Riding the rapids
Bruce Wassom knows the highs of raging currents and the lows of getting swamped in the boat business.
Along with his fellow Southern Oregon boat builders, he's motoring back from the darkest days of the Great Recession in 2008 and 2009.
It took persistence for Wassom and others to survive while buyers and lenders fell by the wayside.
"Boat building was really down, but it's come back some," said Bruce Wassom, who co-founded Jetcraft back in 1990 and then launched Rogue Jet Boatworks in 2003. "It's still a tough industry. We have five or six aluminum manufacturers that are surviving."
The rising economic tide may have lifted the industry off the economic sand bar, but there are still obstacles to negotiate when it comes to international sales and the willingness of hard-hit consumers to freely spend on luxury items.
"The price has gone up considerably for aluminum, labor and outboard motors," Wassom said. "The engine prices have gone up 3 to 5 percent per year."
While business is picking up, it's not necessarily the same business, or customers, as before the recession.
In Rogue Jet Boatworks' case that means burrowing deep into a niche, where 50 percent of his business is building for government agencies, ranging from the National Park Service and Army Corp of Engineers to sheriffs departments and state fish and wildlife units. They're the kind of customers who require 40- to 50-page bids, detailing everything from lights and radios to night-vision systems and thermal recognition components.
"It's the type of specialty stuff a lot of manufacturers don't want to deal with, because it's too complicated," Wassom said. "A lot of agencies specify our boats because we do some things that separate us from general boat people. Jetcraft did a lot of that but not to the extent we do now."
While two dozen, or more, aluminum boat builders attend the Portland boat show, Wassom said, patience is rewarded when it comes to reeling in major orders, such five Sacramento-area agency orders he's received since 2011.
"We have built or are building five fire boats," he said. "We started working on the first of three boats in 2011 and we got orders for two more at the end of 2014."
JetCraft had 56 employees when he sold the company 14 years ago. Rogue Jet Boatworks now employs 16, up from 12 a year ago, he said. Wassom anticipates the company will sell 80 boats this year, up from 60 last year.
"We've gone to competing for more share with glass-boat manufacturers," he said. "The jet-boat industry is really taking a hit on that."
Wassom said half of the boats built in 2000 had inboard or outboard jets. Today, 95 percent of the boats are propeller driven.
"We still do more inboard jets than the rest of Oregon combined, but that's how small the market is," Wassom said.
A new generation of jet motors may reverse the trend, said Phil Cam, president of Ameriflex Engineering LLC, which builds River Hawk Boats.
Bombardier Recreational Products, related to the airplane builder, has developed an engine that will be tested by River Hawk this summer. The Fond du Lac, Wis., firm has re-engineered the power plant used for jet skis and fiberglass boats for use by heavy-gauge aluminum boats.
"It's got great performance and fuel economy," Cam said. "We hope to have it for the 2016 model year and have it at the dealer boat show next year."
Founded in 2003, River Hawk Boats, a less-pricey option than Rogue Jet Boatworks models, was acquired by Cam and his brother Brian Cam in 2008, just as the market collapsed.
"The market went away in August 2008, and we didn't build a boat for another year," said Phil Cam. "There was a cleansing of the industry, dealers had all the inventory and boat brands they needed. When things reset from the adjustment in the economy, there was an opportunity to place our brand with preferable brands that were in the market."
He declined to divulge specific numbers but said the company, which has fewer than 50 employees, hopes to build close to 400 boats.
Some builders are treading water for a variety of reasons, including foreign exchange rates.
"We are where we were in 2008," Boulton Powerboats owner Mike Boulton said.
Wealthy Russian and other European buyers who put in orders for luxury watercraft have backed off in recent years.
"The dollar is so strong that it has killed all of our European sales," Boulton said. "Our dollars are worth double the Russian ruble, plus there is 50 percent duty on top of the price, which has closed the door on a lot of sales. We're still in discussion with our comrades, but there remains quite a lull."
In North America, however, demand has slowly returned, the White City builder said.
"We've had a steady trickle of boats going east forever, and it seems the economy in and around the Great Lakes region is stronger," Boulton said. "It always seems the economy on the East Coast picks up faster than the West Coast.
Overall, consumers still seem a bit leery of taking on the expense of buying a boat, Boulton said.
"Boating is still a step above some other choices," Boulton said. "It's like buying a dragster, taking up sprint-car racing or some other stuff. We're still a popular sport family-wise, and we're doing our best to train the next generations. We're hanging on to the customer base that has remained, it's just not as big as it was."
About half of Boulton Powerboats are sold to government agencies. The company has 20 employees, down from a high-water mark of 30 before the recession.
"It hasn't bounced back like we'd want it per se," Boulton said. "It's like we're floating along on a lazy river."
Reach reporter Greg Stiles at 541-776-4463 or firstname.lastname@example.org. Follow him on Twitter at www.twitter.com/GregMTBusiness, on Facebook at https://www.facebook.com/greg.stiles.31, and read his blog at www.mailtribune.com/EconomicEdge.