Upload
keala
View
49
Download
2
Tags:
Embed Size (px)
DESCRIPTION
Spotlight on the Economy Outlook for Boating. 2009 PCC Annual Membership Conference Surviving and Thriving in Hard Times April 16, 2009. Boating Magazine – May 2009. 2. Agenda. What is happening in the economy? How does it impact boating? What should we expect in the near-term future?. - PowerPoint PPT Presentation
Citation preview
Spotlight on the Economy Outlook for Boating
2009 PCC Annual Membership ConferenceSurviving and Thriving in Hard Times
April 16, 2009
Boating Magazine – May 2009
2
Agenda
What is happening in the economy?
How does it impact boating?
What should we expect in the near-term future?
3
Impacts on Boating
4
Perfect Storm Loss of wealth
House values Stock Market
Rising unemployment Loss of credit
5
Case-Schiller Housing Price Index
0
50
100
150
200
250
300
Jan
-90
Jan
-91
Jan
-92
Jan
-93
Jan
-94
Jan
-95
Jan
-96
Jan
-97
Jan
-98
Jan
-99
Jan
-00
Jan
-01
Jan
-02
Jan
-03
Jan
-04
Jan
-05
Jan
-06
Jan
-07
Jan
-08
Jan
-09
CA-Los Angeles CA-San Diego CA-San Francisco OR-Portland WA-Seattle
Drop from peak as of Jan 2009:
- Los Angeles -39%
- San Diego -41%
- San Francisco -43%
- Portland -18%
- Seattle -20%
6
Dow Jones Industrial Average
Now
Oct 2008
Down ~40% from the peak
7
Staggering Loss of Wealth
Hit by the double whammy of declining home prices and a falling stock market, U.S. households saw their net worth fall by $12.9 trillion since mid 2007, wiping out five years of gains, according to the Federal Reserve.
In the fourth quarter alone, household net worth fell by $5.1 trillion, a record 31% annualized decline.
At the same time that their assets were falling, households were taking on less debt, deleveraging their balance sheets after five years of double-digit growth in debt. In the fourth quarter, households paid off more debt than they took on for the first time since at least 1952.
8
9
Intersection of Greed & Stupidity
Baby Boomers Loss of Wealth 1) The median household with a person between the ages of 45 to 54 saw
its net worth fall by more than 45 percent between 2004 and 2009, from $172,400 in 2004 to just $94,200 in 2009 (all amounts are in 2009 dollars).
2) The situation for early baby boomers is somewhat worse. The median household with a person between the ages of 55 and 64 saw its wealth fall by almost 50 percent from $315,400 in 2004 to $159,800 in 2009.
3) As a result of the plunge in house prices, many baby boomers now have little or no equity in their home. Nearly 30 percent of households headed by someone between the ages of 45
to 54 will need to bring money to their closing (to cover their mortgage and transactions costs) if they were to sell their home.
The Wealth of the Baby Boom Cohorts After the Collapse of the Housing Bubble David Rosnick and Dean Baker; February 2009, Center for Economic and Policy Research
10
Demographics of Boat Owners – Age (NMMA)
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
18-30 31-49 50-64 65 plus
Power boat Sail boat
11
12
Employment or Lack Thereof
Change in U.S. Employment After 15 Months:Current Recession vs. 10 Postwar Recessions
13
Washington State Response to RecessionsLoss of Jobs by Month
-8
-6
-4
-2
0
2
4
6
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Number of months from prior peak
Pe
rce
nt
los
s o
f n
on
-fa
rm jo
bs
1969 1973 1980 1981 1990 2001 2007
Puget Sound lost 87,000 jobs in 1969 in the Boeing Bust.
14
Oregon State Response to Recessions Loss of Jobs by Month
-8
-6
-4
-2
0
2
4
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Number of months from prior peak
Pe
rce
nt
los
s o
f n
on
-fa
rm jo
bs
1969 1973 1980 1981 1990 2001 2007
It took 59 months (~six years) to replace all of the jobs lost in the 1981 recession.
15
California State Response to Recessions Loss of Jobs by Month
-5
-4
-3
-2
-1
0
1
2
3
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Number of months from prior peak
Pe
rce
nt
los
s o
f n
on
-fa
rm jo
bs
1969 1973 1980 1981 1990 2001 2007
Very bleak situation.
16
Alaska State Response to Recessions Loss of Jobs by Month
-5
0
5
10
15
20
25
30
35
40
45
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Number of months from prior peak
Pe
rce
nt
los
s o
f n
on
-fa
rm jo
bs
1969 1973 1980 1981 1990 2001 2007
Very little impact due to nature of economy.
17
Comparative Response in This Recession Loss of Jobs by Month
-6
-5
-4
-3
-2
-1
0
1
2
1 2 3 4 5 6 7 8 9 10 11 12 13 14
Number of months from prior peak
Pe
rce
nt
los
s o
f n
on
-fa
rm jo
bs
Alaska Washington Oregon California
18
Lincoln County (OR) Unemployment Rate
19
Worried Consumers
20
Consumer Confidence - Pacific CoastSource: The Conference Board
0
20
40
60
80
100
120
140
160
180
200
1981
-1
1981
-11
1982
-9
1983
-7
1984
-5
1985
-3
1986
-1
1986
-11
1987
-9
1988
-7
1989
-5
1990
-3
1991
-1
1991
-11
1992
-9
1993
-7
1994
-5
1995
-3
1996
-1
1996
-11
1997
-9
1998
-7
1999
-5
2000
-3
2001
-1
2001
-11
2002
-9
2003
-7
2004
-5
2005
-3
2006
-1
2006
-11
2007
-9
2008
-7
Consumer Confidence IndexTM Present Situation Expectations
21
Lowest Levels since 1981.
Problems for the Marine Industry
22
More than half of marine industry is unemployed Tuesday April 7, 2009
CHICAGO, Ill. — The National Marine Manufacturers Association estimates that as of late March, marine industry unemployment was more than 50 percent, NMMA President Thom Dammrich told the Springfield Business Journal for an article published yesterday.
Retail boat sales fell off precipitously in July 2008, Dammrich said.
In the fourth-quarter of 2008, one in three NMMA members furloughed operations for a period of time, and one in 10 closed down a plant entirely, he told the paper.
"What it comes down to is that, until the consumer starts feeling more confident about the future," he told the Journal, "they're holding off on some purchases."
23
All 15 Foot+ Powerboat Sales Trend Rolling 12 month year-over-year % change in unit sales
Based on new US boat registrations. Bellwether states are geographically dispersed states representing roughly half of the US boat
market (varies by market segment and time of year).
Decline began in 2006
Down 32%
as of Feb 09
24
25
Brunswick switched from 28 to 14 plants
26
Brunswick Beleaguered boat maker Brunswick Corp. said October 2008 it will cut
1,400 more jobs as the company shuts four plants, including ones in Oregon and Washington, and furloughs workers at three more.
The announcement, which sent the manufacturer's stock to a more than 15-year low -- comes four months after the suburban Chicago company said it would eliminate 1,000 jobs because of the falling demand for recreational boats amid a poor economic environment.
Brunswick said it will permanently close plants in Roseburg, Ore., Arlington, Wash., and Pipestone, Minn., while mothballing a plant in Navassa, N.C. The closures -- the latest in a series since 2006 -- will be completed by the first quarter of 2009. When the cuts are complete, the company will have closed more than 40 percent of the boat plants open three years ago.
27
Brunswick International Sales
28
Olympic Boat Center The ship has sailed for one of the largest boat retailers in the world. Olympic Boat Centers of Redmond went on the auction block in a
California bankruptcy court on Tuesday. In bankruptcy court, boat maker Brunswick bought some of Olympic's
assets. A spokesperson said the company bought back the Bayliner boats on Olympic's lots for $2 million, but not the company itself.
Court documents state Olympic owed lenders more than $47 million. Shareholders blame an industry-wide sales slowdown. When the housing
market crashed, buyers couldn't use their home equity to finance a boat.
In a statement released on Tuesday afternoon, Olympic said Brunswick, which is headquartered in Lake Forest, Illinois, will have the rights to the name Olympic Boat Centers once the sale is complete. And to pay off the debt, all of its inventory will be sent to other dealers around the Northwest as well as in California.
29
Boater’s World Closes Friday March 20, 2009
BELTSVILLE, Md. — Ritz Camera Centers Inc. has court approval to liquidate the bankrupt company's Boater's World stores, according to a report from Bloomberg News.
Ritz should collect $40 million from going-out-of business sales at the 129 stores, company attorney Irving Walker said, noting that the sale was in the best interest of the company's creditors.
"The Boater's World business proved to be a positive contributor to the company's profitability for a number of years, and generated positive cash flow through 2007. In the spring of 2008, however, the price of oil skyrocketed, leading to a sharp rise in the price of gas, and that in turn, with other macroeconomic factors, led to a sharp drop in the sales and profitability of the Boater's World business,'' Ritz said in its bankruptcy filing.
Ritz also expects to close more than half of its 800 camera stores and reorganize the rest, according to Bloomberg.
30
New Paradigm is Less Rosy “Our research indicates that the U.S. boating industry continues to experience a down cycle, as evidenced
by lower sales trends in each of our business segments compared to last year, lower new and used boat sales, and declining boat registrations in key states. ” (West Marine)
31
U.S. Marine Expenditures (NMMA, USBEA)
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
$8,000,000
$9,000,000
$10,000,000
$11,000,000
$12,000,000
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Re
al G
DP
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
$8,000,000
Re
al M
ari
ne
Ex
pe
nd
itu
res
Real GDP (Millions) Real Marine Expenditures ($1,000s)
Real means adjusted for inflation: arrows represent economic downturns
32
U.S. Marine Expenditures, GDP (% Change; NMMA)
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
% C
han
ge
Rea
l M
arin
e E
xp
-4%
-2%
0%
2%
4%
6%
8%
Rea
l G
DP
% C
han
ge
Real GDP (Millions) Real Marine Expenditures ($1,000s)
33
U.S. Marine Expenditures (Gain & Loss: NMMA)
-7.8%
6.0%
-3.0%
-25.9%
-13.2%
-3.1%
5.4%
-1.1%
7.0%
12.6%
8.8%
-0.4%
-35.0% -25.0% -15.0% -5.0% 5.0% 15.0%
average
March 2001-Nov. 2001 (8 months)
1997 Dotcom bust
July 1990-March 1991 (8 months)
Jan. 1980-July 1980 (6 months) & July 1981-Nov. 1982 (16months)
Nov. 1973-March 1975 (16 months)
Loss during event Gain three years after event
34
Marine Expenditures - Pacific (NMMA)
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
$1,0
00s
Washington Oregon California
35
Uncertainty is a troublesome thing!
36
Anti-wealth crusaders
37
For sale: Saddam Hussein's luxury yacht
The sale of the 269-foot Ocean Breeze, built for Saddam Hussein and docked on the French Riviera.
Only $34 million but potential buyers are avoiding the auction.
38
Let’s Count our Blessings
$2.00
$2.20
$2.40
$2.60
$2.80
$3.00
$3.20
$3.40
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2006
$
Motor Gasoline Diesel Fuel
Fuel prices should remain lower.
Construction costs are decreasing.
Remaining businesses in the industry will be stronger.
Consumers will be wiser and not over-borrow.
Government oversight will be more vigilant.
Bottom-line (hopefully) = a more sustainable industry.
39
BST Associates
Questions & Answers
Paul Sorensen
BST Associates
PO Box 82388
Kenmore, WA 98028
(425) 486-7722