearly 300 workers because of the sales slump.
Sydney Heller, a boating industry analyst for Shearson Lehman Hutton Inc. in New York, predicts 1989 boat sales will drop 15 percent to 20 percent from last year.
Boyd Poston, an analyst with A.G. Edwards & Sons in St. Louis, said the industry is catching its breath after going full throttle for six years.
″Boating is in a cyclical pullback like in the past,″ he said. ″Once it stops resting, it will go back up.″