ANNAPOLIS – This month, visitors to the popular U.S. Sailboat and Powerboat shows here encountered everything powered by gust or gas, from the simplest dinghy to the most ostentatious yacht.
Yet what most observed was a rejuvenated Maryland recreational boating industry, one bouncing back from an early 1990s sales drought and looking forward to brighter times ahead.
Boat dealers around the state say the recovery is long overdue and attribute the rebound to the repeal of the federal luxury sales tax, an improved economic climate and efforts to renew interest in the sport.
“The marine business is back. It was so fragile for a while, but it’s back now,” said Toni Shoener, service manager for Lippincott Marine in Grasonville.
Shoener, who has worked in boating for the last 15 years, said 1996 was the best recent year for her business and a welcome relief from the “austere” times of the early 1990s, when many of her peers went out of business.
Patrick Mayben, president of Annapolis’ Bristol Yacht Sales Inc., was pleased with his 1996 sales as well.
“We had our best year in 1995, and 1996 has been even better than that. We’re up in dollar volume and in units sold,” Mayben said.
Most dealers said the spur in sales resulted at least in part from the repeal of the federal luxury tax in 1993.
The tax, instituted on Jan. 1, 1991, levied an additional 10 percent surcharge on high-priced luxury items that cost more than $100,000. President Clinton signed a measure repealing the tax in August 1993.
Data supplied by the Maryland Department of Fiscal Services measure how the tax repeal affected boat sales.
A department report shows that in fiscal year 1993 the 5- percent state excise tax levied on boat sales generated $10.9 million in revenues.
By June 1994, when fiscal year 1994 ended, those revenues jumped to $12.7 million, a 16.5 percent increase, and three years later, at the conclusion of fiscal 1996, those taxes produced $14.6 million, a 33.9 percent rise in three years.
According to the report, “federal luxury taxes weakened boat sales” but tax revenues increased as “consumers satisfied their pent-up demand for new boats.”
However, Mayben said the luxury tax was only a small part of sales declines.
“The tax was a problem, but not the problem,” Mayben said. He blamed a “soft” economy that made potential buyers apprehensive about making high-dollar purchases.
The Regional Economic Studies Institute at Towson State University tracks the state’s economic performance. RESI analyzes various aspects of the economy – such as unemployment figures, retail sales, and welfare caseloads – and from them develops a numerical index to compare trends throughout the mid-Atlantic region.
According to RESI’s latest data, as of August 1996 Maryland’s economy had grown by 4.9 percent since August 1995 and by 14.7 percent when compared to the recession period of March 1991.
Diane Graul, sales manager at Full Tilt Marine on Kent Island, agreed that a strong economy is vital to the boating industry.
“A lot of it is based on consumer confidence. If interest rates are down, and the economy is strong, business is good,” Graul said.
There are other factors as well.
Dave Baumgartner, president of Riverside Marine, said his 1996 sales increase represents the fourth consecutive annual rise.
Although he said he sees his sales increasing without any related rise in the popularity of boating, he added that state efforts to improve the environmental condition of the Chesapeake Bay as well as industry attempts to enhance interest in recreational boating have had some impact on bringing in new customers.
For example, Baumgartner said boat manufacturer Bayliner introduced a 30-minute infomercial geared toward those who do not already own boats. It aired around the state from Oct. 11 to Oct. 20.
But possibly the best way to reach new customers is through the boat shows themselves, dealers said.
Graul said: “The show is the most effective tool we have. It creates an unbelievable amount of interest.” Dealers said they are optimistic about next year. Demand and sales will continue to rise, they say, as long as the economy – especially interest rates – and the weather cooperate. -30-