Dyskow: Industry to have another decent year

Aside from the rhetoric surrounding the dumping debate, the outboard engine market has had nothing but good news of late. With such reports as Info-Link’s most recent bellwhether report, which indicated that, while sterndrive boat sales have been down, outboard boat sales had increased as much as 10 percent in 2004 versus 2003, optimistic numbers keep on rolling in.

And those kinds of numbers aren’t surprising to Yamaha Marine Group President Phil Dyskow. His division, which produces two- and four-stroke outboard engines, has seen impressive gains in sales over the past few years, and he believes that all indications seem to be suggesting that 2005 will be another good year for the company – and for the industry in general.

Boating Industry sat down with Dyskow in early December to discuss the company’s expectations for the coming year. You can read those thoughts below; Boating-Industry.com monthly and annual subscribers can also read an in-depth interview with Dyskow regarding the company’s multi-million dollar dealer training initiative – Yamaha University — by clicking here.

Boating Industry: Can you tell us what your expectations are for 2005?

Phil Dyskow: We see every aspect of the economy being stronger than it was last year. If you look at a three-year trend, it’s become steadily stronger year by year. Now that all the election rhetoric is over, it’s a fact that the unemployment rate is going down slightly and that new jobs are being created at a much-improved rate on a month-to-month basis. It’s a fact that overall retail sales are up significantly over last year. And last year was up significantly from the year before. It’s a fact that the stock market is doing better. It’s a fact that interest rates are still low. It’s a fact that the GDP is stronger than a year ago, and a year ago it was stronger than it was before that. So the basic economic issues we look at that drive our industry, as well, are all better. So we should expect our industry to do better.

Now, when you say the industry, you’re talking about everybody, so those percentages stay pretty small. As an example, we think the boat side of the industry, will increase somewhere between 3 and 4 percent. Some segments will grow by more, some will grow by less, and of course, there’ll be a difference between manufacturers.

On the outboard side, we could grow somewhere in that 4 to 6 percent next year — simply because, as an industry, the pipeline is so clean. We’re not meeting demand right now, it’s growing that fast. And everybody seems to have pretty clean pipeline inventories. I noticed George Buckley, in his latest report to shareholders, said that their pipeline was in excellent shape. So, when you put that all together, there’s no reason to assume we wouldn’t have a good year. Anything can happen, but I think the industry is going to have another decent year. And I also think there will be a temporary uptick because of all of those hurricanes. All those insurance claims are going to get processed. People are going to buy new boats.

Boating Industry: How about Yamaha, specifically? Any goals or thoughts on what 2005 might hold?

Phil Dyskow: We’re going to have another growth year. Yamaha has had a decade of growth and when I define growth, I would look at it as retail growth, based on warranty registrations. Wholesale growth doesn’t mean anything. You might just be stuffing the pipeline. All outboard companies submit warranty registration data to NMMA, so we know how fast the industry’s growing and how fast we’re growing. And we’ve consistently outperformed the industry. The last six years have all been retail growth years in excess of 10 percent. This year [2004] will also be in excess of 10 percent on the calendar year. So retail growth in excess of 10 percent will tell you that your pipeline is in good shape, your dealers are probably in good shape, and you’re going to continue that even if the economy slows down, which we don’t think it will. Even if it does, just the sheer pipeline fill will ensure us another successful year.

You know, there are some other factors that we can look. Inflation has been higher than it has been in recent years. That’s a concern for the industry. And we know certain raw materials, petroleum-based and non-petroleum-based, are going up – steel, aluminum, all the petroleum-based products, resins, gelcoats, and whatnot. That’s a concern for us. Also another concern for us should be the weakening of the dollar versus other currencies. It’s not a perfect picture, but it’s a much better picture than we’ve seen in recent years. We had a great year last year and the year before, and the economic picture is much better than it was. When the GDP is over 2 or 3 percent, we usually have a pretty good year, and it is over that now. When the GDP gets below 2 percent, we have a slower year. When it gets below 1 percent, we usually have a bad year. So, like 2000 was a pretty bad year for the marine industry, and the GDP was below 1 percent.

There’s nothing in the overall economic picture that is gloom and doom right now, but there are a couple things we need to watch. The war in Iraq is stabilized, but they’ve got those elections coming up, and who knows what they’ll bring. Then we’ve got this inflation issue we’ll have to watch. The Fed is going to have to raise interest rates to go after that. If it gets high enough, that could have some impact. But none of that stuff looks out of control right now.

There are two things we’re watching carefully: inflation and the weakening of the dollar versus foreign currency. But there’s a lot of good stuff to offset that.

Boating Industry: The raw materials is certainly something that everyone’s watching.

Phil Dyskow: Yeah, and I think you’ll see continued customer demand for new technology on the engine side. I think there’s pent up demand for technology on the sterndrive side, too. That’s why I’m interested to see Volvo coming out with some new technology. On the outboard side, I can tell you that the new technology stuff is driving the growth. Doesn’t matter whose brand it is. The old technology stuff is just dying. And four strokes are just becoming more and more prevalent.

Boating Industry: In the past you’ve told us what you expect the market to be, percentage-wise, for four strokes versus two strokes. Any idea what you expect 2005 to be?

Phil Dyskow:Well, four strokes, for the first time last year, were over 50 percent for the industry. I wouldn’t be a bit surprised to see four strokes substantially over 60 percent for the industry. For Yamaha it already is. But for the industry, I wouldn’t be surprised to see that. And it’s not my opinion. I’m not out there trying to sell one technology or the other. We’re simply in the customer satisfaction business, and if that’s what customers want, we’re going to meet that demand. There is a market for DI, but I just see the growing consumer demand for four stroke continuing, and we’re gong to meet that.