NEWPORT — The boating industry is necessarily embracing globalization, according to two Rhode Island boat manufacturers displaying their products at the Newport International Boat Show. The event opened yesterday and continues through Sunday with more than 700 boats on display along 15 acres of Newport’s waterfront.
M2 Motoryachts, based in Coventry, builds its boats in South Africa with motors and other critical parts shipped to the company’s Cape Town factory, according to director of operations Gary Goddard. Prices of M2’s boats range from $54,000 for a 21-footer to just under $3 million for a 60-foot model.
Pearson Composites, based in Warren, builds several models of sail and power boats from 28 feet to 65 feet in its Rhode Island plant with a work force of more than 200. Prices range from $100,000 to $500,000, and the company plans to begin exporting, according to chief executive officer Patrick Burke.
The mood among salespeople at the show was buoyant on opening day, amid reports that orders for small boats are foundering this season while the demand for mega-yachts is sailing along. “We’ve sold a ton of boats over the last couple of months,” Burke said, “but it was real slow for the prior part of the year.”
Sales of new boats rose slightly in 2006, according to an annual market survey by the National Marine Manufacturers Association. The trade group reported that new-boat and motor sales reached $15.1 billion in 2006, a 3-percent increase from $14.7 billion in 2005.
The average price of a new boat last year was $13,035, and the average price of a new outboard boat, motor and trailer package was $26,085, a 3-percent increase over 2005.
Balancing the good news about last year’s sales, the boating trade association reported that the value of imports to the U.S. boating market is increasing.
Total U.S. boat and engine exports reached $2.3 billion, but with imports valued at $2.8 billion, the U.S. boating industry experienced a trade deficit of $472.3 million, an increase of 3 percent from 2005.
M2’s catamarans are designed in Canada, said Goddard, and are built in South Africa by a work force of 105. “South Africa is the largest center for building catamaran boats,” he said. “You can get skilled labor for $3 an hour; we pay about $5 an hour for skilled, trained people…. Employees there are very loyal, they’re very good and they’re consistent.”
Pearson builds all its boats here with experienced craftsmen, many of them originally from the Azores and Brazil, according to Burke. “We have tremendously skilled craftsmen here,” he said. The company has also launched its own training program, working with schools in Warren to bring some of their students into the work force.
“We need to get overseas from a sales perspective,” Burke said, “but I’m not convinced that we need to commence manufacturing overseas right now, but at some point we will. It’s all volume driven.”
In other industries, such as toy and apparel manufacturing, overseas sourcing is price driven — ultimately by consumers seeking bargains.
Boat buyers are different, said Goddard. “They want quality, they want a good product and they want something that’s reliable. ... People want the best and they’re willing to pay for it.”
“The only person who ever needed a boat was Noah,” Burke said. “After that, it’s all luxury. You’re talking about luxury dollars, disposable income. Think about it. People spend hundreds of thousands of dollars on something they truly do not need. Price is not the sole driver.”
How will the worldwide credit crunch affect the boating industry?
“It’s forcing us to spend more time focusing on the customer and product innovation to assure we get the biggest part of market share,” Burke said. “We’re all forced to sharpen our pencils.”
The boat show is open from 10 a.m. to 6 p.m. today and tomorrow and from 10 a.m. to 5 p.m. Sunday. Admission today and Sunday is $16 and tomorrow is $18.
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