From the NMMA
Despite the economic challenges facing recreational boating, marine businesses are committed to flourishing. Boating is a way of life, a passion and one of the last remaining American manufacturing industries. If we didn’t know it already, we certainly know it now—the boating industry is resilient and ready to do whatever it takes to keep doors open and boats on the water.
It’s not always easy, though. With boat sales in decline, production at an all-time low and inventory stacking up, dealers and manufacturers have many issues to contend with on a daily basis. As troublesome as these issues are, there is another problem quietly threatening our industry: availability of credit for marine dealer floorplans. Without question, floorplan financing is the lynchpin that the industry relies on to keep the distribution network flowing and it’s disappearing quickly.
Over the past year, boat dealers have had a tough time accessing floorplan financing. A large number of traditional marine lenders including Keybank, Textron Financial, Wachovia and National City have left the marine market altogether. To make matters worse, the lender who provides the vast majority of marine financing has stopped issuing new loans and significantly raised and in some cases doubled rates for existing clients. Overall, there’s been a tightening of commercial credit standards.
While problems with floorplan financing affect boat dealers, they also impact boat manufacturers, who rely heavily on their distribution network of dealers to reach boat buyers. When a dealer goes out of business, manufacturers are usually required to “buy back” or re-purchase existing inventory. This can be a heavy burden on manufacturers, who have cut back on or ceased production, implemented furloughs and laid off employees. Meanwhile, boat sales continue to shrink while even the most qualified, credit-worthy customers who are ready to buy boats struggle to obtain the financing to do so.
Fortunately, there is hope on the horizon, but only if the marine industry makes its voice heard loud and clear in Washington, DC. The National Marine Manufacturers Association (NMMA) is leading the charge to encourage Congress and the Treasury Department to help stabilize the floorplan lending market and ease the flow of credit. This would not only help the marine industry but a number of durable goods industries that are suffering from the same credit problems. NMMA is advocating the following specific policy changes.
• Marine floorplan loans should be eligible under TALF (Term Asset-Backed Securities Lending Facility). TALF has the potential to general up to $1 trillion of lending for businesses and households. Currently, only auto floorplans are eligible but so-called mixed collateral floorplans should be included as well.
• Boats should be included in TALF’s consumer lending. Currently, cars, motorcycles and motor homes are eligible.
• Congress should create a federal loan guarantee program for floorplan lending for ALL durable goods manufacturers, including marine, either through TALF, TARP or a new initiative. A federal guarantee program would encourage existing lenders to increase lending and attract new lenders.
These next few weeks are critical as NMMA meets with lawmakers to rally support for these recommendations. A flood of emails and phone calls to Congress and Treasury will help them understand that these measures are necessary to keep our industry afloat.
Visit www.nmma.org/economy to learn more about the issue, download additional materials and use our online advocacy tool to send a message to Washington, DC. The online advocacy tool allows you to send an email to your elected officials and the Treasury Department using a template letter, which you can easily customize to include information about your business. Once you’ve sent your email, encourage your friends and colleagues in the industry to do the same.
Our industry has never hesitated to come together to encourage positive change. That idea rings true now more than ever. Each person taking just a few minutes to send a message will make a tremendous difference in making our voice heard.
For more information, contact Mat Dunn at 202-737-9760 or firstname.lastname@example.org.