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Marine industry survey

January 1st, 2009 / By: / Feature, Industry News, Management

0109_f3_1This summary of the U.S./Canadian marine fabric market segment focuses mostly on the U.S. marketplace, particularly as it relates to the state of the marine fabric market over the past few years: trends, top marine fabric applications and the market outlook. Much of the information was derived from a recent survey conducted by the Industrial Fabrics Association International (IFAI) with U.S./Canadian marine fabric end-product manufacturers and suppliers, including members of the Marine Fabricators Association (MFA) and marine businesses that are not MFA members. Secondary research supplements the results. For the full report on the marine market, visit www.ifaibookstore.com.

The U.S. marine fabric market has been in a state of flux in 2007 and 2008. The culprit is largely a sluggish U.S. economy: a soft housing market (home values collapsing 15–20 percent according to S&P/Case-Shiller), a tight credit crunch, runaway fuel costs (oil and gasoline prices), inexpensive imports from Southeast Asia and spending-conscious boat consumers waiting for the U.S. and world economies to stabilize.

0109_f3_2The poor health of the U.S. economy has been a drag on boat sales growth in the United States, whichdropped in 2007 to 841,820, a 7.7 percent decrease from 2006. To make matters worse, U.S. aftermarket accessory sales fell an estimated 5.5 percent, to $2.6 billion, in 2007 compared to 2006. On a positive note, U.S. aftermarket accessory sales have more than doubled in the last decade, from $1.2 billion in 1997 to $2.6 billion in 2007.

Many U.S. boat manufacturers offset declining U.S. boat sales in 2007 with exports to Canada, Europe and Australia. In fact, in 2007, the United States experienced its first positive trade balance in the import and export of recreational boats and engines since 1996. The declining dollar helped fuel the growth of exports of recreational boats and engines by 23 percent in 2007, to $2.9 billion.

Some marine end-product manufacturers have had a difficult time finding and retaining qualified employees, which has hindered their ability to expand their businesses. The seasonal nature of the new boat and marine fabrication market has been another limiting factor on the growth of new boat and marine fabric sales. For example, 74 percent of new boats were sold in the second and third quarters of 2007, 43 percent in Q2 and 31 percent in Q3. May, June and July were the most active months for boat sales.

The U.S. economy is expected to improve in the second half (possibly the fourth quarter) of 2009, due largely to expansion in spending in residential investment (new houses). The weaknesses in the auto and financial sectors should also begin to abate in 2009, boosting the U.S. gross domestic product (GDP) rate of increase to 1.4 percent versus its forecasted 0.6 percent for 2008, according to the Blue Chip Economic Indicators.

In summary

U.S. GDP grew slowly in 2008 but is expected to improve to 1.4 percent in 2009. This should help U.S. marine fabric end-product manufacturers to achieve slow, positive growth of about 1 percent in 2009. Growth will depend a lot on the U.S. economy’s ability to achieve its projected GDP of 1.4 percent in 2009.

Oil prices will likely remain high, albeit lower than they were in July of 2008, which may deter boating activities. End-product manufacturers will likely face increased textile costs because most fibers and finishes use petroleum as their base. As a result, sourcing cheaper fabrics via imports will likely increase in frequency.

Inflation in the first half of 2008 averaged 4.2 percent. If this continues, consumers will continue to reduce expenditures on new boating items, buy more used boats or delay replacement outlays.

Marine end-product manufacturers continue to experience the age-old dilemma of attracting and retaining skilled labor, especially for custom work. There is no easy solution to this problem. Possible remedies include:

  • Using promotions and advertising to enhance the image of skilled marine work as a rewarding career.
  • Requiring workers to regularly attend IFAI and MFA workshops and certification courses.
  • Regularly participating in the MFA’s annual competition, Marine Fabrication Excellence Awards, which recognizes excellence in marine fabrication. This may help to instill pride in the skills and craftsmanship of workers.
  • Providing compensation for skilled workers that is competitive with alternative careers these workers could pursue. Compensation should also reward workers for ongoing training and certification achievements.

Outlook and changes

Suppliers see continued economic pressure into 2009. Until the economy rebounds, the OEM market segment will be sluggish. Price conscious end-product manufacturers will continue to seek less expensive imported fabrics from Asia. This continued influx of imports (not just from Asia) will erode market shares for the market leaders.

End-product manufacturers see the marine fabric market slowly coming back if the economy begins to improve in 2009. The current slump in boat sales will change how they market their products. There will be more use of the Internet, discounting of prices, increasing of advertising budgets and increasing product features as they relate to green trends. Technology will continue to improve—particularly in stitching and hot air and dielectric welding. Manufacturers see raw material prices remaining high compared to the past (before 2007). Like suppliers, they see more fabric being sourced outside of the United States. Finally, they feel the industry will continue to have a hard time finding skilled craftsman for custom work.

Jeff Rasmussen is market research manager at the Industrial Fabrics Association International. He can be reached at +1 651 225 6967, jcrasmussen@ifai.com.

Survey respondents’ ratings of the outlook for their organization’s marine fabric business in 2008 versus 2007

38% Favorable
(Much better/Somewhat better)

31% Unchanged

31% Unfavorable
(Much worse/Somewhat worse)

Mean rating
(1-5 scale; 5 = Much better): 3.1

For 2008 versus 2007, the outlook for end-product manufacturers and suppliers is spread somewhat evenly, led by the response category favorable (38 percent). This was followed by the response categories unchanged (31 percent), and unfavorable (31 percent).

The mean rating of 3.1 indicates the outlook for 2008 is unchanged to slightly more favorable than in 2007.

Scale: 1 = Much worse
Scale: 3 = Unchanged
Scale: 5 = Much better

Results from IFAI 2008 Marine Fabric Survey

Top three marine fabric applications for end-product manufacturers

  1. Cockpit covers, bimini enclosures, bimini tops
    Number of mentions: 39
  2. Mooring covers, console covers
    Number of mentions: 38
  3. Aft curtains, side curtains, travel covers
    Number of mentions: 37

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