Marine Products Corporation
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The Marine Industry
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The Marine Industry
For 2010, the recreational boating industry accounted for less than one percent of the United States gross domestic product. The recreational marine market is a mature market, with 2009 (latest data available to us) retail expenditures of approximately $31 billion spent on new and used boats, motors and engines, trailers, accessories and other associated costs as estimated by the National Marine Manufacturers Association (“NMMA”). Pleasure boats compete for consumers’ free time with all other leisure activities, from computers and video games to other outdoor sports. Non-active boat owners cite the lack of leisure time as the primary reason for not using their boats.
The NMMA conducts various surveys of pleasure boat industry trends, and the most recent surveys indicate that 66 million adults in the United States participated in recreational boating in 2009, a decrease of six percent compared to the prior year. There are currently approximately 17 million boats owned in the United States, including outboard, inboard, sterndrive, sailboats, personal watercraft, and miscellaneous (canoes, kayaks, rowboats, etc.). Marine Products competes in the sterndrive and inboard boating category with its five lines of Chaparral boats, and in the outboard boating category with its Robalo sport fishing boats. More than 90 percent of the Company’s unit sales are sterndrive boats.
Industry sales of new sterndrive boats in the United States during 2010 totaling 14,922 (source: Info-Link Technologies, Inc.) accounted for approximately 33 percent of the total new fiberglass powerboats sold that were between 18 and 35 feet in hull length. Sales of sterndrive boats had an estimated total retail value of $0.7 billion, or an average retail price per boat of approximately $47,000. Management believes that the five largest states for boat sales at the present time are Florida, Texas, California, North Carolina and New York. Marine Products has dealers in each of these states.
The U.S. domestic recreational boating industry includes sales in the segments of new and used boats, motors and engines, trailers, and other boat accessories. The new fiberglass boat market segment with hull lengths of 18 to 35 feet, the primary market segment in which Marine Products competes, represented $1.9 billion in retail sales during 2010. The table below reflects the estimated sales within this segment by category for 2010 and 2009, ranked by 2010 retail sales (source: Info-Link Technologies, Inc.):











Sales ($ B)




Sales ($ B)


Sterndrive Boats






$ 0.7






$ 1.0


Outboard Boats














Inboard Boats














Jet Boats




















$ 1.9






$ 2.5


Chaparral’s products are categorized as sterndrive and inboard boats and Robalo’s products are categorized as outboard boats. As shown in the table above, the sterndrive boat segment experienced the largest percentage decline in unit sales between 2009 and 2010. The Company believes that the larger decline in unit sales of sterndrive boats in 2010 was due to these units’ higher average retail selling prices, which made consumers more reluctant to purchase them during the recent recession.
The recreational boat manufacturing market remains highly fragmented with the exception of Brunswick Corporation, which has acquired and currently operates a number of recreational boat brands. We estimate that the boat manufacturing industry includes over 130 sterndrive manufacturers and over 300 outboard boat manufacturers, largely small, privately held companies with varying degrees of professional management and manufacturing skill. According to estimates provided by Statistical Surveys, Inc., during the nine months ended September 30, 2010 (latest information available), the top five sterndrive manufacturers, which includes Chaparral, have a market share of approximately 52 percent. Chaparral’s market share in units during the period was 7.5 percent, which represents a decrease of 0.4 percent compared to the 12 months ended December 31, 2009. The Company believes that Chaparral’s market share declined during this period because of competition from other manufacturers and dealers who were forced to liquidate inventory during 2009 and 2010 because of pressure from floorplan lenders or other financial constraints.
Several factors influence sales trends in the recreational boating industry, including general economic growth, consumer confidence, household incomes, the availability and cost of financing for our dealers and customers, weather, fuel prices, tax laws, demographics and consumers’ leisure time. Also, the value of residential and vacation real estate in strong boating states such as California and Florida influences recreational boat sales.
In addition, inflation, the cost of certain components and the impact of environmental regulation have increased the cost of boats in recent years. As the cost of certain raw materials used in the manufacturing process has increased, the cost of boat ownership has increased as well, prompting consumers either to buy a smaller or less expensive boat or defer or forego their purchase. Competition from other leisure and recreational activities, such as vacation properties and travel, can also affect sales of recreational boats.
Management believes Marine Products is well positioned to take advantage of the following conditions, which continue to characterize the industry:
·  labor-intensive manufacturing processes that remain largely unautomated;
·  increasingly strict environmental standards derived from governmental regulations and customer sensitivities;
·  a lack of focus on coordinated customer service and support by dealers and manufacturers;
·  a lack of financial strength among retail boat dealers and many manufacturers, and tight credit availability by floor plan lenders; and
·  a high degree of fragmentation and competition among the large number of sterndrive and outboard recreational boat manufacturers.

Forward-Looking Statement:
Certain statements and information included in this press release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include statements that look forward in time or express management’s beliefs, expectations or hopes. In particular, such statements include, without limitation, statements related to our belief that prolonged winter weather during the first quarter has caused dealer inventories to be higher than normal and our concerns about continued cold weather in many of our domestic markets. These statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Marine Products Corporation to be materially different from any future results, performance or achievements expressed or implied in such forward-looking statements. These risks include possible decreases in the level of consumer confidence and available funds impacting discretionary spending, increased interest rates and fuel prices, weather conditions, changes in consumer preferences, deterioration in the quality of Marine Products’ network of independent boat dealers or availability of financing of their inventory, and competition from other boat manufacturers and dealers. Additional discussion of factors that could cause the actual results to differ materially from management's projections, forecasts, estimates and expectations is contained in Marine Products' Form 10-K, filed with the Securities and Exchange Commission for the year ending December 31, 2013.

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