A disaster driven business phase
The boating industry has been pretty confused by the pandemic already one year by now. There have been various types of disasters many times over the years. Let’s talk about two of them; the financial crisis of 2008 and the present pandemic caused by the Covid-19 virus. What is the difference between the two?
Just before Christmas in 2019 the media started talking about a virus that had already reached many corners of the world. I believe many of us did not think much of it. Viruses have always come and they have disappeared in a few months. Quite soon it became clear that we were facing something new and more dangerous than we had ever seen before.
The boating industry around the world was on its knees and did not quite know what to expect in terms of the market, but then unexpected happened. In the spring months of 2020, the traffic in boat dealerships around the world started growing despite everyone’s fears. However, before we go into that let’s talk a little about history.
Let’s look at this chart for a while.
These numbers come from Finland but in the big picture I believe they demonstrate the development of boating business in many boating countries. During the mid 1990’s, there was steady growth in global business, sometimes in double digit numbers annually. This went on for over ten years obviously with variations depending on what part of the world we are talking about. Then in spring 2008 we started getting news about growing financial challenges in the USA. This unrest soon spread around the world and dealers started receiving order cancellations. The financial crisis of 2008 turned out to be the biggest single fall of our business history. The boating industry, traditionally, depends on the consumer’s discretionary expenditure. Sadly, during this period their belief in their future, jobs and investments just fell almost overnight causing a catastrophic fall of some 40% in the boating business, or any recreational business, in the course of just 12 months. You will all remember how that hurt the industry. But our industry is resilient, it survived and in some parts of the world business was back on track in a few years.
Let’s now look at 2020. In the spring months, the dealers started calling the producers and asking for more boats. The inventory was low or empty and consumers wanted more. And if you look at the total numbers of 2020, the boating business as a whole went up 11% and the number of sold units 19%. This happened in Finland. In many countries the growth numbers were even bigger.
What happened is something we now call “staycation”. A new notion meaning that people will stay home because they simply cannot travel anywhere. They will try to find safe, risk free places where the chance of contracting the virus is minimized. Being on the water is a very good option. Being in the summer houses or other places by the water, soon turned into a rather unprecedented demand for anything that moves on water. This scenario of buying boats and wanting to spend time on water has continued.
The industry around the world is working full steam and trying to catch up to meet increased demand. The supply chain was to a certain extent taken by surprise with parts, raw materials, accessories, equipment and various fittings now being in short supply and we still see extended delivery times.
The credibility of the boating industry, as a major recreational activity needs us all to continue to improve our capability to ensure we satisfy the consumers’ needs.
Many will ask the question; how long can this continue. One prediction is that once the vaccine is distributed to everyone and restrictions start to ease with people travelling again, the demand will start to slow down. We need to be on alert for changes. One possible outcome of this can be that all of those who had considered buying a boat, trading in their old one or just become new boaters have after now completed that desire hence making numbers of boats sold lessen. No-one really knows. Double digit growth numbers on an annual basis in the boating industry just are not normal.
So, what should we do? There is no simple solution. Our products need to be user friendly, nice in design and the market needs to offer boats to entry level boaters maybe more than what is being done now. Boats are in certain ways like cars. The consumers expect new models to have new inventions and improvements. That is what the industry is committed to.
The other thing is that people need to discover the beauty of moving on water. It is an experience like no other. Spending time with your family and friends is something that brings people together. There is an urgent need to globally start promoting boating as a unique way of experiencing nature. It would be risky to count too much on a sales growth caused by a virus. We will certainly get quite a few new boaters during this time but it may be that in 2022 or latest in 2023 will be back on 2018/2019 figures. Or maybe even less because so many new boats have been bought. We also need to ensure that when things get back to normal, we retain this new market.
“The boating and marine industries need to make more noise about the beauty of being on the water”
I believe that the global marine industry should work together even closer than it does now. Campaigns to promote boating can be done globally. They can be adjusted to any local circumstances but we need, in addition to making good boats, make more noise about what the boating experience is all about.
Dr Jouko Huju DBA, GMBA-Finland
+358 40 5509310
Disclaimer: Global Marine Business Advisors and its associated website www.gmba.blue are not registered legal entities. GMBA is a network of independent marine industry advisors. In all articles the opinions expressed are those of the author and does not necessarily reflect those of GMBA