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Thursday, June 11, 2009

Economic Woes Sinking Boating Industry
Story from Star-Tribune

LITTLE FALLS, MINN. -- If Minnesota had a symbolic birthplace for the state's boat-making industry, it might be this city of 8,500 that straddles the upper reaches of the Mississippi River and is home to two of the best-known names in boating: Larson and Crestliner. But a rough economy has battered many sectors of the boating industry, creating ripples that are being felt from the lakeshore to the showroom floor.

At Larson, where layoffs over the past few years have slashed that workforce from a peak of 800 to around 200, only a handful of shrink-wrapped boats were being loaded onto trucks one day last week, waiting for shipment to dealers. Employment at competitor Crestliner, owned by Brunswick Corp., is down 26 percent in the past nine months.

Minnesotans' love affair with boats hasn't ended, but soaring unemployment and plunging home values are swamping an industry that epitomizes sunshine and good times.

New boat registrations, down 20 percent between 2004 and 2008, continued to fall through the first four months of this year. Minneapolis-based boatmaker Genmar Holdings Inc., the parent of Larson and several other lines of boats, filed for protection in U.S. Bankruptcy Court in St. Paul while it reorganizes.

Textron Financial Corp. filed a lawsuit in U.S. District Court against Nisswa Marine, alleging the dealer is nearly $4 million in default on financing for inventory.

In Hastings, marina owner Bill King of King's Cove says only 270 of the 411 slips he has for lease are occupied this season. At Wayzata Marine on Lake Minnetonka, owner Dave Briggs has a dealership full of new boats that he's having trouble selling.

Little Falls Mayor Cathy Van Risseghem said: "When you start looking at the necessities of life, boats probably will be one of those things you don't really need. It's a sign of the economic times, and we just have to learn to deal with it."

boat docks instantmarinedocksIn Hastings, marina owner Bill King of King’s Cove said only 270 of the 411
slips he has for lease are occupied. “It’s a disposable-income issue.”

'It's a Minnesota thing'

With more than 800,000 registered boats, Minnesota has one of the highest boat ownership rates in the country. Judging from the flip flops, swimsuits and berry-brown skin around area boat docks last week, the allure of playing hooky from work on a Friday afternoon for a lazy cruise with a cooler full of beer and pop remains irresistible, especially after a long winter.

"It's a Minnesota thing," said Tamara Duick of Maple Lake. "You don't have to go far to do it. We've got 10,000 lakes."

The owner of Big Dog Fishing Guide said business is holding its own despite the presence of more guides on the lakes.

"We're doing as well as last year, which was a record year," said Gary Klinger, a Howard Lake resident who offers guide services on Lake Minnetonka. On a recent Thursday, Klinger was waiting for two clients -- one from Scotland -- who were in Minneapolis on business and wanted to fish.

But powerboat makers are suffering from a steep drop in demand that began late in 2005 and actually accelerated through the first part of this year.

Brunswick, which makes Bayliner, Mercury and other brands, was forced to close five plants late in 2008, including one in Pipestone. Its sales plunged 64 percent during the first three months of 2009. Recently, the company took a page from automakers and began pledging to cover nine months of payments for any new boat buyers who lose their jobs.

Area boat retailers say they've had to rely heavily on sales of used boats.

"We're selling every used boat we can get," said Briggs of Wayzata Marine. "I don't think folks want their neighbors to see a new boat in the driveway."

Tougher credit policies are one reason Don Mashak, owner of First National Repossession in Albertville, expects the surge in boat repossessions to slow after rising sharply last year.

"People let their boats go before they let their cars go," Mashak said.
'A disposable-income issue'

King, at King's Cove, said boat sales go in cycles but that the current down cycle "is elongated." He said sales of larger boats -- 26 feet or more -- are most affected by the economy and the financing squeeze.

"It's a disposable-income issue," King said. "People are turning to other recreational activities -- motorcycles, RVs, travel, home improvement. It's competition."