Skipper's blog: Could these be our darkest hours?

WELL, dear reader, if ever there was an industry well and truly sunk to the gunwales and shipping water at an alarming rate, it is this one. I know I am seen by many as a purveyor of doom, gloom, cynicism and pessimism, but I am also a peddler of stark reality who, at the present time, can see little prospect of a return to anything like the volumes and profits (don’t ever forget the profits!) of even 10 years ago.

I was tempted to base much of this column on the severe fallout from grey imports, but I would only have been deluding myself and insulting your intelligence. Anybody who believes that grey imports are the sole cause of our predicament would presumably also be of the opinion that The Greens are a progressive, enlightened, balanced and rational political party. No, dear reader, the paltry, piddling, desultory drip of grey imports is a major part of our plight the way the estimate for paintwork repairs to the Titanic’s starboard flank would have been the only major concern for the captain.

Where I am actually going with this is that there are more pressing, regular, everyday issues at play, with the main one being – and here it comes again – profitability. I rang a dealer friend recently to see how things were going and how he was bearing up etc. We started toing and froing with the usual bluster and bullshit and then I happened to ask him what sort of margins he was making. Now, he sells, for the most part, well-built, top-tier (almost), reasonably exclusive boats and is part of a dealer network that’s probably in single figures nationwide. So you’d think that this somewhat rarefied arena would be disproportionately and refreshingly lucrative, wouldn’t you?  Think again. This dealer – someone who knows the game the way Shane Warne knows about hair transplants – will work, if “forced into a corner” (his words), on sub-10% margins if necessary.

Frankly, I found the above revelation astonishing. Here he is selling a range of boats – where the top-end models will break six figures – for margins which, depending on how aggressive and territory-encroaching the competition is, might even go as low as 6%. This makes as much sense as trying to currency-trade in Zimbabwean dollars. How did we sink to these depths? And this guy isn’t even selling a product that remotely impinges upon the sphere of grey Yank imports or boats of that genre. He is selling what should be a stand-alone, classic, unique Aussie success story – the plate aluminium boat. 

The facts are this. Even if a dealer is that rare, far-sighted and accomplished specimen who is lucky enough to own his premises, you can take it as a given that the overheads required to run the operation need to be factored in – particularly in this era of gouging, extortionate power prices (not to mention the ominously looming U-boat that is the carbon tax ready to torpedo every viable business that crosses its bows) – at certainly no less than 10% of the total turnover. Therefore, by my simplistic but nonetheless realistic reckoning, my mate could probably be losing money on every top-end plate boat sold. Ah, but wait, you say, surely there will be rebates (one target- and one quarterly-based) from the outboard manufacturer at least? Big deal, I say. Any retailer who runs a capital-intensive business based solely on what can hypothetically and conditionally be recouped in “back-end” money would probably be better off putting everything on Flying Freddy in the four-fifteen at Flemington.

Yes, grey imports are a problem. And yes, the proper, established, long-standing and genuine importers of the numerous quality Yank boats (who employ scores of Aussies, by the way) could also be regarded as somewhat of a problem. The high Aussie dollar is a problem for the domestic manufacturers who are under pressure from the importers (genuine and parallel) and can no longer compete fairly against the importers or export their own wares, thereby reducing what they can tip back into their businesses etc., etc. But when it boils down to it, we have destroyed our own industry ourselves and it started almost two decades ago, when margins started to dip to under 20%. After the 20% threshold plummeted inexorably downward, where was the next logical landing point?

Then we have the annual boat show circus, where even national flag-bearers like Sydney and Sanctuary Cove are reduced to the frenzied “bargain bazaar” retail status of the pathetic, patchy, parochial, rural also-rans. This is also a contributing factor to our extreme – now approaching terminal – malaise. So how about convening seminars, summits and conferences?  Well, these will probably achieve as much as the tourist bureau in Chernobyl.

No, dear reader, what dealers need right away is a crash course in professionalism, strategy and resourcefulness and how to become and remain viable, sustainable and profitable. The next seminars we hold should be ones which teach our members that whilst retail price is undoubtedly a key factor, it is by no means the sole factor. If we continue to lurch aimlessly, wallowing morosely in self-pity along the current path and keep blaming myriad outside factors (which also happen to be similar to the factors affecting most other industries), then the future for the amateur and less progressive members of our industry will be measured in years instead of decades – although, let’s face it, would that necessarily be a bad thing?