Mexico is becoming more than just a vacation destination for boating industry professionals. With the National Marine Manufacturers Association (NMMA) planning its second-annual Mexico Boat Show, Brunswick continuing to ramp up production at its new Reynosa boat building plant and the Mexican government considering an investment in a chain of marinas along the Baja California Peninsula, executives should prepare themselves to travel to Mexico on business in the near future.
One reason for this new attention is that Mexico’s boating market appears to be growing, according to indications at the first Mexico Annual Boat Show, which took place November 7-10 in Mexico City, says Arlene Baxter, NMMA vice president of industry programs.
This growth is attractive to U.S. companies as many have experienced flat or decreased sales in the U.S. market in recent years and are looking to new markets to reverse that trend.
The Mexico Boat Show, also known as Expo Yate Mundial, attracted over 10,000 people in its first year, and more than 50 percent of exhibitors had confirmed their intent to participate in the show in 2003 by the end of the 2002 event, with many planning to expand their exhibit space, according to NMMA. The association also says it expects the number of boats at the 2003 show to grow, maybe even double, compared to the 2002 event.
Market growth stemming from several sources
Paul St. Amour, director general of E.J. Krause de México, the company producing the Mexico Boat Show in partnership with NMMA, said that the market growth stems from multiple sources:
• From 1996 through 2000, the Mexican economy grew strongly, giving a boost to consumer spending;
• New boat manufacturers from North America and Europe have begun to sell boats in Mexico, helping to increase the options for boat buyers;
• Tariffs have lowered, thanks to NAFTA, and beginning in 2003, the free trade agreement with Europe;
• The Mexican government has been pushing tourism, both national and international, and the resorts and developments on the coasts have grown dramatically, especially with high-end condos and time shares in places like Acapulco and Puerto Vallarta. Many of the condo projects are developed around the water, so as more people buy property in these resorts, many also buy boats;
• More U.S. boat owners are coming to Mexico, and they make use of marinas and boating services, thereby expanding the market, the demand for boating related facilities and services, and the awareness of boating as a desirable recreation and lifestyle;
• Mexico has a significant number of families with discretionary income for purchases such as boats and vacation homes;
• Marine manufacturers have shown they are willing to experiment with a number of innovative offerings to help develop the market and foster boat ownership (like offering a time share concept for boats).
In considering Mexico’s potential as a source of boat sales for U.S. builders, Baxter compared Mexico to Canada, which is the largest destination market for American marine products outside of U.S. borders, absorbing 35 percent of exported boats and 15 percent of exported engines.
“If you look at the significance and proximity of the Canadian market and draw any parallels, you could paint a pretty optimistic picture about Mexico’s long-run potential,” she said.
While Baxter acknowledged that there are significant cultural, economic and structural differences between the two countries, she said market access, open borders and free trade regimes all bode well for the continuing development of Mexico’s potential.
New boat building plant exceeding expectations
Another reason to visit Mexico may be to experience Brunswick’s new manufacturing plant in Reynosa. Last year, the boat building facility began manufacturing the company’s new Bayliner 175, designed and developed to appeal to young boating families.
The company plans to add production of other boat models to the Mexican facility this year. The plant is expected to be at full capacity – 8,000
to 9,000 units – by the end of 2003, according to Dusty McCoy, president of the Brunswick Boat Group. It currently employs about 150 people, a number that is expected to grow to over 250.
The company says it has been working with local suppliers to obtain raw materials and components for the boats manufactured in Reynosa. While McCoy says Brunswick’s presence in the country is unconnected to the growth of Mexico’s boating industry, its new supplier base is able to provide materials and components at a lower cost than the company’s typical U.S. suppliers, according to Brunswick, a fact that may attract other boating manufacturers to do business in Mexico in the future.
New marina chain could boost U.S. business
Meanwhile, the Mexican government has proposed the development of a $1.9-billion chain of marinas along the Baja California peninsula, called Escalera Nautica or Nautical Ladder.
Though some environmentalists have criticized the plan, drawing attention to its potential environmental impact and suggesting that the plan is based on an overestimation of demand for such facilities, it is likely that the government will proceed with some version of the plan.
Early reports stated that the project was expected to be completed by 2014 and consist of 27 proposed developments, spaced about a day’s voyage apart, which would range from maritime rest stops to resort destinations. While Mexican tourism officials said at least 8,000 recreational boats currently tour the Sea of Cortes each year, it predicted as many as 50,000 vessels would tour the area by 2014.
The construction of new marinas in Mexico is likely to stimulate some additional cruising in Pacific waters, especially because of the lack of harbors and sounds on the West Coast, compared to the East Coast, according to Jim Frye, executive director of the Marina Operators Association of America.
“A chain of marinas in Mexico may encourage cruisers to venture further,” he suggested. If planned correctly, it would complement U.S. marinas, not compete. However, Frye warned that marinas that depend solely on cruising yachters will be failures.
“A chain of marinas in Mexico will have to be well thought out and include comprehensive destination resorts,” said Frye. “Dropping some berths or slips along the coast and calling them marinas will not get the job done without the appropriate infrastructure to support the amenities that cruisers are looking for.”
— By Liz Walz
Boat Sales Slightly Lower in 2002
Retail sales of fiberglass and aluminum boats and personal watercraft (PWC) declined during 2002 by amounts ranging from 1.2 percent for aluminum boats to 2.9 percent for PWC, according to Statistical Surveys Inc., an independent market research firm.
Genmar Holdings Inc. maintained its retail market share leadership position in 2002 in the aluminum boats category while Brunswick Corp. remained No. 1 in fiberglass boats 14 feet and longer and Bombardier Inc. was No. 1 in PWC by a wide margin again last year, Statistical Surveys reports.
Statistical Surveys’ report includes retail sales occurring in 44 states accounting for 96 percent to the total U.S. boat market. It was unable to gather sales figures from Hawaii, Delaware, Maine, New Mexico, Oklahoma and Utah in time for its report.
The number of aluminum boats sales by dealers declined 1.2 percent during 2002 to 124,230 units, compared with 125,738 units sold by dealers in the same states in 2001.
Meanwhile, the number of fiberglass boats 14 feet and longer declined 2.7 percent last year to 163,083 units, compared with 167,617 units sold by dealers in 2001.
In the PWC market, retail sales declined 2.9 percent in 2002 to 73,198 units, compared with 75,417 units retailed in the same states a year earlier.
Genmar slightly expanded its lead in the aluminum boats category over Tracker Marine LLC last year, according to Statistical Surveys. Genmar had a 22.9-percent retail market share in 2002, compared with Tracker’s 16.5 percent.
There were 28,469 Genmar aluminum boats retailed by dealers in the 44 states in 2002, a 1.8-percent increase over the 27,960 Genmar units sold in the same states in 2001.
Tracker’s aluminum boat sales in the same states declined 1.4 percent last year to 20,513 units, compared with 20,804 units sold a year earlier.
Rounding out the Top 5 in aluminum boats are Alumacraft Inc., Smoker-Craft Inc. and Godfrey Marine Inc. Alumacraft’s retail market share was 7.4 percent last year, Smoker-Craft’s was 6 percent and Godfrey’s was 5.6 percent, according to the report.
In fiberglass boats 14 feet and longer, Brunswick is in a relatively tight race with Genmar for the top spot. Bruns-wick’s retail market share last year was 17.5 percent and Genmar’s was 16.6 percent. Genmar narrowed the gap last year because Brunswick’s sales declined 3.2 percent in 2002 to 28,520 units sold in the 44 states, while Genmar’s increased 8.7 percent to 27,029 units.
Then, there is a sharp drop-off in the fiberglass 14 feet and above category with Tracker, the company in the No. 3 position, posting a 3.9-percent retail market share.
Tracker was followed by Yamaha, with a 3.2 percent market share, and Marine Products Inc., with a 3.1 percent retail market share in the fiberglass boats 14 feet and above category.
Meanwhile, Bombardier accounted for 44.9 percent of the retail market for PWC in the 44 states in 2002, according to Statistical Surveys. There were 32,831 Bombardier PWC sold in the 44 states, a 1.5-percent decline from the 33,340 units retailed in the same states in 2001.
Yamaha remained No. 2 in the PWC market in 2002 with a 29.4-percent market share. There were 21,536 Yamaha PWC retailed in those states last year, a 10.4-percent decline from 24,024 units sold a year earlier.
Then, there is a sharp drop-off to Kawasaki, which had a 12.2 percent share of the retail market for PWC last year, and Polaris, which had an 11 percent share, according to statistical surveys. Honda made a move into the PWC market in 2002. Its dealers sold 1,769 units during 2002 in participating states, giving it a 2.4-percent retail market share.
— By Jeff kUrowski