Recession-Boating Industry-Volunteers Needed

[kaferhaus]

Re: Recession-Boating Industry-Volunteers Needed

Jay, that's pretty much exactly what I said.....

But these folks "looking for deals" are wanting to pay below dealer cost... a guy looking at a NADA book (which are not known for their accuracy by the way) and trying to use that as a basis for buying a NEW boat are out of their minds.

A dealer is not going to sell a boat that he owes money on below what he owes. It will kill his cash position, cash keeps you open.

The boat builders who continued to manufacture boats even once orders started to decline were fools as they used up "cash" to buy those materials and pay those wages.

The timing of such decisions often make the difference between staying in business and becoming another statistic.

I'm in the manufacturing business and have had the fortune of making those kind of decisions appropriately over the past 25yrs. Many of my competitiors did not and are no longer in business. And it's exactly why you never buy a business based on their P&L statement alone... You look at their cash situation, a great P&L can be very misleading as many mfgs count production as "profit". The auto makers did this for years while they were continuously borrowing money.

And anytime a mfg is willing to place product on consignment that should be a big warning sign of that companies poor cash situation.

I've had customers ask many times over the years for either "extended terms" or consignment arrangements. We always say "NO". If I place product out in the market on consignment, the customer has no investment in it and can afford to demand too high a price for it as he doesn't have to pay for it until he sells it.... he has no cash tied up in it.

Again, cash is king, everything else is window dressing.

 

[DJ]

Re: Recession-Boating Industry-Volunteers Needed

I explained all of this in another thread on the same topic...

A "dealer" realizes NO cash infusion if he sells a boat at or below cost. ZERO, NONE, NADA. In fact he has to write a check which puts him in a worse cash position.

The manufacturers don't care about boats that have been already sent to dealers so far as cash is concerned as they've already been paid for the boat by the bank. The dealer "pays" for the boat once he sells it. In the interim the dealer is paying "floor plan interest" on his inventory. Depending on his status with the lender this is either .6 to 1.5% per month once the "Free flooring" period has expired. Depending on the mfg, the dealer could get as much as 6 months "grace" before the boat goes on floor plan interest.

So maybe a boat is off the grace and the dealer is paying 1% a month on the balance he owes (just say he owes 20,000 for argument's sake).. once he sells that boat he has to write a check for $20,000. His "cost" is actually a good bit higher than that, he's had to keep the boat clean, "demo it" a number of times and likely has some dealer installed extras on the boat.

So, he's out $200 a month in interest on this boat... selling you the boat at cost is how much? and he can't pay the first "operating" expense with what's left over so he's in the hole.

Now you want to buy the boat below cost... he's stupid to sell it too you as it puts his cash situation backwards, he gains nothing... the little interest he's paying every month will carry that boat a long time over the thousands you want him to pay up front to dump the boat.

And it's exactly why so many dealers are going BK instead of blowing boats out. It makes more sense financially to just walk away instead of selling your house, raiding the kids college fund etc. so some guy can get the great deal he wants.

Dealers close when their floor plan expense exceeds their income, they close the doors and walk away. Until then they will continue to try and save their business but you cannot do it by letting your cash situation move backwards.

Cash keeps you open, writting checks to cover losses does not.

Ditto! Well said, spot on and correct.

This whole economy issue is very much emotional. It's a self fulfilling prophecy. Shut off the dang TV and Radio and go about your lives. We, as US citizens are definetely overmediad, (if that's a word). Maybe I just coined one.

For those of you directly effected, I understand-not good.

For all, let's look at the positives.

1. Gas is at $1.47 here.

2. Credit is loosening.

3. It's a new year.

4. We've been here before. This is NOTHING new and it will happen again.

5. We're at relative Peace in the world. Again, "relative".

6. We have a new Admininistration going into the White House. Not the the Prez. can do a damn thing but we all THINK he/she can. Again, "perception".

Chill out, enjoy the cheap energy and ride it out.

Let's keep this NON POLITICAL-Kapeesh?

 

[dingbat]

Re: Recession-Boating Industry-Volunteers Needed

We manufacture next to nothing in this country any longer and as a "consumer" that can be good because prices are cheap... but the consumer also has to have a job to buy those products... the "good" jobs have been slowly leaving this country for decades

The "good jobs" are still here. In fact, I would venture to guess that the ?good jobs? are far more lucrative than ever.

As a kid coming out of high school in the late 70?s I was a trained and certified nuclear class welder. I was going to join the union and conquer the world?or so I thought

My father who was a College Professor at the time saw the writing on the wall. He kept on me that there was no future in manufacturing and kept at it until I started attending night school (had a wife and kid at age 19) to continue my education.

Well I did go back to school and got my degree and never looked back. The best bit of advice that my father ever gave me.

 

[kaferhaus]

Re: Recession-Boating Industry-Volunteers Needed

Your dad was dead wrong about welders.... down here companies are cutting each others throats over hiring welders... and the pay is good. But it's "skilled" labor.

And unlike you, most americans cannot obtain a college education and even if they could there's not the jobs there to employ them. Remember a decade or two ago? Computer science majors out the gazoo.... kids right out of school with no experience getting offers of 60-70K a year... that's all gone. That work can be done long distance.... a programmer doesn't need to be "at the office so to speak". Most of those jobs are now in India and Pakistan.

Even law schools are scaling back enrollments.... most folks have no idea that there are hundreds of thousands of folks with law degrees that are not practicing law... because they couldn't make a living, there's simply too many of them. It's even been hitting the accounting profession... usually all of those kids had job offers before they even graduated... no longer.

Someone has to make the widgets, cook the food, serve the food, cut the grass, haul the garbage, stock the shelves, drive the truck etc.

No country with a Service economy has every prospered long term.

Glad your situation is good, so's mine but that doesn't mean beans to anyone else.

 

[DJ]

Re: Recession-Boating Industry-Volunteers Needed

Kafer is right.

We need people to: DO STUFF.

However, as we (USA) want to export our industrial base, we're killing ourselves.

We need HEAVY industry........

We shoot ourselves, in the foot, with the EPA and all the other Government mandated rules/reg's.

If we think that "emerging" countries are following those rules----DREAM ON!

We need a "reality check".

World economy-YES-maybe. But. we are not there yet.

Let's take care of biz here first.

 

[sickwilly]

Re: Recession-Boating Industry-Volunteers Needed

They have an army of computer programers/IT folk at the university/med center I work at, and most all of them can afford boats. Also, there is no hiring freeze in their department.

Don't believe everything you hear about jobs and the economy.

 

[kaferhaus]

Re: Recession-Boating Industry-Volunteers Needed

They have an army of computer programers/IT folk at the university/med center I work at, and most all of them can afford boats. Also, there is no hiring freeze in their department.

Don't believe everything you hear about jobs and the economy.

Sick..... come on man... you're talking about 2 recession proof industries rolled into one here.... healthcare and a Public University...

That is not the real world

 

[sickwilly]

Re: Recession-Boating Industry-Volunteers Needed

No industry except spirit sales is recession proof, but some are less recession reactive than others.

Headline story in today's middle tennessee paper was gas prices back up by end of 2010 -- not the war in Gaza, ash spill in east tennessee, or some other important thing, but SPECULATION about where oil might go.

Yeah, lets stoke up fears of high gas prices returning while our car industry and boat dealers suffering. Nothing like projected hysteria to keep spending down.

 

[kaferhaus]

Re: Recession-Boating Industry-Volunteers Needed

Having talked with dealers in my area they *most* not ready to cut their losses on inventory just yet. Many believe there is nothing different right now than the annual winter "lull" and the economy will rebound by summer. Lets all hope they are right!

Not too many left to talk too around here... the spring/summer season was not very good for them here and most of them believe many folks with money saw it coming and decided to wait on the new boat. I have too many boats now to be honest... but I rarely buy a brand new boat. I prefer to let the other guy take the hit on the initial depreciation. Same with automobiles... My wife bought a new car in 2003... that was the first new car either of us bought in 15 years or more.

Financially we have been very fortunate, blessed whatever you want to call it but it wasn't always that way by a long shot. We still live like we can't afford much and sock money away for the "lean" years or retirement.

When I first started my business (wife has her own career as a CPA) we struggled as I didn't take a salary for almost 3yrs and a paltry one for the next 3. The business has stood on it's own for the past 19yrs and we're no longer personnaly "on the hook" for it's finances, no more personal guarantees on the business's credit line etc.