Renowned Economist Discusses Economic Trends at General Members Meeting in Annapolis
A leading global economist said the economy “is bumping along surprisingly well” during an Oct. 5 panel discussion of sailing and industry speakers at Sail America’s General Members Meeting in Annapolis.
“The economy is bumping along surprisingly well, given the headline risks from the subprime blowup, which was really about the sale and purchase of toxic products, which happens from time to time in a free economy,” said Dr. Douglas Love, executive vice president, CIO and treasurer for Investors Guaranty Fund, Ltd. While it was difficult to predict the future financial ripples stemming from the subprime crisis, Love said he thought the U.S. economy had absorbed the shocks and was moving forward.
Love spoke to a record crowd of 200 people during a panel discussion about sailing’s current and future outlook at Sail America’s General Members Meeting in Annapolis. He said the weakness in the U.S. dollar was beneficial to the U.S. sailing industry, even though it meant an increase in the cost of importing raw materials. “The good news of it is that for the past three, four, five months or so, exports from the U.S. are growing at a rate of three times the rate of imports to the U.S., largely as a result of the lower dollar. So this is very good for exporting for all industries.”
Love also forecast a surging international demand for luxury yachts, as financial powers in London, Dubai, Stockholm and Shanghai come on strong.
During his travels abroad, Love said he is seeing a “real diffusion of the power of Wall Street across the globe. The share of market in securities trading and investment banking in London has now become a severe competitor to the U.S.,” he said. “Goldman Sachs (a global investment banking firm) for the first time last year made more profits in Europe and in Asia than it did in the U.S.”
He noted that, “In the U.S., it’s better to be in the sailing industry than in the automotive industry. I know you guys are down 10% year over year. I don’t see any big boosts coming out of that, But I think it won’t get any worse. It probably will go back to where it was.”
Increased global competition, especially from China, with its low-cost labor, has had an impact on the sailing industry. “China is helping us bring better value to the customer and we actually embrace it,” said Wayne Burdick, president of Beneteau USA. As a defense against China, Burdick said sailing manufacturers are driven to do a much better job by reducing “the labor component without taking quality out.”
Alistair Murray, Ronstan International managing director, said China “is changing the shape of what we do,” noting that the pressure from China, with its ability to produce low-cost stainless steel, has meant that the “portion of the market we’re now chasing is a lot smaller because of the pressure from China.” But he said that development has motivated Ronstan to concentrate on its strengths and accept the fact that “products with a high labor component are going to come from China, whether you like it or not.”
Murray invited the audience to attend the next International Sailing Summit in Paris in December 2008. Murray, founder and chairman of the International Sailing Summit, said the theme of the summit would be learning and gaining new ideas from other industries, such as the golf industry.
Bill Goggins, Harken commercial manager, said it was “absolutely, 100% critical” to bring in a large volume of new consumers to sailing. As chair of Sail America’s marketing committee, he noted that Sail America had focused its resources intelligently on marketing campaigns through its Discover Sailing DVD, its public service advertising campaign in major magazines and newspapers and the Southam Awards, the prestigious annual editorial competition that honors journalists who carry sailing’s message to a mainstream, non-sailing audience.
Thom Dammrich, president of the National Marine Manufacturers Association (NMMA), said the “Discover Boating” multimedia consumer campaign, now in its second year, was working to generate new prospects for sailing and boating, as it gained increased visibility among consumers.
Visits to the “Discover Boating” website were up from 1.9 million in 2006 to 3.25 million in 2007, he said. Visitors now spent an average of 11 minutes browsing through the website, up from nine minutes in 2006. About 57,000 visitors requested NMMA’s DVD, “How to Get Started in Boating,” up from 40,000 in 2006. NMMA also distributed 4,500 of Sail America’s “Discover Sailing: The Ultimate Adventure” DVD in 2007.
In 2007, 21,000 “hot prospects” asked to be contacted by a manufacturer or dealer to gain further boating information, which is up from 13,600 in 2006. Of these prospects, 4,000 or 20%, requested further info about sailing, said Dammrich.
Overall brand awareness of the Discover Boating campaign among consumers has grown to 36% in 2007, up from 25% in the campaign’s first year.
“It’s working,” he said. “We are getting not interested people interested in boating and our research shows it takes one to three years for someone to go from not interested to purchase.” Dammrich said he thought the Discover Boating campaign is going to “provide a lot of boost to the industry in 2008, 2009, and beyond.”
Jonathan Banks, Sail America executive director, answered questions about Sail America’s new mission and new membership services. “We wanted to rearticulate Sail America’s mission to focus on growing the market and helping sailing businesses become more successful,” said Banks. “Our activities are focused on providing our members with targeted sales opportunities, developing new marketing campaigns, offering new business education tools and introducing cost-saving affinity programs, all of which will help create a stronger, more sustainable market for sailing-related products and services.”