A Reader Writes "I would be worried about the price of gas..."
Checking my mail box this morning, I was delighted to receive a note from Bob K. who wrote:

Hi Bob,

I have never been to New Orleans, but your ongoing remembrances have me eager to visit there when it is possible. Keep up the good work of keeping this region in our thoughts.

About MPX , I would be worried about the price of gas depressing the pleasure boat market. As I drive about La Crosse, I see used boats and motor homes for sale at very low prices....yet MPX numbers look promising. Perhaps there are parts of the country (such as the eastern sea board) more dependant on boats that are in need of replacement. This should be interesting to watch.

Bob

Winslow Homer Painting

Thanks so much for stopping by and visiting! You have made an excellent point over fuel prices and their possible effect on sales of pleasure boats. It is interesting that the point & figure chart on MPX there is indeed a drop in the price that I mentioned on the post...as the stock has fallen from the $20 level to the $12 level recently. Is this a result of the climbing gas prices? Perhaps.

I did a bit of a Google search and found this article from the Miami Herald (9/16/05) that reported:

Finding people willing and able to pay $10.5 million for a new yacht is the easy part of Mac McLaughlin's job.

The hard part: finding people willing and able to make the yachts.

McLaughlin is the chief financial offer of Broward Marine, a yacht manufacturing and repair business in Fort Lauderdale.

A declining dollar against the euro and an aging population with lots of disposable income make these busy times for Broward Marine and others in South Florida's marine industry. ''There's a heck of a lot of millionaires out there,'' McLaughlin said.

He says he'll have to triple or quadruple his workforce over the next nine months to keep up with increased demand.

However, a local Midwestern paper (Chicago "Northwest Herald" 9/6/05) reported this:

At the other end of the spectrum, Jim Galway, sales manager at Watertower Marina Inc. in McHenry, said soaring temperatures, skyrocketing fuel prices and low water levels had hurt summer business.

"It has not been a terrible year, but we definitely are not up to par as far as people buying, using and servicing their boats," Galway said. "It might have been too hot for some people to bother coming out.

"Gas prices have hurt. When some people starting hearing rumors of how high prices were going to go, and did go, they did not bother to come out to buy a boat and use the boat they already had.

"Some canals were low, so people were worried about damage to their boats. We have not fixed a lot of boats. Either there has not been much damage or people have yet to fix their boats."

At Fox 14 Marina near the Fox River in Fox River Grove, manager Garry Zack said business this summer has been "very good."

"We were closed until the Fourth of July in 2004 because we had so much rain they had to close the river," Zack said. "Last year was bad. This year is much better.

"The boaters love the hot weather. For those of us working in the shop all day with no air conditioning, it was brutal."

The high cost of gas has not deterred boaters at Fox 14 Marina, Zack said.

"More people commented about gas prices last year, even though they are higher this year," he said. "When we finally rolled to $3 a gallon in mid-August, only one customer complained.

"Gas prices are 10 to 15 cents higher on the waterway because we do not buy in bulk. We have kept our prices as low as we could. I think the boaters understood the situation."

Even with the summer boating season winding down, Watertower Marina has not dropped anchor on its business prospects just yet.

"Just recently boat sales started picking up," Galway said late last month. "Hopefully that will continue to make up for some of the slow periods we had earlier in the season that we should not have had.

"And maybe some people are waiting for the fall to service some of their boats that might have been damaged by the low canals."

Thus, I am not sure whether the price of gas has definitely impacted boat sales overall. Certainly in some areas of the country where the local economy may not be as strong and the disposable income may not be as great, sales may be impacted. However, since many boats, especially the more expensive boats and yachts, may have upper-income purchasers who are less affected by fuel prices, this may not be a factor for those sales.

Thanks so much for the note. Time will tell whether the gas prices will be affecting sales at a company like MPX. You have made some excellent points and we may be seeing this in the future.

Bob