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SOURCE: USDOC, International Trade Administration SOURCE KEY: IT PROGRAM KEY: IT MARKET PROGRAM: Market Research Reports UPDATE: Monthly ID NUMBER: IT MARKET 111101930 TITLE: UNITED KINGDOM - YACHT INDUSTRY PROFILE - IMI930224 DATA TYPE: TEXT END YEAR: 1993 UPDATED: 03/16/93 KEYWORDS 1: | 9302 | CC412 | IMI | IMI9302 | PLB | PLEASURE BOATS AND ACCESSORIES | UNITED KINGDOM COUNTRY: | UNITED KINGDOM | GREAT BRITIAN | U.K. | EC | EEC | EUROPE | EUROPEAN COMM. | EUROPEAN COMMUNITY | EUROPEAN ECONOMIC COMMUNITY | OECD | ORGANIZATION FOR ECONOMIC COOPERATION & DEVELOPMENT | ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMET | WEST EUROPE | WESTERN EUROPE | WESTERN EUROPEAN COUNTRIES TEXT UNITED KINGDOM - YACHT INDUSTRY PROFILE - IMI930224 SUMMARY This article is derived from a telegraphic report dated 24 February 1993, prepared at the American Embassy - London. It discusses the British yacht-building industry. The article consists of 2 pages. 24 FEB 93 AMEMBASSY LONDON SUBJECT: IMI: THE BRITISH BOAT INDUSTRY 1. SUMMARY: THE PREVAILING VIEW AMONG EXHIBITORS AT THE RECENT LONDON INTERNATIONAL BOAT SHOW WAS GUARDED OPTIMISM THAT THERE WOULD BE SOME MARKET UPTURN THIS YEAR. CONFIDENCE HAS BEEN BOOSTED BY SOME UNEXPECTED COMPANY SALES, AND BY THE "KNOCK-ON" EFFECT OF STERLING'S DEVALUATION IN OVERSEAS MARKETS. HOWEVER, SALES BY THE INDUSTRY AS A WHOLE, INCLUDING LEISURE AND COMMERCIAL BOATBUILDERS, MARINA OPERATORS, SAILMAKERS AND SUPPLIERS OF ELECTRONIC EQUIPMENT, HAVE SHRUNK BY MORE THAN 25 PERCENT IN THE PAST TWO YEARS. IN PARTICULAR, PURCHASES OF MOTOR OR SAILING YACHTS FELL BY 16 PERCENT IN 1991, STILL LEAVING SIGNIFICANT TOTAL SALES, INCLUDING BOATS, EQUIPMENT AND CHANDLERY OF $1.72 BILLION. MANY COMPANIES HAVE BEEN FORCED TO TRIM BACK ON THEIR WORKFORCE OR, IN SOME CASES, HAVE EITHER GONE OUT OF BUSINESS ENTIRELY OR RETURNED VIA THE LIQUIDATORS IN A MUCH SLIMMED-DOWN FORM. A RESURGENCE IN SALES TOWARDS THE END OF 1992 SUGGESTS THIS YEAR'S PERFORMANCE WILL FURTHER IMPROVE IN A FEW SECTORS. END SUMMARY. 2. AFTER TWO DISASTROUS TRADING YEARS FOR THE INDUSTRY, SEVERAL BOAT PRODUCERS RECORDED SUBSTANTIAL SALES IN 1992 WHICH APPEAR TO GIVE AN INDICATION THAT THE WORST IS OVER. ONE PLYMOUTH-BASED BOAT BUILDER SOLD THREE 65 FT. MOTOR YACHTS WORTH ALMOST $1 MILLION EACH WITHIN THE PAST TEN MONTHS TO EUROPEAN CLIENTS, AND ANOTHER BOAT FIRM FROM ESSEX REPORTED THAT SALES OF YACHTS IN THE $60,000 RANGE HAVE PICKED UP OVER THE PAST THREE MONTHS. IT IS NOT A UNIVERSAL UPTURN, HOWEVER, AND THE IMPROVEMENT IN SOME SECTORS IS ONLY SKETCHY. MANY CHANDLERS ARE FACING GREAT DIFFICULTIES, AND HAVE NOT EVEN ENJOYED THE BENEFIT OF OWNERS RE-EQUIPPING RATHER THAN TRADING IN THEIR BOATS. MARINA OPERATORS, TOO, ARE CONTINUING TO SUFFER AS MUCH AS ANY COMPANY IN THE PROPERTY SECTOR. MANY MARINAS ARE NO LONGER ABLE TO COVER THEIR OPERATING COSTS, AS BOATING ENTHUSIASTS LOOK FOR ALTERNATIVE AND CHEAPER MOORINGS. 3. BUT LEADING BUILDERS WITH ESTABLISHED OVERSEAS MARKETS HAVE RECEIVED AN EXPORT BOOST FROM THE DEVALUATION OF STERLING LAST SEPTEMBER. THE GREATEST BENEFICIARIES ARE LIKELY TO BE THE BUILDERS OF LARGER MOTORIZED BOATS. SMALLER OPERATORS, IN WHAT HAS ALWAYS BEEN A FRAGMENTED INDUSTRY, ARE LESS LIKELY TO BE ABLE TO BEAR THE COST OF EXPORTING, AND WILL HAVE TO WAIT UNTIL DEMAND IN THE U.K. PICKS UP. NATURALLY, DEVALUATION WILL ALSO REDUCE IMPORT PENETRATION FROM THE UNITED STATES AS WELL AS CONTINENTAL EUROPE, IN PARTICULAR SCANDINAVIA AND BELGIUM, WHICH BENEFITED FROM AN OVERVALUED POUND. 4. THE U.K. BOATING INDUSTRY HAS BEEN SUSTAINED BY ITS EXPORT MARKET. EXPORT SALES ACCOUNTED FOR $215 MILLION OF TOTAL LEISURE BOAT SALES OF $365 MILLION IN 1991, BUT THE GLOBAL RECESSION WHICH IS NOW BEGINNING TO STRIKE AT SOME OF ITS TRADITIONAL OVERSEAS MARKETS LIKE GERMANY, AND THE RELATIVELY NEW MARKET OF JAPAN, IS CAUSING DOUBTS WHETHER EXPORT SALES CAN BE MAINTAINED. JAPAN'S ECONOMIC TROUBLES HAVE DRASTICALLY CUT DEMAND THAT WAS BEGINNING TO TAKE OFF AFTER A SWITCH IN CONTEMPORARY SPORTS FASHION AWAY FROM GOLF TO NAUTICAL LEISURE ACTIVITIES. THE DOWNTURN IN THE GERMAN ECONOMY IS THREATENING THE U.K. BOAT BUILDERS' LARGEST SINGLE EXPORT MARKET, ALTHOUGH SO FAR THEY HAVE NOT SEEN ANY NOTICEABLE FALL IN DEMAND. 5. THE BRITISH RECESSION HAS, AT LEAST, HELPED "SEE OFF" KEY FRENCH EUROPEAN RIVALS WHO HAD MADE GREAT INROADS INTO THE U.K. BUILDERS' DOMESTIC MARKET SHARE. SALES BY THE FRENCH BUILDERS, BENETEAU AND JEANEAU, HAVE FALLEN DRAMATICALLY OVER THE LAST TWO YEARS. TYPICAL PRODUCTS OF THEIRS APPEALED TO THE WELL-HEALED AMATEUR SAILOR - THAT SECTOR OF THE BOATING INDUSTRY THAT HAS BEEN MOST IMMEDIATELY AFFECTED BY THE RECESSION. THE BRITISH MARINE INDUSTRIES FEDERATION BELIEVES THAT SALES IN 1992 CONTINUED TO FALL, BUT AT A SLOWER PACE, AND PREDICTS THAT 1993 WILL SEE LITTLE CHANGE. 6. PROSPECTS FOR FURTHER IMMEDIATE MARKET PENETRATION BY U.S. BOAT BUILDERS IN GENERAL ARE NOT BRIGHT, AND HAVE NOT BEEN ASSISTED BY THE RECENT DEVALUATION OF STERLING. INDUSTRY SOURCES INDICATE THAT THE CURRENT BEST PROSPECTS ARE FOR SMALLER PLEASURE CRAFT SUCH AS DINGHIES AND INFLATABLES. THE MARKET FOR MARINE SPORTS EQUIPMENT - SAILBOARDS, WINDSURFING EQUIPMENT, JET SKIS AND WET BIKES, ETC., REMAINS STEADY OVERALL, AS DOES THE MARKET FOR SMALLER HORSE POWER ENGINES. THERE IS ALSO A CONSTANT DEMAND FOR MARINE SAFETY EQUIPMENT, CLOTHING AND FOOTWEAR. (USFCS/DFGODSON/GLOOSE/KMOOREFIELD)DEAL
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