Part Two: Looking to purchase a new boat? You’re not alone. We sat down with three production builders to dig into the continued boat-buying frenzy.
Boating provides an escape from the fast-paced rat race that is life in the 21st century. We’ve been preaching that idea of escaping on the water for decades, but in the past year it became crystal clear for a growing cadre of new boaters. Time on the water equated to a safe way to enjoy some fresh air with those lucky enough to be within the bubble of a boat owner. But if you’re looking to crack into the bubble this summer, you may need an extra dose of patience.
With an influx of new boat owners knocking at the door of boat dealerships and yacht brokers, inventory quickly fell to low levels. Combine that demand with global supply chain issues and you’ve got builders scrambling to manufacture boats in a timely fashion without waiting on parts and engines. It’s a good news/bad news situation. The builders are happy for the surge in demand, but they’re frustrated because they can’t deliver a boat, or the level of customer service they’d like to, in a timely manner. And unfortunately, the boat buyer is left wanting some clarity on time tables that the builder can’t always provide, because many of them are waiting on answers of their own from suppliers and vendors.
Tommy Thompson: Vice President of Sales at Bertram
Every month or so, Tommy Thompson sends out a newsletter to the company’s widespread community of owners. Typically, these “Insider Updates” consist of a few video walkthroughs and prevalent news items, which, aside from owner event cancellations due to Covid, have generally been positive as of late, thanks to a production line that is churning out center and dual consoles at a record clip.
Well, not anymore.
“I’m getting ready to send my next Insider out, and I just took a picture of a couple barrels of resin. I’m calling them ‘liquid gold,’” said Thompson. Not only is resin scarce, but Bertram doesn’t have enough miscellaneous parts to finish most of their builds. “It’s frustrating as hell,” he added. “You have to tell people we’ve got boats sitting there waiting for a windshield.”
Unfortunately, it’s an all too real refrain industrywide; the deep freeze that shut down the petroleum industry in Texas back in February, coupled with limited backstocks of materials thanks to a record-setting demand for products spurred on by Covid, has created a “perfect storm” that has ground the supply chain to a halt. Before the collapse, Bertram was planning to build 500 boats over the next few years. That number dropped to zero for three weeks as they moved what resources they had to their bigger models, and the ones already sold, to get those out the door as soon as possible. Luckily, they weathered the worst of it without any layoffs.
At the Palm Beach Boat Show, Thompson heard other major manufacturers were considering shutting down completely from two weeks to a month to curtail future supply chain issues. “It makes sense,” he said. “What are they going to do with their employees? They’ve got 1,000 employees; 200 of them do nothing but build parts. And if you have no raw materials…”
Bertram CEO Mark Paulhas has been in the industry for 30 years and has never seen anything like this. Neither has Bertram’s fiberglass production manager at their facility in Tampa. To try and keep up with demand, manufacturers have resorted to bartering with one another like it’s the Wild West. “We’ve had major players in the marine industry, other companies, calling us saying, ‘Can we buy this from you? ‘Do you have any of this?’” said Thompson.
Right now, Bertram has four of their 50s on the line, and two 61s in production. “It’s more of an assembly process—so the parts for those boats have been built for a long time,” said Thompson. “Whereas when you have outboard products, it takes a week to build the boat and another two weeks to assemble it.” In normal times, that’s usually a good thing: The wait time is typically reduced for smaller boats. Now, there isn’t enough resin to finish those smaller projects. Added Thompson, “the second 39 CC is pretty much done, but it’s still waiting on like a dozen parts.”
Thompson also warns that boat prices could rise as the cost of raw materials spikes. “Like drastically,” he said. “I can’t really speak to that, because I don’t know the exact numbers, but it’s pretty remarkable. They’re going to take advantage of this shortage, and we have no recourse until somebody else comes along and competes with them.”
Will that hopefully be a temporary problem?
“It never is,” he said. “They’ll raise the prices and never bring them back down again, I’m sure.”
Jim Leishman, Owner/President of Nordhavn Yachts
While the outboard market is experiencing a squeeze, inboard markets and, more specifically, the trawler-type yachts that depend on inboard engines, are experiencing radical supply-chain pressures as well. “For now,” said Jim Leishman, one of the owners of Nordhavn Yachts, a significant player in the trawler market since 1978, “I’ve had to stop taking orders for new boats because everything’s so backed up. For our new 41, for example, we’re trying to get generators by buying them in groups of 10, but still, everything is six months, eight months, sometimes even a full year out. We really don’t know for sure when we’ll get what we need. Resin is scarce too, along with fiberglass, steering systems, electronics, engines. The way things stand right now, we’re committed to building 34 of the new 41-footers, and the last will be delivered toward the end of 2023. Beyond that, we’ll do a letter of intent on a boat, but we simply can’t sign a contract. Things are just too unpredictable.”
As for the reason why the boom in boat sales continues unabated despite supply-chain issues, Leishman is as mystified as most everybody else in the boat business. “Frankly,” he said, “I didn’t even begin to anticipate what is happening now, and I don’t have any idea when this thing will come to an end, although what we hear is that a huge increase in capital gains taxes, when it comes, is likely to put a damper on the market, at least slow it down some. It’s really wild, but the demand for new boats is really affecting the brokerage business, too. At the present time, there are virtually no Nordhavns for sale on the brokerage market.”
Tom Slikkers, President of S2/Tiara Yachts
Tom Slikkers said the fact that his company is family-owned affords little more than “some extra flexibility” vis-à-vis the strictly corporate builders when dealing with the boatbuilding supply chain dilemma. “Otherwise,” he continued, “we’ve got virtually the same problems everyone else has.” Slikkers went on to list several, seemingly unrelated factors that he thinks are contributing to supply-chain problems, starting with the intense, Covid-related demand for products like boats designed for outdoor usage. “Whether it’s RVs, kayaks, canoes or whatever,” he said, “all of us that supply the outdoor market have our foot on the gas, and it’s causing a bottleneck.”
Slikkers went on to suggest that, a decade or so ago, EPA regulations forced fiberglass manufacturers out of business in the United States, a development that Chinese manufacturers took advantage of. “Now,” he said, “about 95 percent of the fiberglass manufactured in the world comes from China. Couple this with the fact that you have all these ships locked up offshore, having to wait to unload for long periods of time, and you begin to understand what’s happening, why fiberglass is getting scarce and why getting the supplies we need is like hand-to-hand combat.”
Another problem Slikkers pointed to is the dearth of vendors that actually supply auxiliary and constituent products to the recreational marine business. Although larger, higher-volume manufacturing entities like the automotive market may rely on a selection of numerous alternative vendors which provide windshields, electronics, seats and other components, marine suppliers tend to be comparatively few and far between. “Take windshield glass, for example,” Slikkers said. “To my knowledge, there are only two suppliers of windshield glass for boats built here in this country, unless, of course, you go overseas. For us to have all of our eggs in just one or two baskets this way exposes us to a great deal of supply-side vulnerability, especially in times like these.”
Slikkers admitted that Tiara is occasionally late on deliveries of boats to its dealers, but he said, the company does all it can to explain problems to its business partners and not surprise them with shortfalls. Then again, shortfalls often come unexpectedly. “You know,” he concluded, “we have meetings here at least once a week and part of every meeting consists of an update from our supply chain director. And she informs us of the reality the folks in our purchasing department—and all of the folks out in the plant who are trying to build a quality product—are going to have to live with in upcoming days. And routinely, these days, it’s like a game of Whac-A-Mol for everybody—either we can’t get this part or component or we can’t get that one and, by the way, the price on both of them has just gone up. I’m not complaining. We can adjust—we have to adjust. I’m just telling you how it really is.”
The bottom line for the boater: Get your orders in as soon as you can, be patient and take care of your friends who own boats so you can still get out on the water.