SIC 3732
BOAT BUILDING AND REPAIRING



This industry consists of establishments primarily engaged in building and repairing boats. Establishments primarily engaged in operating marinas and that perform incidental boat repair are classified in SIC 4493: Marinas. Membership yacht clubs are classified under SIC 7997: Membership Sports and Recreation Clubs; and outboard motor repair is classified under SIC 7699: Repair Shops and Related Services, Not Elsewhere Classified.

NAICS Code(s)

811490 (Other Personal Household Goods Repair and Maintenance)

336612 (Boat Building)

Industry Snapshot

In the second half of the 1990s, the recreational boating industry in the United States was continuing to recover from a devastating industry-wide slump that began in the late 1980s and continued into the early 1990s. During the industry recession, stretching from 1988 through 1992, constant-dollar product shipments declined at a compound annual rate of approximately 15 percent. The turnaround began in 1993, when the industry cut its decline in shipments to less than 1 percent. In 1996 an unseasonably cool, damp summer in much of the United States cast something of a chill over the domestic market for pleasure boats. However, industry shipments began to climb in 1997, and they continued increasing through the end of the decade, reaching $8.3 billion in 2000.

The outlook for the recreational boating industry in the late 1990s was reasonably bright, according to the marine equipment economist of the Commerce Department's International Trade Administration. Among the factors cited for this cautious optimism were the Environmental Protection Agency's new emissions standards. The standards do not take full force until 2005, but they are being phased in gradually. ITA's economist said many consumers might have postponed purchases because they want to see what this new technology is and how it will affect them.

Organization and Structure

Repairs account for only about a 4 percent share of the boat building and repairing industry's revenue. In 1987, in the thick of the industry's boom period, 151 of the 2,176 establishments in this classification were engaged primarily in repairing boats. These establishments employed 3,500 workers and generated $223 million in shipment value. There was some evidence that slow sales of new boats in recent years have provided a bit of a spark to the repair business. In the early 1990s boat yards specializing in refurbishing older boats charged in the range of $50 to $60 an hour for semiskilled labor on repairs.

Types of Boats Manufactured. Outboard boats make up the largest category of boats built in the United States, accounting for approximately 47 percent of all pleasure boats owned. In 1992 about 192,000 outboard boats were sold, a slight drop from the previous year and a 40-year low. Nearly 150 companies specialized in the manufacture of outboard boats in 1987. The value of outboard boats shipped that year was $1.2 million. About eight million of these boats were currently owned in the United States in the mid-1990s. Boats in this category include runabouts, bass boats, utility boats, offshore fishing boats, and pontoons. Aluminum and fiberglass are the most common materials used in the construction of these boats.

Inboard/outdrive (I/O) boats, also known as stern drive boats, account for nearly 11 percent of U.S. pleasure boats. More than 90 companies specialized in I/O boats in 1987. Larger, higher-priced stern drive boats were among those that suffered particularly harsh sales declines since the late 1980s. As a result of this decline, manufacturers attempted to attract buyers with significantly lower prices. This resulted in a 2,000-unit increase in sales of stern drive boats in 1992.

Inboard boats include mainly cabin cruisers and sport boats. The inboard cruiser business was hit hard by the recession and the 10 percent excise tax on luxury boats that took effect in 1991 (but was repealed by the Clinton administration in 1993). Largely due to the tax, inboard cruiser sales were cut in half in 1991, and had yet to recover in 1997. Ski boats accounted for 88 percent of the inboard sport boats manufactured. Other inboard sport boats include runabouts, which represent about 9 percent of the market, and inboard fishing boats (under 25 feet).

Of the boats owned in the United States (about 1.4 million units), 8 percent are sailboats. This includes both nonpowered sailboats (1.3 million) and auxiliary-powered craft (70,000). Altogether, sailboats represent about 4 percent of boats manufactured. The vast majority of sailboats built were in the 12 to 19 foot range. From 1991 through 1993 sales of larger sailboats plummeted, largely attributable to the excise tax on luxury boats. In 1994, even after the repeal of the excise tax on luxury boats, large sailing craft's percentage of total sailboat production continued to be quite small. Of the 13,000 sailboats produced that year about two-thirds were in the 12 to 19 foot class. Another 20 percent were sailboats ranging from 20 feet to 29 feet in length. Sailboats of 41 feet or more in length accounted for a mere 2.9 percent of total production.

One of the fastest-growing segments of the U.S. recreational boating market in 1997 was personal watercraft, sales of which have almost doubled, from 1993's 107,000 units with a retail value of $618.0 million to sales in 1995 of 200,000 units with a value of $1.1 billion. Personal watercraft are small inboard engine boats powered by a jet propulsion unit and operated by a person or persons sitting, standing, or kneeling on it.

Until fairly recently this segment of the market was supplied very heavily by imports, with the three leading producers being Canada's Bombardier and Japan's Kawasaki and Yamaha. The Japanese companies have since established extensive U.S. manufacturing facilities, and in 1993, traditional U.S. boat manufacturers Sea Ray Boats and Boston Whaler Inc. began producing personal watercraft.

Other types of boats include unregistered small craft (canoes, rowboats, dinghies, etc.), open-deck boats (deck-style monohull runabouts and aluminum pontoons), and houseboats.

Markets. In 1994 sales of boats, motors, trailers, and marine accessories were highest in Florida, which took more than 21 percent of total sales, followed by Michigan and Texas, each accounting for slightly more than 12.5 percent of total sales. Californians bought the next highest share of boating equipment, accounting for 10.8 percent of total U.S. sales. Minnesota and New York followed, with shares of 8.7 and 8.6 percent, respectively.

Establishment Distribution and Size. Boats are built primarily where there is a lot of water. Geographically, Florida and California dominate the boat building and repairing industry. More than $1 billion in product shipments, about 21 percent of the U.S. total, originate in Florida, where over 400 establishments are located. California is home to about 250 establishments in this industry. Washington and Tennessee, the latter of which has extensive recreational boating waters (though it is land-locked), round out the top four states in the manufacture of pleasure boats.

Boat building and repairing concerns can vary dramatically in size. About half of the more than 2,000 establishments in the industry employ only one to four people. The largest share of revenue, however, is generated by more sizable operations, especially the approximately 100 companies with between 100 and 500 employees. This group accounts for about half of the dollar value of the industry's shipments.

Background and Development

Prior to the mid-nineteenth century, boats in the United States were built primarily by the people who used them. Most were workboats designed for specific uses. These included whaling boats for the Arctic seas, dories for the Grand Banks, log canoes used by oystermen, and a huge variety of skiffs and other small craft. Eventually boats became more versatile. The Whitehall was a pulling boat first used in New York harbor as sort of a water taxi. A classic rowing boat, the Whitehall was found to be well suited as a sailing vessel as well, and it began to appear in other harbors on both coasts, both with and without sails, and was sometimes used for fishing.

Around 1850 recreational boating began to grow significantly in the United States. Boat builders throughout the Northeast, previously makers of workboats, were in demand for the production of leisure boats for weekend amateurs. This led to a proliferation of Whitehalls, guide boats, and Saint Lawrence skiffs on lakes from New England to the Midwest. The popularity of rowboats dropped when the gasoline engine appeared in the United States in 1878. Fishermen, both professional and recreational, began using boats with motors instead.

Some of the companies that entered the early motorboat industry were automobile manufacturers. One such company was the Lozier Motor Company, which began building boats around the turn of the century. Another important company in the early 1900s was the Electric Boat Company of Bayonne, New Jersey, which manufactured a wide variety of boats, including tiny launches and huge luxury cruisers by the time of the company's demise around 1950. Chris-Craft Boats was another important powerboat manufacturer by 1930. By the middle of the twentieth century, there was a renaissance of classic boat designs. New boats modeled on the vessels of the past were constructed using fiberglass and other modern materials. To an extent, this trend has continued.

In the 1950s the number of recreational boats owned in the United States more than doubled, reaching over seven million by 1961. This number has climbed slowly and steadily for the most part since then. In the mid-1980s, the pleasure boat industry boomed, with product shipments growing at an average rate of 13 percent a year. In 1989, however, the economy soured, sending boat manufacturing into a tailspin from which it has yet to emerge. The industry's problems were compounded in 1991 when a 10 percent federal tax on boats retailing for over $100,000 was enacted. Largely as a result of the tax, the share of the pleasure boat market by dollar value accounted for by boats in that high-price bracket slipped from 33 percent to 25 percent in one year.

Three factors contributed to the major drop in the demand for boats in the United States between 1989 and 1991. One was the reluctance on the part of consumers to take on additional debt on top of that incurred during the industry's boom years of 1982 through 1988. Another factor was the overall decline in the economy during this period. As disposable personal income declines, pleasure boats, being large and unnecessary (or "luxury") purchases, are among the first items deleted from shopping lists during economic downturns. A third factor was the 10 percent federal luxury tax on pleasure boats with price tags over $100,000. The tax, which was repealed in 1993, has generally taken the blame for the departure of several luxury boat builders from the market, and the loss of thousands of industry jobs.

Signs of Recovery. The earliest signs of a recovery emerged in 1992. The 1993 repeal of the luxury tax appears to be helping complete the recovery. Part of the increase in orders that took place was to rebuild dealers' inventories, which had reached the lowest levels in history by the beginning of 1992. Nevertheless, most manufacturers reported improving conditions, and some began rehiring laid-off workers. Viking Yacht Co. (a maker of high-end vessels), for example, began rehiring after seeing its work force plunge to 65 employees from its 1990 level of 1,500. Industry analysts expect the recovery to continue at a modest pace through the end of the 1990s. In order to affect the expected recovery, the boating industry must meet the challenge of restoring consumer demand. Manufacturers are hopeful that the rapidly growing 35- to 54-year-old age group will live up to its demographic billing as big spenders on leisure activities such as boating.

Current Conditions

The U.S. boat manufacturers enjoy the largest market in the world making up 40 percent of the global pleasure boat market. Florida led the nation in the late 1990s with 203 boat manufacturers. By 1999 used boats accounted for almost two-thirds of all boat sales, cutting into the industries production.

The value of industry shipments grew steadily throughout the late 1990s, climbing from $5.6 billion in 1997 to $8.3 billion in 2000. The cost of materials increased from $3.2 billion in 1997 to $4.6 billion in 2000. Over the same time period, the total number of industry employees increased from 41,172 to 57,080. Production workers in 2000 numbered 95,344; they worked a total of 95,344 hours and earned total wages of $1.12 billion.

The boating industry moved into the twenty-first century facing many issues that would have a significant impact. All of these issues—U.S. Environmental Protection Agency standards, operator licensing, marine wildlife protection laws, various new or increased user fees and taxes, and consumer debt—will play a major role in determining the U.S. market for pleasure craft.

Industry Leaders

The world's leading manufacturer of pleasure boats and motors in the mid-1990s was Brunswick Corporation, based in Lake Forest, Illinois. By 1999 Brunswick was number one boat building with $8.2 million in the global retail market. In addition to its boat and boating motor product lines, Brunswick is a leading manufacturer of bowling and bicycling equipment. Among the boat brands Brunswick builds are Sea Ray, Bayliner, Maxum, Baja, Boston Whaler, and Robalo. Brunswick also manufactures Mercury, Mariner, and Force outboard engines.

Brunswick was founded in 1845, and for much of its history was principally a maker of billiards and bowling equipment. In the early 1960s, the popularity of bowling declined, and the company diversified. By the following decade, Brunswick was building boats on a large scale. In 1986, Brunswick bought two important boat companies, Bayliner and Ray Industries.

The number two major player in the boat building industry is Genmar Industries Inc., which is headquartered in Minneapolis but builds recreational powerboats in Florida, Minnesota, Wisconsin, North Carolina, Louisiana, and Arkansas. Genmar's boat brands include Trojan, Crestliner, Glastron, Aquasport, Cajun, Wellcraft, Carver, Logic, Lund, Nova, and Ranger. In addition to its U.S. facilities, Genmar builds boats at a plant in the Canadian province of Manitoba. Genmar's worldwide employees total approximately 5,000.

Genmar is dedicated to developing research and technology that will not only change the recreational boat industry, but will also improve and establish new standards in manufacturing. Robotics is just one example of the work they are doing.

Workforce

There were 57,080 people in the United States employed in the boat building and repairing industry in 2000, compared to the 44,500 employees reported in 1992. Production workers, who totaled 46,846 in 2000, earned an average of $11.84 an hour.

America and the World

In 1997 U.S. imports of pleasure boats dropped 18 percent from 1996. Canada, being the number one foreign supplier to the United States experienced a 28 percent decline in shipments to America. Despite the drop in Canada's declining market, Italy saw a 45 percent increase in shipments to the United States in 1997. The United Kingdom became the third largest supplier to the United States in 1997 with imports equaling $68 million. Taiwan's boat imports were up 9 percent and in the first 5 to 10 years of the next century, Taiwan could become a major source of production.

By 1999 U.S. boat manufacturers were still considered to be the best, making them the number one supplier of pleasure boats worldwide. The largest exporters of boats, after the United States are, Canada, Japan, Netherlands, Germany, United Kingdom, and Australia, respectively. Italy and the Bahamas were two growing markets for these manufacturers in the late 1990s.

In the first quarter of 1998 exports to Japan, Singapore, Hong Kong, and Malasia were down 23 percent, 48 percent, 66 percent, and 97 percent, respectively. This was due to the Asian Economic Crisis. As foreign exchange rates improve, however, U.S. boat manufacturers expect to see these exports rise in number again.

Research and Technology

For over 40 years fiberglass was the most common material used to build small watercraft. But in 1999, a new process called Advanced Composite Process (ACP) incorporated a vacuum-formed outer shell reinforced by a central foam core with inner bi-directional fabric for added strength, making the hulls of boats five times stronger against impact and exposure. Along with enhanced quality, this is an automated process which cuts man hours in the production of the boat hulls versus the more labor intensive fiberglass product.

Along with the technology for creating stronger, lighter boats, the late 1990s brought about a new add-on feature to the pleasure boat industry. Boats were now being offered with large swim platforms 15 to 20 percent larger than conventional designs in years past without compromising performance.

Some of the most impressive innovations in the boat industry in recent years have been in electronics. VHF (very high frequency) radios, among the most common pieces of boating equipment, have evolved from heavy, permanently installed instruments to hand held, portable devices. Advances have also been made in atmosphere sensor technology, including equipment for detecting carbon monoxide. Another major technological development in boating was the Global Positioning System (GPS), a satellite-based navigational system. GPS was originally developed by the Defense Department for use in deploying weapons. The system, which is available to the public in a semi-crippled form, can be used for navigating on land and in the air as well as at sea.

The boat repair industry has also benefited from technological advances of recent years. Computer-based inventory systems have enabled companies to keep their inventories smaller, while at the same time improving the efficiency of parts delivery.

Further Reading

Amerman, Don. "Cool Summer Dampens Pleasure Boat Sales." The Journal of Commerce, 23 September 1996.

Brunswick Corporation. "History," 1999. Available from http://www.brunswickcorp.com

Genmar. "Virtual Engineered Composites," 1999. Available from http://genmar.com/html .

Gromer, Cliff. Popular Mechanics. "Dream Boat," April 1999.

Janssen, Peter A. Motor Boating and Sailing. "At the Helm – A Lot of Changes." January 1999.

Linskey, Tom. Sail Magazine. "Brave New Boating," July 1998.

United States Census Bureau. "1997 Economic Census: Boat Building," 1997.

United States Census Bureau. "Statistics for Industries and Industry Groups: 2000." Annual Survey of Manufacturers. February 2002. Available from http://www.census.gov .



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