It Must Be Murder To Try To Start A Boat Building Business

[hsi88]

My son graduated with a degree in Economics and one in Sociology. The degrees go very much hand in hand. He can describe some of this way better than I can, but as he has reminded me many times, different things can drive the economy. And many economic factors can happen at the same time. Everything from war to low interest rates can drive the economy for a while. But unfortunately, much of this stimulus is based on the accumulation of debt. And as you said, you can't have your cake and eat it too.

This may be one of the reasons China is defunding some of its military. Because there is just so much money to go around and choices have to be made. I have been to both China and Brazil in the last 2 years. These countries make a vast assortment of products. When I flew from DC to NY, to get my visa, I flew on a jet made in Brazil. While in China, I noticed they are starting to produce sophisticated medical equipment, which explains why some villages have a cat scan machine.

These countries are both examples of growing economies with the burden of underutilized population. It is a model that many up and coming countries face and as the wealth gap increases here in the U.S. I think we will see much more of this in our future. But in all cases, consumerism is driving the bus. Without it, China and Brazil would be wasting their time making products.

Luckily for us, some of this consumerism is based on goods that are regularly replenished. Food, toilet paper (at least here in the U.S.). So a certain amount of consumerism remains, even through bad times. But consumerism has its limits. It runs in cycles where everyone that wants a phone, has one. Even my kids have not changed phones in 2 years. Household appliances last a long time, so you don't go to the store every year to buy a new fridge or oven. When there is a glut of nice, used cars, many find little need for something brand new. The same goes for boats. Perhaps seeing new boat sales limited to the rich is telling us something. Perhaps its a sign of rougher times ahead. Perhaps its just a loss of interest in a modern world. I guess time will tell. As it always does.

[Island Time O25]

Everything US has achieved in the past 100-150 years was precisely because of its middle class not despite of it. A two class society will never be able to develop economically as well as the one with a robust middle class. Corporate profits are whole other issue but they alone do not make an economically robust societies. Economically rich owners/managers yes but societies no. Just compare overall the economies of up until recently middle class strong US, Canada, EU, Australia etc. and your typical banana republic or oil and gas oligarchy such as Russia, Nigeria or Mexico. Not even close.

So if we want to tumble down to the level of these banana-gas 3rd World hellholes - we should welcome the demise of our middle class and declare such demise "an economic reality". Or we can learn from the glaring mistakes of the past 20-25 years (globalization comes to mind) and reverse the course and re-establish the economic regime which has sustained our unprecedented post WWII recovery. BTW nominal highest corporate tax bracket during the Eisenhower administration was about 90% and not only our economy did not collapse as a result it actually thrived until we bankrupted ourselves by simultaneously bogging down in unwinnable wars in far away places and allowing 10-20% of the population to get on some kind of gov't dole with open ended commitments for their sustenance (it's probably much higher percentage by now). If we fix just these two factors we can have our cake and eat it too so to speak. Otherwise welcome to the United Banana/Gas-Oil States of America. ((

PS Obama's exec. order opening up US gas and oil sales outside the US markets is the first warning shot of things to come. Since pretty much everything else we used to produce and sell to the world is now made in and sold from China we are left with cannibalizing our natural resources to make up the shortfall. Textbook case of a banana economy in the making. Not there yet but 8 more years of same old same old will get us there in no time and will finish the job started in the early 90s by the push for globalization.

[Island Time O25]

As I pointed out in another thread whatever interest for sailing is still there among the younger generation is being channeled not through individual ownership which became totally unattainable for a recent college grad even with a decent paying job, but through sailing clubs and such. Most of these clubs have buy/lease back programs which enable the few private owners (usually a guy or a couple in their 40s lining up for outright ownership 5 years later) to afford their own boat making deals with the club for the first 5 years of ownership and use.

The club members usually spend between $2K and $9K per season depending on the boat size and use and most of the time can even partner on the more expensive 35+ft boats. That's how I started splitting then top tier 39ft membership of $7.5K per season three ways.

These clubs IMO are actually some of the few new boat buyers on the market and from what I've seen most end up with new Bavarias, Hanses, Hunters and Beneteaus at boat show or demo prices. Naturally none of them would consider anything more expensive than those nor would spending more per boat would make any economic sense for them. But overall I do think sailing is going the way horse riding went - not totally dead but not a common enough pursuit either.

[robert sailor]

Sailing,flying and motorcycles are going the way of the dodo bird eh?? You might be right but I think you are forgetting that the sailors/fliers/riders come from an Era of natural risk takers. We weren't playing with nofriendos or X boxes, we were out doing stuff. The next generations have got many more choices for their spare time and it seldom includes these types of activities. Helicopter parents haven't helped either, can you imagine having your parents arrange play dates when you were a kid.

[TheThunderbird]

Sharing CF confessions, it is clear that the average serious sailor is aging into his/her late 50s, or more.
Partly due to retirement plans,party due to lack of enough spare time for an expensive toy, when younger and busy.

Therefore, expensive toys are getting bigger and richer for the very few, and many users share crowded chartered boats for a few weeks only.

More importantly, I feel like there was much more enthusiasm and passions in the baby-boom generation, than at present.

[Island Time O25]

Originally Posted by TheThunderbird

More importantly, I feel like there was much more enthusiasm and passions in the baby-boom generation, than at present.

Baby boomers when younger were on their way up both economically and psychologically. The current younger generation economically is the first one in the last 60-70 years which is not living as well as their parents (never mind better than their parents) nor does it have better prospects ahead. Thus both inability to afford and fear to get into another mountain of unrepayable debt.

Just as with living arrangements where rent and roommates have become the new normal and replaced the idea of your own house right after college (or shortly thereafter) boat chartering, club schemes and occasional hitched boat rides have replaced boat ownership, even at the level of a 22-25 footer. Heck, the current recent college graduate generation can't even afford to keep a car in the city thus the rise of zip cars, uber, bycling and such.

[Cadence]

Originally Posted by hsi88

You make this sound like a ton of money. People making anywhere near $10 an hour in California today are no better off than people making "10 cents" in China. If you make $10 an hour, you are lucky to live in a trailer. Or you live in a house with 3 families to make ends meet. And you are lucky if you have any medical care in a rich country where medical costs are 10 times what they are anywhere else in the world due to greed.

But boating is in trouble not so much because of the shift in economics, but because the interest is not there. When the vast majority of us gray hairs stop sailing, the sport will be all but finished (same with motorcycles). If anyone motor-boated in the 60's and 70's or sailed in the 70's and 80's, you know what I mean. There might be more people actually cruising and taking trips to the Caribbean, but just look out on the water here in the Chesapeake and there are simply nowhere near as many boats.

Sailboats outside the mouth of Annapolis used to paint the horizon white with sails. Not any more. When I was a kid, lots of us young guys talked about boating. And flying for that matter. My kids have never talked to a single person all the way through college with those same ambitions. When I run into a young person that shows an interest today, I do everything I can to nurture it because I feel it won't last.

And boating has never been as cheap as it is today. That is what is puzzling. When very few sail in an area with an endless supply of weekend worthy boats for free, something else is wrong. Go to any boat yard. There are lots of boats for under $1000 with running engines and good sails. Look on eBay, same thing. And if you are willing to sail a boat under 30 feet, you can add a brand new electric start four stroke outboard for around $2000. Fancy electronics have never been cheaper. And yet most of these boats will end up as scrap and the motors will go unsold.

The marinas are full of boats that never go out. And these will continue to flood an already saturated market. Go to the Annapolis Sailboat Show and docks that were once filled with people have plenty of maneuvering room today.

On a personal level, I saw all these cheap boats and thought with a little spit and polish and a weekend per engine, I could turn $200 boats into $2000 boats or even $20,000 boats. Boy was I wrong. Making a $200 boat look and run as good as a $20,000 still sells for $200. Or perhaps I might double my money. Great. I spent a hundred hours of my time to make under a grand.

I will end up doing what everyone else does. I will end up giving away all these boats. Another stupid business decision on my part. I did not do adequate marketing research. As I'm sure a lot of these failing boat companies will tell you.

Yep, the $15 will make a difference in the short term. Wage compression will have everyone getting a raise so the $15 will have the same purchasing power as the $10 did. The only thing accomplished is increasing our trade imbalance resulting in fewer jobs. You can't legislate people out of poverty. It is a global economy.

[Island Time O25]

Originally Posted by Cadence

Yep, the $15 will make a difference in the short term. Wage compression will have everyone getting a raise so the $15 will have the same purchasing power as the $10 did. The only thing accomplished is increasing our trade imbalance resulting in fewer jobs. You can't legislate people out of poverty. It is a global economy.

The culprit in all of this is the welfare system which makes minimum wage jobs (no matter what the minimum is) unattractive for a large segment of the able population. I have once done simple calculations of the equivalent of what a welfare family of 4 (single mother and 2-3 kids) in a large city (NYC, Chicago, SF, LA, Philly, Boston, Seattle, etc) is getting in benefits. Turns out that to maintain their lifestyle, which on welfare consists of at least a 2-3BR subsidized apartment, cash payments, food stamps, free medical insurance, fuel and clothing assistance, free college tuition, free day care, free school lunches and subway passes, etc, etc. same family would need to earn AT LEAST $100-120K before taxes to live same lifestyle in same area of the city. How's $15/hr wage gonna change that?

[Cadence]

Originally Posted by Island Time O25

The culprit in all of this is the welfare system which makes minimum wage jobs (no matter what the minimum is) unattractive for a large segment of the able population. I have once done simple calculations of the equivalent of what a welfare family of 4 (single mother and 2-3 kids) in a large city (NYC, Chicago, SF, LA, Philly, Boston, Seattle, etc) is getting in benefits. Turns out that to maintain their lifestyle, which on welfare consists of at least a 2-3BR subsidized apartment, cash payments, food stamps, free medical insurance, fuel and clothing assistance, free college tuition, free day care, free school lunches and subway passes, etc, etc. same family would need to earn AT LEAST $100-120K before taxes to live same lifestyle in same area of the city. How's $15/hr wage gonna change that?

Amen! As much as I dislike paying for it, the free education may be the only good thing, if utilized and a decent GPA has to be maintained.

[SV Windrush II]

I just noticed this post and would like to clarify a few things. Fist of all, I am an American doing business in China for basically all the reasons stated above. i started a boat building business in Wenzhou China last year. secondly, wages here are not so cheap as one would think. saying labor here is .10 per hour is simply extremely inaccurate. the average wage here for skilled labor is about $800 per month. and workers here live by the bell, they don’t work more than 8 hours per day unless you pay them overtime. Also trying to find skilled labor for fiberglass boat building is almost impossible as the boat building here is still in the dark ages and these people think they already know what they are doing and non of them understand english. So if you can imagine, i am training workers who have no idea how to build a boat, they are hard headed and stubborn, and have zero social skills. Also China is cracking down on environmental rules, and there is a lot of restriction on chemicals used in manufacturing. on the positive side, the government encourages foreign investment if they think it will benefit them down the road, so we got discounted manufacturing facility and some help getting started with the government corporate paperwork. At the end of the day, it is brutal starting a boatbuilding business anywhere in the world, not just in america.

[Outlaw7]

USCG regulations for small boats is brutal, must have positive buoyancy and I believe self righting capabilities.