Storms Batter Businesses
October 19, 2004
Filed under Features
While several powersports companies suffered significant damage, most of those firms already are bouncing back, a survey of Florida companies by Powersports Business revealed. And many industry representatives are painting a rosy picture for sales in the upcoming months as the recovery process continues.
One of the companies hardest hit by the storms was Land ‘N’ Sea, North America’s largest distributor of marine parts and accessories. Half of the company’s 50,000 sq. ft. distribution facility in Port Charlotte, Fla., was destroyed when Hurricane Charley, packing 155 mph winds, hit the Gulf Coast Aug. 13.
The company essentially lost use of the facility — which served approximately 10 sales territories — when part of its roof was torn away. However, Land ‘N’ Sea had a recovery team at work the next morning and the company, which has several distribution locations, was open for business the following Monday.
“Business is still good, not great,” said Tom Wallis, vice president of marketing services for Land ‘N’ Sea. “We had been having double-digit growth in that area, now there’s a lot of strain, but growth is still strong. As the governor of California would say, and I’ll say it too, ‘We’ll be back.’”
On the other side of the state, personal watercraft manufacturer Sea-Doo also suffered heavy damage from the storms. The company’s saltwater testing facility in Grant was condemned after Hurricane Frances left about two feet of water inside the building, said Tim McKercher, communications director for Bombardier Recreational Products-Watercraft.
Employees from that facility relocated to the BRP Technological Center in Palm City, the company’s 1,200 acre watercraft R&D facility, only to see Hurricane Jeanne pass through three weeks later and rip some of the roof off that building.
“As far as the industry, all four hurricanes, for a wide majority, have halted all new unit sales,” McKercher said. “As far as the service part of it goes, I’ve heard it’s OK. I haven’t heard of any substantial dealer damage. But as far as new unit sales, and that goes for all products, motorcycles, ATVs and everything, people really aren’t thinking of playtime right now.”
However, Land ‘N’ Sea’s Chief Operating Officer Tom Schuessler believes business will pick up in the wake of the hurricanes as those that were affected look to replace what was lost.
“Our expectation is that people will take care of their homes first, then three or six months from now, we’ll see a significant rebound when people begin to fix the damage to their boats.”
That damage was widespread, as Twin Vee, Inc. President David East can attest. In Fort Pierce, on Florida’s Atlantic Coast, where Twin Vee’s power catamaran manufacturing facility stood in the path of the eyes of both Hurricane Frances and Hurricane Jeanne , over 3,000 boats were destroyed.
Twin Vee was lucky, coming through the storms relatively unscathed with only minor roof and water damage done to its two-building facility, which occupies about 80,000 sq. ft. of space. However, the company lost four weeks of production time due to power outages caused by the two storms, and East said his company’s Florida dealers all suffered damage as well.
“I don’t think we have a Florida dealer that wasn’t affected by one of the hurricanes,” East said. “None of them lost a showroom or anything like that, but they basically had the same things we had, a loss of power, leaks in the roof, that type of stuff.”
But East shares the Land ‘N’ Sea’s optimistic outlook.
“I think between people getting their lives back together, looking for a little R&R and replacing the boats that were destroyed in the storm, we’re going to see a huge explosion in the general public buying boats.
“Several of our dealers are anticipating this too. We have one dealer that had 10 boats in stock and he just placed an order for another 26, in anticipation that when these people finally get their lives back on track they’re going to go nuts.”
Equity research reports from A.G. Edwards seem to bear out these forecasts.
An A.G. Edwards report in early September predicted that the impact of Hurricanes Charley and Frances would be a positive one for Brunswick Corp., Land ‘N’ Sea’s parent company and owner of Mercury and MerCruiser engines as well as numerous boat brands.
“While we in no manner want to minimize the human suffering and broad destruction brought by these two hurricanes to Florida and other neighboring states, we believe the damage done to boats in regions affected by these storms could provide extra fuel to what should already be a solid ’05 for BC and the boating industry,” A.G. Edwards analysts wrote.
Noting that Florida alone accounted for 10.4% of the marine industry’s retail sales in 2003, the analysts agreed that boat owners would look to replace lost boats and motors after first addressing the damage done to homes and businesses.
And the A.G. Edwards analysts didn’t confine their predictions to just the marine industry. In a separate outlook report issued in late September for Harley-Davidson, A.G. Edwards said the motorcycle manufacturer’s seasonal sales might slow as regions affected by the hurricanes recovered, but wouldn’t disappear entirely.
“We do believe that any HDI/industry retail sales not made as a result of the hurricanes, are only deferred at worst until spring 2005,” the analysts wrote.
Hurricane season runs through mid-November, but experts say strong late-season storms threatening the United States are a rarity, which is good news as cleanup efforts continue.
“Right now there’s nothing stirring,”
McKercher said. “Compared to what the summer was like, if there’s nothing out there for a week that’s great news. It really looked like a battle zone around here for two months.”