Page 11: of Maritime Reporter Magazine (February 1992)

MEGAYACHTS:

A 'MEGA' MARKET FOR U.S. BUILDERS & SUPPLIERS

By James R. McCaul, President

IMA Associates, Inc.

Adetailed analysis of the entire U.S. marine industry was re- cently completed by IMA Associ- ates. The study examines the pros- pects for vessel construction and major modifications in 24 marine business sectors. Megayacht con- struction is one of the sectors exam- ined. This article highlights some of the more interesting study findings and conclusions.

Statistics compiled by the Depart- ment of Commerce indicate that production and repair of pleasure boats in this country is a $4.2 billion business. The industry employs 43,000 workers. Details are shown in Exhibit 1.

Pleasure Boat Exports

The value of U.S. pleasure boat exports was $816 million in 1991. As shown in Exhibit 2, boat exports have been steadily increasing over the past five years and are expected to continue to grow through 1992.

Pleasure boat construction in the

U.S. has been one of the few marine activities in which U.S. manufac- turers have been actively expand- ing export sales.

A 120-foot, Detroit Diesel-powered megayacht from Broward Marine.

The major markets for U.S. boat exports are Canada, Japan, and EEC countries. Japan alone accounted for boat export sales totaling $163 million in 1990 and $152 million in 1991. In contrast, imports of plea- sure boats from Japan were only $37 million in 1990—producing one of the best export-to-import ratios of any U.S. industry for that year. De- tails for exports and imports during 1990 are shown in Exhibit 3.

The Department of Commerce re- ports that "the U.S. pleasure boat industry is one of the few consumer goods industries that has an overall trade surplus." DOC goes on to say that the growth of U.S. pleasure boat exports has been "a bright spot" during the recent recessionary pe- riod.

While yachts ranging from 80 to 150 feet in length are only a small portion of the pleasure boat sector, they represent a very interesting market for builders and equipment s upplier s. According to IMA records,

U.S. builders during the past three years have delivered more than 80 motor yachts over 80 feet in length.

The records indicate that 24 mega- yachts were delivered in 1989,34 in 1990 and 26 in 1991.

Outlook For Megayacht

Construction

Like other parts of the economy,

U.S. pleasure boat builders have been impacted by the downturn in economic activity over the past year.

As indicated by data in Exhibit 1, industry shipments in current dol- lars declined from $5.7 billion in 1989—to $5.2 billion in 1990, $4.8 billion in 1991. In constant dollars the decline has obviously been more significant.

Contributing to this decline have been changes in the tax law. The recently introduced 10 percent luxury tax on expensive boats has been deadly for pleasure boat man- ufacturers . However, this luxury tax has had the most impact on yachts in the price range from $100,000 to $1 million. Large megayachts cost- ing $3 million to $7 million are sold (continued on page 14)

Exhibit 1: Trends & Forecasts: Boat Building & Repairing

SIC 3732 (In millions of dollars except as noted)

ITEM 1987 1988 1989 1990' 19912 1 9923

INDUSTRY DATA

Value of Shipments4

Value of Shipments (1987$)

Total Employment (000)

Production Workers (000)

Average Hourly Earnings ($)

Capital Expenditures

PRODUCT DATA

Value of Shipments5

Value of Shipments (1987$)

TRADE DATA

Value of Imports - - 404 279 237

Value of Exports - 615 793 816 'Estimate, except exports and imports. 2Estimate. 3Forecast. 4Value of all products and services sold by establishments in the boat building and repairing industry.5Value of products classified in the boat building and repairing industry produced by all industries. Source: U.S. Industrial Outlook 1992 5353 5935 5739 5240 4810 - 5353 5740 5312 4670 4231 4147 57.2 62.8 60.4 51.2 43.0 - 47.1 51.9 49.2 41.3 34.7 - 8.13 8.22 8.44 8.58 8.76 - 134 141 120 - - - 5219 5896 5613 5123 4702 5219 5693 5180 4566 4072 4054

February, 1992 13