ANALYSIS-U.S. boat, RV makers face another tough year

By James B. Kelleher

CHICAGO, Jan 17 (Reuters) - It's not unusual for there to be a chill in the air when recreational vehicle manufacturers and retailers convene each January here for the annual Chicago Boat, RV and Outdoors Show.

But as they meet this week, the frost is likely to be felt inside the normally comfortable convention center where the deteriorating U.S. economy has turned an already challenging retail environment into a nightmarish one that might last through the second half of 2009 for the boating industry.

Boat and RV-makers were already contending with consumer belt-tightening tied to the slump in the U.S. housing market whose ups and downs are highly correlated with boat, all-terrain vehicle and motorcycle sales.

"People are concerned about 2008," said Thom Dammrich, the president of the National Marine Manufacturers Association, which represents about 1,700 boat builders, engine manufacturers, and marine accessory manufacturers.

"I think most are projecting that the year would be flat to slightly down over 2007 ... I think most manufacturers would be very happy with an '08 that was flat."

But with a bevy of recent reports sparking fears of a recession, including Thursday's report showing housing starts at a 16-year low, many Wall Street analysts predict an even more pronounced pullback in spending on the industry's pricey toys -- one that could persist for boat makers in particular long after the housing market starts to stabilize.

"Consumer spending will be weaker in 2008 than in 2007," says Robert Simonson, an analyst at William Blair & Co. As a result, Simonson recently cut his earnings estimates for a host of leading industry players, including Harley-Davidson Inc (HOG.N: Quote, Profile, Research, Stock Buzz), the No. 1 maker of heavyweight motorcycles, and Winnebago Industries Inc (WGO.N: Quote, Profile, Research, Stock Buzz), the No. 1 maker of motor homes. Shares in both stocks were hovering around their 52-week lows on Thursday.