At 2012 Hartford Boat Show, Optimistic Signs For State's Marine Industry
By JANICE PODSADA
January 27, 2012
A year ago, the state's marine industry was battling a proposed luxury tax that boat sellers, marina owners and sailmakers believed would further depress an already hard-hit industry. From 2007 to 2010, the state's recreational boating industry had seen boat sales plummet 70 percent and the number of workers fall from 12,000 to 4,500.
Gov.Dannel P. Malloy's proposed budget included a "luxury tax" on new and used boat purchases, a 3 percent surcharge on the value of vessels over $100,000 — beyond the proposed 6.35 percent retail sales tax. The state collects sales tax when a boat is sold and resold multiple times.
Malloy's proposal brought riggers, shipyard owners and marine industry leaders to the state's Capitol in protest.
A compromise was reached, and today new and used boats selling for less than $100,000 are taxed at the going sales tax rate of 6.35 percent. Vessels selling for more than $100,000 are taxed 7 percent on the entire amount.
"The difference is minimal, but the perception that the state has a luxury tax has hurt," Grant W. Westerson, president of the Connecticut Marine Trades Association Westerson said Friday as he prepared for the opening of the 2012 Hartford Boat Show at the Connecticut Convention Center in Hartford. The annual event, sponsored by the Connecticut Marine Trades Association, ends Sunday at 5 p.m.
Last year, new and used boat sales were up slightly, Westerson said. "They're not flat but not as high as we hoped."
Connecticut has about 110,000 registered boats; 78 percent are less than 26 feet. "That's the real boater in Connecticut — middle-income families, the family boater, — not the 40-foot trawler captain or the cocktail boat," Westerson said.
It's hoped the sale of those family-size boats will continue to accelerate, although the industry is now keeping a close watch on gasoline prices. "They're creeping up again," Westerson said.
Rising gas prices at the dock aren't the only worry — when petroleum prices swell, boat prices can also jump. Fiberglass, fiberglass compounds and resins, materials used in the construction and maintenance of boats, are made from petrochemicals, Westerson explained.
The opening of this year's Hartford Boat Show bodes well for sales, said Burns, who was on hand for Friday's opening. "This is the first year in a couple of years that the show sold out — maybe we are starting to break loose from this expanded recession."
The show, which features more than 250 vessels — the largest a 40-foot trawler, is a one-stop shopping excursion for would-be boaters, offering new and used boat sales, surveying services, financing and insurance specialists, Westerson said.
Boating season doesn't open until May 1, but from now until then marks the "heart of the selling and buying season," said Kathleen Burns, general manager of Noank Shipyard and chairman of the Connecticut Marine Trades Association.
"In talking to dealers and looking at my own business, there's a little touch of pent-up demand. It's been a tough few years," Burns said. "This year we're seeing more enthusiasm. Some boaters are starting to come back. People are saying … a boat may be in the cards this year."
More than 500 businesses around the state are involved in recreational boating, employing about 5,000 people across the state. Each year those firms generate about $1.5 billion in annual sales, Westerson said.
It's a diverse group of businesses and tradesmen, ranging from boat surveyors like Barnaby Blatch, who inspects recreational and commercial vessels on behalf of potential buyers and insurance companies, to dock hands, mechanics and upholsterers, such as Westbrook-based Nautical Needles Inc., whose 16 workers repair and refurbish boat interiors and make drapes and upholstery.
"We're doing a big job right now — 200 custom chairs for a cruise ship," said owner Susan Lennox, who brought pillow, drapery and custom seating samples to her booth at the show. "The orders have been pouring in," Lennox said.
The good news for anyone in the market for a new or used vessel is that lending — the deal-maker or breaker of boat sales — is almost back to normal, said Vernon J. Blanc, director of sales at Newcoast Financial Services in Clearwater, Fla.
"We're seeing our loan levels approach pre-recession levels," said Blanc, who was staffing the company's booth at the boat show. "In 2008 and 2009, everything stopped," he said. "By 2010, we started to come out of it."
But unlike pre-recession days, would-be borrowers can expect to face more in-depth financial scrutiny. "The background checks are a little bit deeper," he said. "Lenders want proof of income stream and asset base," he said.
Biggest tip? "Know who you're dealing with. Look for a national lender with deep financial resources."
The ability to walk in and get a signature loan has been lost, added Blanc, "but that's what got everyone in trouble."
Michael J. Buenaventura, owner of Seaboard Marina Inc. in South Glastonbury, who deals exclusively in used boats.
"We're the closest marina to Hartford," said Buenaventura whose marina has 225 slips.
In a good year, he said, he sells about 50 vessels. But in 2010, sales dried up, and he sold fewer than 20 boats.
Last year, sales picked up and he sold 28 boats. Currently, he's got 75 for sale.
His bread-and-butter boat? Vessels in the $20,000 to $30,000 range, big enough for mom and dad and two kids "to go water skiing or go to Old Saybrook and back," he said.
"I'm looking for a very good year," said Buenaventura, who recently added three full-time employees. "Once the boat show happens, my phone starts ringing."
Reprinted with permission of the Hartford Courant.
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