Finnish boating industry boosted by economic growth and warm summer

According to Jarkko Pajusalo, CEO of the Finnish Marine Industries Federation Finnboat, the warm summer of 2018 served to boost the sales of small motor boats and personal watercraft (PWC) in particular. 

“Last summer, boat dealers were able to clear out their stocks of small boats, and the deliveries of motor boats less than 5 metres in length increased by as much as 23 per cent over the previous year,” Pajusalo says. 

Another development testifying to the popularity of small boats is the rapid increase in the sales of electric outboard motors. Almost 6,000 electric outboard motors were sold in 2018, compared with 3,500 the year before.

“The easy-to-use and affordable electric motor seems to have replaced small combustion engines as well as become more commonplace as an optional accessory in rowing boats. Electric motors are also used as bow-mounted trolling motors in recreational fishing boats that have become increasingly popular,” Pajusalo estimates. 

In terms of numbers of registrations, the largest growth took place in PWCs, whose registrations exceeded the 1,000-unit mark for the first time in Finland (+313/45%). 

In addition to the increase in the sales of small motor boats and PWCs, the sales of motor boats over 9 metres in length also continued to grow. At the same time, the sales of large outboard engines have grown as well, as more and more boat manufacturers have diversified their offering of even larger boats to include model versions that can be equipped with a single or twin outboard set-up instead of an inboard engine or sterndrive. 

The aggregate net sales of Finnboat’s member companies – boat builders, shipyards and industry traders – were EUR 542 million in 2018 (VAT 0%, calculated based on production and import prices). The industry employs some 3,500 persons in Finland.

The value of sailing boat exports hangs upon luxury yacht deliveries

A special trait of Finnish sailing boat exports is the nature of the business undertaken by Baltic and Nautor, two luxury boat manufacturers based in the Ostrobothnia region. Their largest super yachts are valued at over EUR 10 million per vessel. The total value of Finnish boat exports may fluctuate substantially, largely depending on the timing of the Baltic and Swan yacht projects. 

The number of yacht deliveries scheduled for 2018 was smaller than in the previous year, which affected the total value of boat exports. Customs statistics show a drop of almost EUR 28 million in the value of sailing boat exports from the level of 2017.

“Sailing boats only represented one per cent of the aggregate number of boats exported. But in the combined value of exports, their share is almost one-third,” Pajusalo explains. 

Sweden and Norway remained the most important export destinations for Finnish boats, although the previous year’s deliveries of luxury yachts had temporarily elevated Malta as number one. In 2018, the luxury yacht deliveries were more evenly divided over different destination markets, such as the USA, Germany, the Marshall Islands, France and Malta.

Sweden, Norway and USA the most important export destinations

According to customs statistics, the strongest export countries were Sweden and Norway. The largest growth by far was experienced in the U.S. market, where the value of Finnish boat exports increased by more than EUR 20 million. The other growth markets were Germany, France and Russia. 

The value of exports to Sweden was EUR 59.4 million. Sweden was by far the largest export market in terms of numbers of boats sold as well, as a total of 4,539 boats were exported to Sweden from Finland. In comparison, just over 100 boats were imported from Sweden to Finland, for a total value of about EUR 2 million.

Exports to Norway have been hampered by the relative weakness of the Norwegian krone, a situation that has prevailed for years already, and the strong dependence of the country’s economy on the offshore industry. 2018 finally brought a turn for the better, and the value of exports to Norway did increase in January-November by about 5 per cent.

“The sales to Russia have continued to increase steadily. Consumer purchase power has developed favourably, but the rouble’s weakness has negated this to some extent, effectively slowing down the growth of exports to Russia. Moreover, the high degree of uncertainty lingering over the political situation makes the business environment unconducive to such sales success as in the best years,” Pajusalo says.

The Finnish boating industry is an export industry of predominantly small and mid-sized enterprises (SMEs), providing employment particularly in small localities. The industry relies strongly on operating environments that are as steady as possible, both in the domestic context and in export markets. Currently the main risks are political, including growth of protectionism and trade wars. In a rapidly evolving consumer business, the investments made in production and product development are very extensive, and successful promotion of exports requires perseverance and longevity. Therefore, the boating industry, first and foremost, calls for predictability in political decision-making. 

Change in school summer holiday timing would support the boating industry and travel business

As one measure to support the boating industry and the entire domestic travel industry, Finnish boating industry companies are saying that the schools' summer holiday period should be shifted back towards August by at least two weeks. Changing the holiday timing this way would boost domestic travel, given the typically uncertain weather conditions of Finland in the month of June and the inclination of holiday-making Finns to head abroad then.

“We have seen it this past summer, too, how the short duration of the travel season in Finland puts business owners at guest marinas in a very challenging position; at present, the travel season is just way too short. It is no wonder that the Finnboat members are concerned about it: in a survey among our members, as many as 91% were in favour of shifting back the summer holidays,” Jarkko Pajusalo says. 

A report commissioned in spring 2018 by the Ministry of Economic Affairs and Employment of Finland indicates that shifting back the summer holidays by just two weeks would serve to create 1,300 more man-years in the travel industry and improve the services available for travellers, including boaters, particularly in August. The travel industry reckons that the positive effects would be even more substantial, were the holiday period shifted back to begin only at Midsummer and terminate at the end of August. 

“We must be able to combine forces in developing the services available in the archipelago and on lakes and marketing our waterways, so as to increase the vitality of the Finnish archipelago with the help of boating travellers,” Pajusalo states.

Domestic boat sales on the increase

Boat sales in Finland experienced strong growth, boosted by economic growth, stern consumer confidence and warm and sunny summer weather. Measured in euros, the whole industry’s domestic sales of products and services grew by 10 per cent while the total net sales increased by 4 per cent.

In motor boat registrations, the numbers of small boat registrations (max. 5.5 metres in length) fell by 7%, resulting in a decrease in total registrations by -1.7%. In contrast, the number of wholesale deliveries of motor boats and small boats of the same size increased by 23%, and thanks to the warm summer, there was very good activity in the sales of small leisure boats, indicating a shift towards such small boat types that do not require registration. The sales of large motor boats (9 metres or more in length) also continued to grow.

In outboard engine sales, two trends could be seen as well: more large outboards were sold, while fewer small outboards exchanged hands. In terms of numbers of outboards sold, the deliveries to Finland in 2018 were down by 5 per cent from the year before. In light of the statistics on wholesale deliveries, the sales of electric outboard motors increased by more than 70%. Rapid development in electric motor technology has facilitated the emergence of electrically powered propulsion as an alternative particularly for rowing boats and small motor boats.

The sales of sailing boats continued to be very modest. There were only 15 initial registrations of yachts or motor sailers over 20 feet long. 

“Compared with the peak years, the sales of new sailing boats continue to be at a very low level, but market expectations are now more positive than in a long time. Sailing boats have evolved a great deal over the past years, and a lot of the sailing boats in Finland tend to be rather old. The used sailing boat market is very lively, so there is pent-up demand for new sailing boats as well,” Pajusalo says. 

On the whole, Pajusalo considers the prospects for the current year to remain promising. 

“The Finnish economy has continued to grow, although this growth is likely to slow down, and consumer confidence has also weakened from the previous year's peak level. The boat business is post-cyclical in nature, consumer confidence remains high and the boating industry export prospects continue to be positive. The biggest risks are related to politics, and therefore the boating industry calls for avoidance of trade wars.” 

Domestic boat registrations; Small boat sales

• The number of boat registrations increased by 7.5% in 2018, totalling 3,844 registered boats.
• Altogether 2,715 motor boats, 1,005 personal watercraft and 52 RIBs/inflatables were registered.
• In terms of numbers of registrations, the largest growth took place in PWCs, whose registrations exceeded the 1,000-unit mark for the first time in Finland (+313/45%).
• Only 15 sailing boats and motor sailers over 20 feet long were sold in Finland, which is a very small number compared to the busiest years. 
• Wholesale of small boats (max. 5.5 metres in length) increased from the previous year’s level and totalled 2,007 boats (+23%).

Value of boat exports

• In 2018, the euro-denominated value of invoicing in boat exports, as reported by the companies, amounted to EUR 219 million, a decrease of -5 per cent from 2017. Of the total production of the Finnish boat manufacturing, the share of exports was 76 per cent in 2018.
• The currently available customs statistics only cover the period January-November 2018, which means that the total number of boats that actually crossed the border during the year is yet unknown.In January-November, the value of exports was EUR 210.4 million (-11.8%). 
• Sweden regained the position of the top export destination for Finnish boats. The ten largest countries accounted for 91% of Finland's boat exports. Top 10 export countries were Sweden, Norway, USA, Germany, France, Russia, the Marshall Islands, UK and Malta.
• The other countries or territories surpassing the EUR 1 million mark in Finnish boat exports during the review period were the British Virgin Islands, Estonia, Turkey, Greece, Greenland, Denmark, New Zealand, Algeria and the Netherlands. 
• A total of 9,046 boats were exported to 40 different countries in January-November 2018. In terms of numbers of boats exported in 2018, sailing boats accounted for a share of 1 per cent, but in terms of export value, their share was 28 per cent.

Trade statistics on the top 10 export countries:

Country	No. of boats	EUR million	Change
Sweden	4539	59,4	-9,6 %
Norway	3089	51,3	+5,4 %
USA	17	26,7	+509,7 %
Germany	248	15,4	+105,4 %
France	94	10,8	+142,6 %
Russia	481	7,0	+59,7 %
Marshall islands	1	6,8
UK	119	5,6	-27,6 %
Switzerland	87	3,8	+22 %
Malta	1	3,7	-94 %

Boat imports 

• The customs statistics on boat imports are likewise from January-November. During that period, the value of boat imports amounted to EUR 53.3 million (+4.8%).

• The statistics exclude all boats that cost less than 840 euros.

• The imports mainly consisted of personal watercraft from Mexico and the USA and also to some extent boats particularly from the UK, Poland, the USA and Sweden. Most of the PWCs imported to Finland are sold further to other parts of Europe.

• The five largest import countries accounted for 92% of Finland’s total boat imports.

Trade statistics on the top five import countries in January-November:

Country	No of boats	EUR million	Change
Mexico	3697	27,5	+3  %
UK	290	9,1	+ 829 %
Poland	181	6,6	-12,1 %
USA	918	3,4	+36,7 %
Sweden	106	2,2	-54,1 %

Wholesale deliveries of outboard engines  

• Altogether 25,561 outboard engines (+13%) were delivered to retail sales through Finn-ish importers.

• Of these outboard engines, 10,398 (-5%) were delivered to Finland and 15,163 (+31%) were re-exported.

• Finnish importers export outboard engines to other countries such as Russia and the Baltic states. Of all outboard engines sold in Finland and its neighbouring countries, some 79 per cent have power ratings of less than 60 hp, which reflects the fact that the demand for high-power outboard engines is notably lower in Finland than in the biggest boating industry markets. However, the number of small outboard engines is on the de-crease in Finland as well. In contrast, sales of electric outboard motors are experiencing strong growth.

• A total of 1,358 outboard engines rated at over 100 hp were delivered to Finland, repre-senting a growth of 7 per cent from the year before.

Net sales of companies

The net sales of Finnboat’s member companies in 2018, EUR million (VAT 0%, calculated based on production and import prices):  

	Finland, EUR million	Exports, EUR million
Boats	108,3 (+23 %)	218,8 (-5 %)
Engines	58,3 (+13 %)	17,9 (+4 %)
Accessories	71,7 (-5 %)	29,4 (+24 %)
Services etc.	37,2 (+7 %)	0,3 (-45 %)
Total	275 (+10 %)	266 (-2 %)

Entire industry, total EUR 542 million (+4%)

Boating industry barometer; Industry outlook for 2019 

Finnboat has once again compiled estimates from its members on their net sales and personnel for 2019. The employment situation is expected to continue improving slightly, and more than half of the companies expect their net sales to grow. However, compared to the estimates made a year ago, a larger share of companies now expects their net sales to remain at the same level.

Personnel in 2019 

• 24 % of companies expect to have more staff (24 % in the previous year)
• 4 % of companies expect to have fewer staff (4 %)
• 72 % of companies expect their number of staff to remain unchanged (72 %).
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Net sales in 2019

• 55 % of companies expect their net sales to grow (61% in the previous year)

• 7 % of companies expect their net sales to decrease (7%)

• 38 % of companies expect their net sales to remain at the same level (32%).

Of all of the 124 companies that responded, 11% had temporary layoffs in 2018 (9 % in the previous year).