netrashetty
Netra Shetty
Rockwell Collins, Inc. (NYSE: COL) is a large United States-based international company headquartered in Cedar Rapids, Iowa, primarily providing aviation and information technology systems, solutions, and services to governmental agencies and aircraft manufacturers.
he boat dealership industry comprises traditional powerboats, personal watercrafts, kayaks and sailboats.
The U.S. pleasure boat industry has had several years of growth, with real domestic shipments growing 3 percent annually from 1992 to 1998 (see Table 39-12). Over that period, real apparent consumption also rose, growing 5 percent annually, thanks mostly to an annual growth rate of 22 percent in U.S. imports of pleasure boats. The boating industry has kept pace with the national economy, which grew 3 percent annually from 1992 to 1998 as measured by real GDP. Growth in personal income and consumer spending have been the highlights of GDP growth, and those factors are key indicators of growth for the boating industry. Real disposable personal income grew 2 percent annually from 1992 to 1998, while total real personal consumption expenditures grew 3 percent annually over that period. Real personal consumption expenditures on boats increased 15 percent annually over that period.
However, in 1999, the boating industry saw growth slow down while the national economy continued to have strong growth. In the first 6 months of 1999, GDP and disposable personal income each increased 4 percent compared with the first 6 months of 1998, while personal consumption expenditures increased 5 percent in real terms after double-digit annual growth from 1992 through 1998. In 1999, real domestic shipments increased an estimated 1 percent, totaling $6.2 billion in current dollars. Fueled by an estimated 10 percent growth in U.S. boat imports, apparent consumption increased 2.3 percent in real terms. Several indicators for the boat industry began to slow or decline. While consumers continued to spend, they began to dip into savings in 1999. Savings as a percentage of disposable income averaged -1 percent in the first half of 1999. The ratio of consumer debt to personal income also remained high, above 18 percent, for the fifth consecutive year. In addition, interest rates increased modestly throughout the first half of the year. These indicators made consumers more concerned about taking on the significant additional debt associated with the purchase of a boat. This consumer wariness can be measured to a degree by consumer expectations surveys. According to a University of Michigan survey, consumers’ expectations dipped in the first half of 1999, down 3.8 percent from 1998. Indicators such as consumer expectations were at or near record highs. It is likely that the negative growth may only slow growth in the industry rather than signaling a decline. In addition, some manufacturers are reporting a shift of consumer preferences toward larger, more expensive boats, offsetting any negative growth trends in the industry. Industry shipments were expected to increase almost 1 percent in 1999 in 1992 dollars.
A further concern of the boating industry in regard to today’s consumers is whether they continue to enjoy boating. Participation in boating and boating activities declined over the last 10 years. According to an NSGA survey, 25.7 million people participated in power and motor boating in 1998, down from 32.5 million in 1988. Participation in sailing decreased from 6.7 million to 3.6 million individuals from 1988 to 1998. Several activities associated with boating also declined, such as water skiing and fishing. Over that period, participation in water skiing dropped from 12.8 million to 7.2 million individuals. Fishing lost 2.1 million individuals from 1988 to 1998, when it had 43.6 million participants. Overdevelopment of water locations, higher participation costs versus those for other recreational activities, and a lack of a concerted effort to promote the activity are the reasons most commonly cited for the decline in participation.
Global Industry Trends
Despite the potential of international E-commerce, foreign market demand has been weak over the last several years. U.S. exports of pleasure boats fell 1 percent annually from 1992 through 1998. In 1999, U.S. exports were estimated to lose over 1 percent. Overall economic conditions in many overseas markets have not been as strong as those in the U.S. market. Real GDP growth in the top 20 overseas markets, as weighted by U.S. total manufacturing exports, increased only 2 percent in 1998 and an estimated 1.8 percent in 1999 compared with 3.9 percent and an estimated 3.5 percent for the U.S. market in 1998 and 1999, respectively. As was the case more recently in the United States, this probably meant that consumer confidence and disposable income growth were lower, making consumers slightly more apprehensive about buying a boat. In addition, it is likely that less was spent on capital investments, particularly marina development. Furthermore, overseas pleasure boat markets are smaller and therefore typically have fewer dealers and distributors that are willing to take risks when the economy is weak or unstable.
The U.S. pleasure boat market is the largest in the world. U.S. consumption of pleasure boats and marine accessories accounts for an estimated 60 percent of the worldwide market for such products. Typically, U.S. manufacturers hope for a strong U.S. market to bolster sales and profits. A strong U.S. market also helps exports to a degree, as economies of scale are an important factor in the production of boats. If U.S. manufacturers are able to produce a large number of boats for the U.S. market, prices will decline for domestic and international buyers, making the U.S. firms more price-competitive overseas.
An additional concern for the boat industry is the increased cost associated with new legislation regulating and taxing the boating industry. The U.S. Environmental Protection Agency (EPA) and the industry have begun implementing stricter emissions standards that will be gradually phased in over the next 6 years and probably will add noise standards over the next several years. These stricter emissions standards require a large capital investment by marine engine companies such as Brunswick and OMC. Similar outboard engine emissions standards are being drafted in the EU. The engine industry has been negotiating with the Europeans for a phase-in period similar to the EPA phase-in. If emissions regulations have no phase-in, they will cause a severe disruption in the supply of outboards to the EU. Other regulations being considered, including operator licensing, upgraded standards for boat components, marine wildlife protection laws, and various user fees and taxes, also may have a significant impact on the boating industry.
Although dollar volume was up, wholesale unit shipments for the traditional powerboat segment declined, down 5 percent for 2005. Outboard boat wholesale unit shipments for the year were down almost 8 percent, which is similar to the decline seen in outboard engine shipments, down 7 percent for the year, according to the association. Sterndrive boats also showed a 2 percent decline in wholesale unit shipments in 2005.
NMMA's MSR tracks manufacturers' shipments to dealers for both boats and outboard engines using a control group of boat and engine manufacturers. The 2005 boat control group represents about 77 percent of the overall boat marketplace while the 2005 outboard engine control group represents about 95 percent of the market.
Industry Definitions
Boat – watercraft that provides transportation over water, can be propelled by human power, wind or engine
Boat dealer - a business that sells new boats and/or used boats at the retail level, based on a dealership contract with a boat maker or its distributor.
Boat park – an area that has a boat ramp, usually picnic areas, recreation facilities etc.
Bow – the forward part of the boat.
Inboard – an engine fitted inside a boat which is the opposite of an outboard.
Outboard - A detachable engine mounted on a boat's stern, this is very popular for family boats in the US.
Starboard - right side of a boat when looking toward the bow.
Stern – the rear end of the boat.
Market Metrics
Until the recent economic recession of 2008, this and related industries had enjoyed very strong growth. Figures gathered by the U.S. Department of Commerce indicated that boat building in the U.S. increased by 51% in the five year period measured from 1997 to 2002 to hit over US $8 billion on value of boats shipped while boat dealers had over US $12 billion in shipments(see chart below).
At the same time, the boat building category had seen an increase of 8.3% in the number of firms in the industry and a further rise of 21.3% in employment (see chart below).
In the boat dealers sub-category, between 1997 and 2002, the Commerce Department calculated that the number of establishments in the industry rose 5%, while employment increased 13.6% (see chart below). The bulding and selling of boats has been a small, but rapidly expanding segment of the total recreation market.
About 5,000 retail dealers sell boats and related products and services in the United States, with combined annual revenue of about $12 billion. MarineMax, the largest retailer, has only a 2 percent market share in this fragmented industry. The 20 top dealers collectively have about 20 percent of the market. Most dealers operate a single location, are privately owned, and have less than $3 million in annual sales. Larger dealers can have more than $10 million in annual sales.
Industry Players
In 1997, more than 40% of dollar sales in the recreational boating market was controlled by six producers—Brunswick, Outboard Marine, Genmar, Yamaha Motor, Bombardier, and McAndrews & Forbes. The top two companies, Brunswick and Outboard Marine, alone account for over 27.5% of recreational boat sales and approximately 40% of the engine market, expressed in terms of value of shipments
he boat dealership industry comprises traditional powerboats, personal watercrafts, kayaks and sailboats.
The U.S. pleasure boat industry has had several years of growth, with real domestic shipments growing 3 percent annually from 1992 to 1998 (see Table 39-12). Over that period, real apparent consumption also rose, growing 5 percent annually, thanks mostly to an annual growth rate of 22 percent in U.S. imports of pleasure boats. The boating industry has kept pace with the national economy, which grew 3 percent annually from 1992 to 1998 as measured by real GDP. Growth in personal income and consumer spending have been the highlights of GDP growth, and those factors are key indicators of growth for the boating industry. Real disposable personal income grew 2 percent annually from 1992 to 1998, while total real personal consumption expenditures grew 3 percent annually over that period. Real personal consumption expenditures on boats increased 15 percent annually over that period.
However, in 1999, the boating industry saw growth slow down while the national economy continued to have strong growth. In the first 6 months of 1999, GDP and disposable personal income each increased 4 percent compared with the first 6 months of 1998, while personal consumption expenditures increased 5 percent in real terms after double-digit annual growth from 1992 through 1998. In 1999, real domestic shipments increased an estimated 1 percent, totaling $6.2 billion in current dollars. Fueled by an estimated 10 percent growth in U.S. boat imports, apparent consumption increased 2.3 percent in real terms. Several indicators for the boat industry began to slow or decline. While consumers continued to spend, they began to dip into savings in 1999. Savings as a percentage of disposable income averaged -1 percent in the first half of 1999. The ratio of consumer debt to personal income also remained high, above 18 percent, for the fifth consecutive year. In addition, interest rates increased modestly throughout the first half of the year. These indicators made consumers more concerned about taking on the significant additional debt associated with the purchase of a boat. This consumer wariness can be measured to a degree by consumer expectations surveys. According to a University of Michigan survey, consumers’ expectations dipped in the first half of 1999, down 3.8 percent from 1998. Indicators such as consumer expectations were at or near record highs. It is likely that the negative growth may only slow growth in the industry rather than signaling a decline. In addition, some manufacturers are reporting a shift of consumer preferences toward larger, more expensive boats, offsetting any negative growth trends in the industry. Industry shipments were expected to increase almost 1 percent in 1999 in 1992 dollars.
A further concern of the boating industry in regard to today’s consumers is whether they continue to enjoy boating. Participation in boating and boating activities declined over the last 10 years. According to an NSGA survey, 25.7 million people participated in power and motor boating in 1998, down from 32.5 million in 1988. Participation in sailing decreased from 6.7 million to 3.6 million individuals from 1988 to 1998. Several activities associated with boating also declined, such as water skiing and fishing. Over that period, participation in water skiing dropped from 12.8 million to 7.2 million individuals. Fishing lost 2.1 million individuals from 1988 to 1998, when it had 43.6 million participants. Overdevelopment of water locations, higher participation costs versus those for other recreational activities, and a lack of a concerted effort to promote the activity are the reasons most commonly cited for the decline in participation.
Global Industry Trends
Despite the potential of international E-commerce, foreign market demand has been weak over the last several years. U.S. exports of pleasure boats fell 1 percent annually from 1992 through 1998. In 1999, U.S. exports were estimated to lose over 1 percent. Overall economic conditions in many overseas markets have not been as strong as those in the U.S. market. Real GDP growth in the top 20 overseas markets, as weighted by U.S. total manufacturing exports, increased only 2 percent in 1998 and an estimated 1.8 percent in 1999 compared with 3.9 percent and an estimated 3.5 percent for the U.S. market in 1998 and 1999, respectively. As was the case more recently in the United States, this probably meant that consumer confidence and disposable income growth were lower, making consumers slightly more apprehensive about buying a boat. In addition, it is likely that less was spent on capital investments, particularly marina development. Furthermore, overseas pleasure boat markets are smaller and therefore typically have fewer dealers and distributors that are willing to take risks when the economy is weak or unstable.
The U.S. pleasure boat market is the largest in the world. U.S. consumption of pleasure boats and marine accessories accounts for an estimated 60 percent of the worldwide market for such products. Typically, U.S. manufacturers hope for a strong U.S. market to bolster sales and profits. A strong U.S. market also helps exports to a degree, as economies of scale are an important factor in the production of boats. If U.S. manufacturers are able to produce a large number of boats for the U.S. market, prices will decline for domestic and international buyers, making the U.S. firms more price-competitive overseas.
An additional concern for the boat industry is the increased cost associated with new legislation regulating and taxing the boating industry. The U.S. Environmental Protection Agency (EPA) and the industry have begun implementing stricter emissions standards that will be gradually phased in over the next 6 years and probably will add noise standards over the next several years. These stricter emissions standards require a large capital investment by marine engine companies such as Brunswick and OMC. Similar outboard engine emissions standards are being drafted in the EU. The engine industry has been negotiating with the Europeans for a phase-in period similar to the EPA phase-in. If emissions regulations have no phase-in, they will cause a severe disruption in the supply of outboards to the EU. Other regulations being considered, including operator licensing, upgraded standards for boat components, marine wildlife protection laws, and various user fees and taxes, also may have a significant impact on the boating industry.
Although dollar volume was up, wholesale unit shipments for the traditional powerboat segment declined, down 5 percent for 2005. Outboard boat wholesale unit shipments for the year were down almost 8 percent, which is similar to the decline seen in outboard engine shipments, down 7 percent for the year, according to the association. Sterndrive boats also showed a 2 percent decline in wholesale unit shipments in 2005.
NMMA's MSR tracks manufacturers' shipments to dealers for both boats and outboard engines using a control group of boat and engine manufacturers. The 2005 boat control group represents about 77 percent of the overall boat marketplace while the 2005 outboard engine control group represents about 95 percent of the market.
Industry Definitions
Boat – watercraft that provides transportation over water, can be propelled by human power, wind or engine
Boat dealer - a business that sells new boats and/or used boats at the retail level, based on a dealership contract with a boat maker or its distributor.
Boat park – an area that has a boat ramp, usually picnic areas, recreation facilities etc.
Bow – the forward part of the boat.
Inboard – an engine fitted inside a boat which is the opposite of an outboard.
Outboard - A detachable engine mounted on a boat's stern, this is very popular for family boats in the US.
Starboard - right side of a boat when looking toward the bow.
Stern – the rear end of the boat.
Market Metrics
Until the recent economic recession of 2008, this and related industries had enjoyed very strong growth. Figures gathered by the U.S. Department of Commerce indicated that boat building in the U.S. increased by 51% in the five year period measured from 1997 to 2002 to hit over US $8 billion on value of boats shipped while boat dealers had over US $12 billion in shipments(see chart below).
At the same time, the boat building category had seen an increase of 8.3% in the number of firms in the industry and a further rise of 21.3% in employment (see chart below).
In the boat dealers sub-category, between 1997 and 2002, the Commerce Department calculated that the number of establishments in the industry rose 5%, while employment increased 13.6% (see chart below). The bulding and selling of boats has been a small, but rapidly expanding segment of the total recreation market.
About 5,000 retail dealers sell boats and related products and services in the United States, with combined annual revenue of about $12 billion. MarineMax, the largest retailer, has only a 2 percent market share in this fragmented industry. The 20 top dealers collectively have about 20 percent of the market. Most dealers operate a single location, are privately owned, and have less than $3 million in annual sales. Larger dealers can have more than $10 million in annual sales.
Industry Players
In 1997, more than 40% of dollar sales in the recreational boating market was controlled by six producers—Brunswick, Outboard Marine, Genmar, Yamaha Motor, Bombardier, and McAndrews & Forbes. The top two companies, Brunswick and Outboard Marine, alone account for over 27.5% of recreational boat sales and approximately 40% of the engine market, expressed in terms of value of shipments