Everything for Boats is so Expensive

Originally published elsewhere 7/11/08

Boaters almost universally complain about how expensive boat parts and accessories are compared to the other stuff they buy in their lives. When they hear what something costs, the experienced shake their heads and bravely say, "its a boat." The increasing cost of fuel doesn't help. This resentment transfers over to boating merchants and craftsmen. I install an inverter system and people wonder if they have just paid me for a long weekend in Hawaii.  

The resentment of the dominant chandlery, West Marine, is palpable. This is especially true after West Marine bought out their only serious retail competition Boat US. Comparing in-store prices against what online merchants like Defender charge sometimes makes it seem like WM uses its dominant position to inflate prices and gouge us boaters. A local sales tax only exacerbates things.  So far internet merchants have mostly escaped paying sales tax. And you wonder why your state is going broke.

I am certainly not an apologist for West Marine, but I have a different perspective on the "high price" issue. Marine stuff costs a lot compared to complex consumer goods like cameras, phones and automobiles. The differences are several. The marine market is comparatively small worldwide. Production runs for parts may be in the dozens for big stuff to the thousands for little stuff. The economies of scale that really kick in when volumes are in the millions rarely trickle down to us boaters. We should be happy that the magic of packing performance onto semiconductor chips does make quite sophisticated electronics available to us.  

It's only that most electronic components are made in the millions, or at least in semiconductor fabs that can produce many variations of product at roughly the same cost. The total volumes are in the millions and we marine customers get to hitch a ride with some programmable general purpose chips to power our chartplotters and radars. Our applications could never support semiconductor factories that cost over a billion dollars each at the turn of the century when I left that business. All those WalMart televisions are subsidizing your fishfinder. Looking to cleats and windlasses and winches and wiring panels, we share no mass production capability with consumer society. If injection molded plastic worked for boat parts we might be in better shape, price wise. New boats cost so much because they are basically hand-built. The suppliers for General Motors and Toyota are not churning out boat parts. They would laugh at the modest quantities we use. No, local machine shops turn out rigging fittings. Our big names like Harken and Lewmar and Maxwell are pretty small as companies go.  

Our resentment is focused at the point of purchase, not at the manufacturer and not at our small market in general. We bitch at West Marine, to say nothing of what you think about guys like me. Consider one additional factor: both the cost and the value of a boat part vary mightily depending on where it is physically in the world. A cleat that costs 89 cents to manufacture at the factory in India is not available to you because that's what it's worth at the factory. Send the part to another offshore company that individually packages the part so it will look attractive on the retailer's shelf and it's worth $1.15. Now import it, make doubly sure it meets quality standards, and warehouse it by the skid box somewhere. Now it's worth $3.00. Ship it to a distributor, who ties up tremendous amounts of capital keeping things on the shelf so they can be shipped in standard packages, 25 say, to a retailer, and now it's worth $6.00. The distributor is only set up to deal with a relatively small number of retailers who always pay their bills promptly. Now the part is finally within your reach, at the retail level. You go to the store and it is hanging in a display. The store might sell a few per month, so they are carrying a substantial inventory. They pay interest on those inventory dollars. The rent on the store is pretty pricey because you want the part within easy driving distance of your boat. So now the part cost you $18.99. And you say, "Twenty dollars for this little plated casting that must cost less than a buck to manufacture. I'm being ripped off." No, the value of the part on the shelf at your local chandlery is way more than the value of exactly the same part at the factory in India. Want to go to India and pick up 5,000 cleats? You can have them at 89 cents too.  

To complete the picture add the cost of the catalog, the cost of giving you a new part when you walk in with a defective one, the cost of having someone able to stock-check all the stores in your area to see where a part might be that you need today because tomorrow you have to go back to your regular life. You can extend the list and do the math.  

At the very end of the distribution chain, I install a part from the stock in my truck on your boat. I do not bill you for the time it takes to go to West Marine and buy the part because I use a reasonable number of them and bought them ahead of time. I carry maybe $5,000 in parts in the truck, all of them small like switches and fuses. I would not be worth robbing because you can't fence all this varied stuff in one place. I pay for the part when I stock it. Sometimes I guess wrong on what to buy and the part does not sell for years, if ever. For example, I keep a complete stock of all the common navigation lamps so I have what you need when I come to your boat for something else and you say, "Oh, by the way, the stern light doesn't work." Multiply that by fuses and wire and lugs and terminal strips and switches and it adds up. So what is it worth, right there dockside?  

Sure, you could stand by and run to West Marine for the part as soon as I figure out I need it. Assuming they have it in stock, which is a poor bet if you need a half-dozen parts. Which is why I stock things; I cannot depend on any retailer to fill an order for parts 100%. And I need 100% of the parts to do the job. Right now, not tomorrow when the store can have it transferred in. You still going to run for parts for me? Is your time worth nothing? So here is where the part has it's highest value, right at your boat when you need it. How much more can I charge than West Marine? Not much, because I don't have the time to explain all this when you and I are at your boat. And the last thing I want to do is to fight with you over the price of a terminal block. So some of the cost of carrying the part is in what I charge you for the part. Some of it is in the hourly rate.  

At the end of the week I make enough to keep going, mostly. None of us skilled boat craftsmen are even remotely well off. Your local charter captains don't do that well either. And that is the way it is with boats. Get over it.