Boats are back.

• Author: Kurowski, Jeff
• Position: Indiana boat makers - Recreation

The luxury tax is gone and Indiana's boat makers are cruising.

The U.S. economy seems to have entered a phase of slow but steady growth, and Indiana's recreational boat builders are throttling up.

Nationally, the industry grew at a rate of almost 7 percent in 1993, with growth rates of 6 to 10 percent forecast for 1994, according to the National Marine Manufacturers Association in Chicago. Several Indiana companies outperformed the industry in 1993, and they hope to do so again this year.

One reason for optimism is the repeal of the federal luxury tax, which many blame for seriously impairing boat sales. Indiana manufacturers primarily build aluminum pontoon and fishing boats, plus fiberglass runabouts and deckboats--products priced well below the $100,000 threshold where the luxury tax kicked in. But most in the industry believe the luxury tax depressed sales of all boats, because many potential boat buyers apparently assumed the tax applied to all boats.

Along with the negative impact on buyer psychology, the luxury tax created financial problems for many boat dealers, forcing them to cut back on orders for smaller, less expensive boats, according to Roger Harmon, president of GW Invader Inc., a builder of fiberglass runabouts and deckboats in Tipton.

"The luxury tax affected the dealer's cash flow if he sold both big boats and small boats," he says. That's because revenue from the sales of big boats provided many dealers with the capital needed to stock their small-boat inventories. Fewer big-boat sales meant dealers had to reduce their small-boat inventories.

Thunderbird Products was the only Indiana company directly affected by the luxury tax because it builds large cruisers and speedy high-performance boats at its plant in Decatur. "We were affected dramatically by the luxury tax," says Wayne Porter, vice president of sales. "Forty percent of our volume was priced above $100,000."

Thanks to the repeal of the luxury tax, Thunderbird is hoping for a 10 percent increase in sales during the 1994 boat-industry model year, which ends June 30. The end of the tax also is paving the way for new high-end developments. "We hope to introduce a new 40-foot cruiser next fall, retailing for around $245,000," he says.

In Syracuse, where Outboard Marine builds aluminum fishing boats and aluminum deckboards, the employees worked a considerable amount of overtime during the second half of 1993, according to Plant...