Marine canvas businesses say they’re poised for growth

When the American economic engine stalled in late 2008, many business categories suffered tremendous losses. But many marine canvas businesses have not only survived the downturn, they are poised for growth as the economy returns to form.

“Our business increased,” says Richard Hirsch, secretary/treasurer of Manart-Hirsch Co. Inc. “We had a double-digit increase last year. In times of recession, our business does well because we cater to the recover market. When people are not purchasing, they go out and have their boat’s canvas redone.”

Westland Industries has a similar story to tell with predictions of double-digit growth in the boat cover and bimini top categories. “We feel market conditions are prime for a great selling year if we target the right consumers with the right offer,” says Mike McTeer, vice president of sales and marketing for parent company Marine Accessories Corp. “Our feelings are that canvas products buyers have adopted a similar position as overall consumers in that there is pent-up demand for sales, but they are searching for a deal/special value before they purchase.”

Marine canvas suppliers serve two masters, original equipment manufacturers and aftermarket shops that repair and replace marine fabrics. Each segment has seen significantly different sales curves during the recession.

Sales of new boats hit rock bottom in 2010. By then, new boat manufacturing had plummeted 50 to 70 percent, says Vince Hankins, industrial business manager, Glen Raven. Moving into 2011, Hankins has seen the start of a turnaround.

“We’ve seen the financial status of those manufacturers who were able to weather the storm appear to stabilize,” he says. “We’ve seen some degree of recovery in new boat building. The aftermarket was affected without question during the economic downturn, but it did not see the same degree of impact. It was severe, no question about it, but boaters never left the lifestyle. They were still in a position to reinvest in a new top or new cushions to maintain their boat and their investment.”

David Karpinski, vice president of sales and marketing, Taylor Made Products, notes that both OEM and aftermarket segments had to deal with excess inventory in the pipeline. Now that the pipeline is clear, business is improving in both areas.

“Our OEM business is up,” says Glenn Boresi, general manager, MarChem CFI. “That’s, quite frankly, more of a reflection of us taking market share.”

Tom Koster, marine products manager, Trivantage, agrees, “Any time the market is down, you have to be able to go after it. When the market is down, that’s when the opportunities are there. This is the time when you create new opportunities.”

Evolving business practices
When a recession hammers sales expectations, business have to adapt their business practices to survive.

“People are doing different things now,” says Boresi, “but I think they will go back to their old habits. They are being more frugal, investigating alternative products and not stocking inventory. The smaller cut-and-sew shops are ordering the exact yardage they think they need the day they need it as opposed to ordering rolls of fabric and having it in stock. They are trying to lower their overhead.”

In Salt Lake City, Innovative Canvas Sales Manager David Green acknowledges that practice. “We did lower our inventory. We had to keep an eye on cost of goods sold. We will go back to old way of doing things in terms of stocking inventory. It’s more inefficient on our part to order in pieces.”

Faith Roberts, owner of marine canvas shop Banner Canvas in Minneapolis, notes that a reduction in inventory can lead to other problems.

“I don’t carry as much on the shelves,” she says. “But that leads to another problem. When I have someone walk in the door and I can’t service them right away, that’s a problem for me.”

She adds that marine canvas suppliers also have tighter inventories, resulting in “major issues” getting supplies.

Glen Raven serves canvas shops with a nationwide distribution network to provide materials with quick delivery schedules. The company has multiple products that can hit a variety of price points and different variations of the product to fit specialized niches.

“We can hit aggressive price points and give good value in terms of color retention, weather resistance and durability,” Hankins explains. “That’s not of the same level of the Sunbrella product but if there is a need for a more value priced products for marine topping we do have alternative products.”

Westland Industries is responding to market conditions with aggressive promotions, a special emphasis on quality fabrics that are value priced and extended warranties targeted at boat owners that fit its prime buyer profile, based on the brand and age of their boat, says McTeer.

Many marine canvas shops look to their suppliers for tools, products and business practices to help them persevere.

“They are always looking for better ways to do things,” explains Koster. “Most of the marine market makes the majority of their money between March and October. Their most important commodity is their time. If they can buy something from us that cuts down the amount of time it takes to make a cover, that’s worthwhile to them.”

Boresi adds, “They are looking for whoever the supplier is to help them differentiate the product. The first thing they are obviously always looking for is low price, but they are really looking for value. If we can provide them value that differentiates their finished product from their competitors, that’s what they are really after.”

In order to better serve its customers, Taylor Made Products has invested in new products and improved service levels.

“The days of holding a lot of inventory in the warehouses, dealerships and stores are an antiquated business model,” explains Karpinski. “In the canvas market, because of the plethora of fabric types, colors, sizes, models and makes what is required of the manufacturer is a service level so that when a consumer makes the decision to buy the product we make it and ship it as quickly as possible.”

In 2010, Taylor Made Products launched the industry’s first 24-hour national boat cover drop ship turnaround time, which allows customers to not have to carry as much inventory and yet still offer a broad selection, says Karpinski.

“It’s next to impossible to have the right size, color, make, year and model combinations to fit every consumer need,” he explains.

Although incorporating new products is clearly a way to differentiate a small business, Koster reports that marine canvas shop owners are very conservative when adopting new products or processes.

“Our customer base is risk averse. If they change a process or component, they can’t do it across the board. If it fails they have lost a year’s income because they have to replace all those things that failed,” explains Koster. “When they look at new products, they will consider a small segment. It’s a full five years before they have full confidence in a product.”

Addressing the consumers’ increased interest in value and affordability, Taylor Made Products recently added Gore’s Tenara thread as standard in its Hot Shots and Ultima boat cover and bimini product lines, which come with a lifetime guarantee on their seams.

Hope for a recovery

While words like caution and conservative are still used to describe the mood of business owners, 2011 offers hope for a sustained recovery.

“We are poised for good things when the market returns,” Boresi says. “We’ve not gone into a shell. We’ve invested and spent time, effort and money developing new products and relationships with customers so when the economy does recover we can take advantage of it.”

“Having gone through the worst of the economy, I’m definitely looking to put more inventory back in here for spring. We think we are going to need it,” says Roberts.

Taylor Made sees the current business climate as ripe with opportunity. After launching the drop ship canvas boat cover and Tenara thread initiatives, the manufacturer has seen a dramatic positive impact on sales.

“You can’t just snap your fingers and say you are going to improve your service level,” Karpinski comments. “That took a considerable investment in machines, operations and reworking how we do things here. Where some of our competitors out of necessity may have been more defensive in their posture, we see that as an opportunity to take market share.” When a business downturn occurs, market leaders often step up the pace of product innovation and development activities.

Hankins believes companies that retrench during a recession risk long-term success. He notes. “It can be an easy position to take during times of business difficulties to ratchet back your development activities but that is completely jeopardizing not only your future as a supplier but your position with the customer base and their ability to rely on you as a supplier.”

— By Louis Dzierzak