Changes And Challenges...

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Things are really bad in the US market just now and don't let anyone suggest any different, says Phil Draper

MARCH 2008

I’m just back from my annual winter fix of sunshine, AKA the simultaneous two-show, four-site extravaganza that is Miami in the second week of February. It was an interesting one this year, that’s for sure; but one not too difficult to sum up in actual fact.
Small-boat business in the US is diabolical just now. The country is in an election year and seemingly on the brink of a full-blown recession, so almost ‘end of story’. The bottom line is aggressive play can always grab business, even in a bear market, so things are never completely dead, but it is almost certainly a time over there when the strong survive and weak perish. There's going to be a lot of the latter.
Thankfully things get less gloomy the bigger you go. The messages gleaned from my megayacht soundings were mixed. Generally there is distinctly more action for new-builds over 100ft (30m) than under. Also not surprisingly the currency picture is impacting everything. Things are really bad out there if you’re on the wrong end of them.
Alas much of the truth goes untold, because too many people when confronted with recession, and an industry reporter like me brandishing a notebook, hide behind tosh, grinning and spinning.

“Alas much of the truth goes untold, because too many people when confronted with recession — and an industry reporter like me brandishing a notebook — hide behind tosh, grinning and spinning...” 

Fact is, if you’re exporting boats from, say, Europe to the States at the moment, you’re having a really tough time of it – and anyone who says different is glossing it up very large – and so by definition the US boat importers are really struggling. Some of the chat around the back of Miami stands was really rather bleak.
But there are some winners. They tend to reflect the flip-side of the weakness of the dollar. The US megayacht majors seem to be doing okay, because that top-end sector is still doing well globally and because their order books reflect deals that were struck months and years previously; and because they are starting to win orders from outside North America because the US dollar has lost so much ground. Things are a lot different to how they were and I’m talking very long ago at all. Up until very recently many of them almost couldn’t be bothered selling to and building for clients thousands of miles away and, perhaps more importantly, possibly having to build to different classification and certification requirements.
European visitors certainly didn’t pass unrecognised this year at the Miami Yacht & Brokerage Show. There were loads of them!
Yes. Regardless of to whom one talks just now, and on whatever continent they happen to be standing on at the time, all seem to be agreed that we’re going to face a challenging year or two.

© Phil Draper