While the last few years enjoyed calm and growth, choppiness is back in the U.S. boating industry. Minnesota, home to six boat factories, hasn’t been immune.
The latest curve came with Larson Boat Group’s announcement that it is closing its factory in Minnesota and moving 114 jobs to Wisconsin. The consolidation is a punch for an industry thought long recovered from the Great Recession and its days of chronic layoffs and bankruptcies.
Boat makers in Minnesota have different stories — some of triumph.
The makers of pontoon, ski/surf, and aluminum fishing boats — such as Alumacraft in St. Peter, Premier Pontoons in Wyoming, Crestliner and Lund in New York Mills and Gekko in Mound — report solid growth. But makers of inboard “runabout” pleasure boats such as Larson in Little Falls say they have struggled with currency woes, shifting demand from younger and older customers, and weak sales of boats with inboard motors.
There are several factors fueling the changes.
Dealers said they notice boat buyers turning away from runabout pleasure boats because they don’t like the hard-to-access motors. Those engines sit below deck and they carry an extra 200 to 300 pounds. Instead buyers are choosing simpler fishing boats with fuel-efficient, lighter-weight motors that sit right on the transom.
At the same time, many millennials and Gen-Xers are avoiding boat buying altogether, and the high U.S. dollar has hurt some boat sales in Canada.
The National Marine Manufacturers Association (NMMA) and Statistical Surveys Inc. said U.S. powerboat sales fell 0.3 percent in October but are up 4.4 percent year-to-date. Sales are normally up 5 percent.
In October, U.S. sales of runabout and “bowrider” pleasure boats plunged 15 percent, just as fishing and water-skiing boats surged a respective 7 and 11 percent.
“Runabouts have seen a steady decrease for five years” and that continues, said Carl Blackwell, head of marketing for the NMMA.
Larson felt that shift keenly, despite diversifying its product line to include more popular fishing boats and pontoons with its runabouts. Last week, Larson announced it will shut its Little Falls factory in 2017 and move operations to its sister plant in Pulaski, Wis.
It is the blend of “adverse economic dynamics and shifting changes within the marine market that require us to consolidate,” said Larson CEO Rob Parmentier. “After months of analysis, financial review and personal agony we must close our Little Falls operation and facility after more than 100 years of boatbuilding accolades and achievements.”
Joe Hausladen, parts manager at Hannay’s Marine dealership in St. Anthony, is concerned.
“We had a good year with Larson this year but are worried there may be some disruption with their move,” he said. “We have to adjust what we buy now because we don’t know how the move will affect the availability of product next year.”
Hausladen said Larson’s pontoons and fishing boats sold well this year, but he acknowledged the “demise of runabouts.”
Pontoons, he said, were all the rage at the Minneapolis Boat Show in January. “The pontoon area was enormous. … It never used to be this heavy,” Hausladen said.
Matthew Vetzner, vice president of marketing for Larson, said he’s noticed the shifts in boat buying.
“Our traditional runabout buyers are getting older and opting instead for pontoons as they age. At the same time, younger generations are not buying boats like they used to. So the volume of buyers is not being replaced, Vetzner said. “The challenge in the boating industry is finding younger new buyers.”
Larson’s news comes just as Minnesota’s boat-making industry seemed to have recovered from 2009, a time when discretionary spending plummeted.
Larson once had 800 employees and used to be part of Genmar Holdings Inc., the world’s second largest boat maker with 13 brands and 1,000 dealers. But employment dropped to 200 by 2009, the year parent firm Genmar filed for Chapter 11 bankruptcy with $216 million in debts and $237 million in assets.
In 2010, Larson was sold to Minnesota businessman and Genmar founder Irwin Jacobs and his partner, with the help of state and city loans.
Today, Larson’s Minnesota employment is down to 114. Company leaders hope the move to Wisconsin will be the last big change.
Larson’s departure is the second big hit to the city of Little Falls. In 2010, Illinois-based Brunswick Corp. moved its Crestliner boat factory from Little Falls to New York Mills, where it already made Lund aluminum fishing boats. Scores of employees were left without jobs. But the consolidation saved Brunswick thousands of dollars and helped it endure the brutal recession.
Today, Brunswick’s boat division is growing, despite weak sales of large onboard boats and a “challenging” international marine market, Brunswick CEO Mark Schwabero told analysts. Third-quarter boat sales increased 13 percent to $307 million. Brunswick owns 15 boat brands, including the Crestliner and Lund boats made in New York Mills in northwest Minnesota.
Alumacraft, which has 175 workers making aluminum fishing boats in St. Peter, also is “doing very well. We are pretty stable and probably pretty lucky, too,” said manufacturing vice president Tom Beckius.
Alumacraft’s niche — small, affordable fishing boats — helped it evade problems seen by peers, especially in Canada. “In the last five years, our business has probably quadrupled in Canada. We added some really strong dealers out there,” Beckius said.
Alumacraft prides itself in making pontoons and basic fishing boats where the motor sits on the transom and not below deck. Seats are simple vinyl. Some models can be had for as little as $1,000 (as opposed to its one specialty product worth tens of thousands).
“We are more geared toward basic fishing and so we have attractive pricing. We are a good value and so we have had pretty substantial growth in Canada even though the exchange rate is not good,” Beckius said. “When you get into the pleasure boats, they run you more money.”