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US Industrial Outlook

Personal consumer durables

Personal consumer durables – Industry Overview

John M. Harris

Buoyed by a modest economic recovery, shipments of selected personal consumer durables are expected to increase about 3.7percent in 1993 in real terms, more than double the estimated 1.7 percent rise in 1992.

The personal consumer durables industries covered in this chapter are jewelry (SIC 3911 and 3961); musical instruments (SIC 393 1); motorcycles, bicycles, and parts (SIC 3751); boat building and repairing (SIC 3732); and sporting and athletic goods (SIC 3949).

Before reading this chapter, please see “How to Get the Most Out of this Book” on page 1. It will answer data collection procedures, factors affecting trade data, forecasting methodology, the use of constant dollars, the difference between industry and product data, sources and references, and the Standard Industrial Classification (SIC) system. For other topics related to the subject of this chapter, see chapters 6 (Wood Products), 9 (Textiles), 12 (Plastics and Rubber), 13 (Metals), 15 (Electronic Components and Equipment), and 30 (Entertainment).

After rather lackluster growth in 1992, the personal consumer durables industries are expected to grow at a slightly faster rate in 1993, reflecting the modest economic recovery. Gross domestic production is forecast to grow 3 percent in 1993 compared with an estimated 2 percent in 1992. All of the industries covered here are expected to record increased sales in 1993, as the recovery quickens.

Because consumer spending for these products is discretionary, cyclical economic factors, such as consumer confidence levels and unemployment rates, substantially affect the personal consumer durables industries. Consumer confidence, as measured by the Conference Board, hit a low of 47.3 on the index in February 1992 (1985 = 100). Consumer confidence then increased from February to June, reaching 72.6. However, it unexpectedly plunged in mid-summer, dropping to 58 in August.

One reason for this plunge was the increase in the unemployment rate, which grew from 7.1 percent in January 1992 to 7.7 percent in July. Some well-publicized layoffs in the defense and computer industries contributed to consumer awareness of the unemployment problem.

Also hurting consumer confidence and spending was fluctuating real disposable personal income, which seesawed during the first six months of 1992, and rose less than an estimated 2 percent for all of 1992.

The reduced purchasing power of the dollar abroad stimulated U.S. exports of consumer goods while discouraging imports in 1992. In the future, the North American Free Trade Agreement (NAFTA) between the United States, Canada, and Mexico may affect the industries’ trade balance. If ratified and made effective in 1994, most US. and Mexican duties on each other’s consumer goods will be eliminated over 10 years. However, since most Mexican consumer goods now enter the United States duty-free under the Generalized System of Preferences, US. exports, now subject to duties, will receive more of a boost from reduced tariffs in the future.

Tariffs between the United States and Canada currently are being eliminated under the U.S.-Canada Free Trade Agreement, now in its fifth year. Some have already been eliminated and the rest will be eliminated in five more years. Duty elimination under this agreement and NAFTA will result in increased trade among the three countries. These agreements should also result in enhanced US. competitiveness with Europe and Asia.–John M. Harris, Office of Consumer Goods, (202) 482-1178, September 1992.

JEWELRY

An anemic economic recovery restrained jewelry sales during 1992. Total 1992 product shipments of precious metal jewelry and costume jewelry (SICS 3911 and 3961) was an estimated $5.2 billion, unchanged from 1991 after adjusting for inflation. Product shipment values for precious metal jewelry were $3.8 billion in 1992, up 1 percent over 1992 in real terms, and $1.4 billion for costume jewelry, down 3 percent.

Several major jewelry retail chains succumbed to financial troubles in 1992. Among these were Zale Corp. and Barry’s Jewelers Inc., the largest and third largest US. jewelry retailers, both of which filed petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Act. Several jewelry manufacturers, who were considered unsecured creditors, lost on amounts owed to them when these customers declared bankruptcy. Manufacturers were further affected by decreased demand when these retailers then closed several retail outlets to cut costs. Several smaller jewelry retailers also closed stores and reduced their inventories during the year due to lower sales levels.

Raw Material Prices

The worldwide economic slowdown resulted in only some isolated declines in gem prices during 1992. Diamond prices remained stable, as the De Beers’ Central Selling Organization restricted supplies, and prices of emeralds, rubies, and sapphires also held level. Demand for these latter gems was sufficient that dealers were not forced to lower prices during the year. However, some of the cheaper, more common stones, such as amethyst and topaz, dropped in price during the year.

Both gold and silver prices traded in narrow bands during 1992. Gold ranged from about $335 to $360 per ounce, while silver ranged from about $3.70 to $4.10 per ounce. These metals continued to drift in their long-term downward trading trends of recent years.

FTC Jewelry Industry Guides

In June 1992, the Federal Trade Commission (FTC) requested public comments on proposed revisions to its Guides for the Jewelry Industry. The Jewelers Vigilance Committee, a jewelry industry trade association, proposed the revisions in a petition to the Commission.

The Guides apply to jewelry industry products, including gemstones and their synthetic and imitation substitutes and articles fabricated from precious metals, precious metal alloys and their imitations. They also apply to individuals and firms engaged in the business of selling, identifying, grading, appraising, or promoting the purchase of jewelry industry products. And they apply to oral and written representations, advertising, and labeling and marking of industry products.

The proposed revisions would prohibit the use of certain misleading terms and require better disclosure of gemstone treatment. Standards also would be established or changed for various categories of metals, such as pewter and platinum.

The FTC staff will analyze the public comments received and make any appropriate changes before making recommendations to the Commission. The revised Guides are not expected to be issued until after mid-1993.

INTERNATIONAL COMPETITIVENESS

The US. jewelry industry continued to record an unfavorable trade balance in 1992. Imports of precious metal jewelry increased an estimated 8 percent to $2.7 billion, and exports increased about 35 percent to $585 million. Costume jewelry imports increased an estimated 16 percent to $665 million, and exports were up an estimated 5 percent to $133 million.

Italy continues to be the leading precious metal jewelry supplier to the United States, accounting for more than 40 percent of total imports in 1992. Italy’s strength is in stylish gold jewelry. Other major suppliers of precious metal jewelry are Thailand, Israel, and Hong Kong.

South Korea and Taiwan are the leading suppliers of costume jewelry, accounting for more than a combined 20 percent of total imports. Other important suppliers are Austria and China. Imports from China are growing rapidly, more than doubling during the past three years, reaching an estimated 13 percent of total US. imports in 1992.

None of the leading costume jewelry suppliers, and only Thailand and Israel among the leading precious metal jewelry suppliers, currently are eligible for duty-free tariff treatment under the Generalized System of Preferences (GSP). GSP is a program that allows duty-free treatment for certain products from most developing countries. Thailand, however, has lost its duty-free GSP status in some jewelry tariff categories in which it was deemed to be sufficiently competitive.

The leading export markets for US. precious metal jewelry in 1992 were Switzerland, Japan, and Thailand. Japan, Canada, and Mexico were the leading markets for costume jewelry. The sluggishness of many European economies was more than offset by the weak US. dollar in foreign exchange markets relative to European currencies, resulting in a sharp increase in US. exports of precious metal jewelry to many of those countries. However, exports of both categories of jewelry to Japan declined substantially in 1992, reflecting the declining Japanese economy.

ENVIRONMENTAL PROFILE

The jewelry industry, which uses many types of metals and chemicals, has been heavily affected by environmental regulations in recent years. Those manufacturers who do their own electroplating, as well as the 75 to 80 independent contract electroplaters in the industry, are closely regulated. They generally have been required to install wastewater treatment facilities in order to remove metals, such as copper, lead, and nickel, as well as chemicals, such as ammonia, from discharge water. Any resulting sludge must be taken to a toxic dump. These wastewater treatment requirements have added substantially to the cost of electroplating.

In the area of clean air regulation, several manufacturers have had to install air scrubbers to remove pollutants from exhaust air. In addition, chlorofluorocarbon-based cleaning agents, considered harmful to ozone in the atmosphere, are being phased out. Ventilation hoods for employee safety are now also required if certain hazardous materials are used.

Repetitive motion disorders, such as carpal tunnel syndrome, are another problem facing jewelry manufacturers. Carpal tunnel syndrome is tendon and nerve damage in the wrist caused by work requiring repetitive hand motions. Public awareness of such disorders now accounts for more than half of all reported occupational illnesses. They can be prevented by better worker training, job rotation, better tool selection, and the redesigning of work stations.

Outlook for 1993

Bolstered by an improving economy and greater real disposable income, consumer confidence is expected to rise in 1993, compared with the relatively low levels during much of 1992. This bodes well for the jewelry industry. The constant dollar value of domestic shipments of precious metal jewelry is expected to increase 4 percent in 1993, while costume jewelry shipments are expected to increase 2 percent.

Long-Term Prospects

Several factors indicate a favorable period for the jewelry industry over the next five years. Following the 1991-1992 downturn, there is substantial pent-up demand for deferrable consumer goods such as jewelry. In a recovery, disposable personal income should expand about 3 percent per year. In addition, many consumers have recently increased their disposable income after housing costs by refinancing their homes. During 1992, mortgage rates dipped to the lowest levels in two decades. Many consumers also reduced their overall debt in 1992 by deferring many major purchases; they maintained a savings rate of about 5 percent of disposable personal income. While population growth will continue at about 1 percent annually, the number of working women, who are major purchasers of jewelry, is expected to continue to increase at about 1.5 percent per year. Shipments of precious metal jewelry are expected to grow at an average annual rate of 4 percent in real terms through 1997. Costume jewelry shipments are expected to increase 3 percent annually during the same period.–John M. Harris, Office of Consumer Goods, (202) 482-1178, September 1992.

Additional References

(Call the Bureau of the Census at (301) 763-4100 for information about how to order Census documents.) Jewelry, Silverware, and Plated Ware, 1987 Census of Manufactures, MC87-I-39A. Bureau of the Census, U.S. Department of Commerce, Washington, DC 20233. Office Supplies, Costume Jewelry and Notions, 1987 Census of Manufactures, MC87-I-39C. Bureau of the Census, U.S. Department of Commerce, Washington, DC 20233. 1990 Annual Survey of Manufactures, Bureau of the Census, U.S. Department of Commerce, Washington, DC 20233. American Jewelry Manufacturer, and Jeweler’s Circular-Keystone, Chilton Company, Chilton Way, Radnor, PA 19089. Telephone: (215) 964-4000. Modern Jewelers, Vance Publishing Corporation, 400 Knightsbridge Parkway, Lincolnshire, IL 60060. Telephone: (913) 451-2200. National Jeweler Gralla Publications, 1515 Broadway, New York, NY 10036. Telephone: (212) 869-1300.

MUSICAL INSTRUMENTS

The value of product shipments of musical instruments (SIC 3931) reached $821 million in 1992, an increase of 1.5 percent in constant dollars over 1991. Increases in shipments of acoustic guitars, grand pianos, electronic pianos, and school band instruments accounted for most of the gain.

The popularity of acoustic guitar sounds continues to gain with the baby boomer generation, now entering the 35-to-54 age group, increasing demand for these products. Likewise, the traditional sounds of grand pianos appeal to many consumers. On the other hand, product improvements in electronic pianos, such as increased numbers of instrument sounds to accompany the piano, and the availability of preset rhythmic features, have resulted in increased consumer acceptance of these products. This comes at the expense of vertical acoustic piano shipments. A 1.1 percent increase in the number of children aged 5 to 17 contributed to a slight increase in shipments of school band and orchestral instruments.

INTERNATIONAL COMPETITIVENESS

Following two years of declining imports of musical instruments, imports in 1992 increased an estimated 14 percent to $676 million. Increased consumer demand for high-end electronic instruments, such as electronic pianos, synthesizers, and portable keyboards with more and improved features, accounted for much of the increase. Also in high demand were acoustic guitars and school band instruments.

Japan is by far the leading foreign supplier, accounting for about 47 percent of total imports in 1992. Other major suppliers are South Korea (16 percent), Taiwan (8 percent), Germany (7 percent), and Mexico (5 percent). Imports from Mexico have more than doubled since 1989 as more U.S. manufacturers have built plants there to take advantage of its proximity, low wages, and increasing trade ties with the United States.

Exports of musical instruments increased about 7 percent in 1992 to $330 million. The major foreign markets are Japan, Canada, the United Kingdom, Germany, and Mexico. These five countries accounted for approximately 55 percent of total exports. Exports to Germany, which were down about 12 percent during the first 5 months of 1992 as high interest rates and increased taxes slowed the German economy, ended the year off slightly. The low value of the U.S. dollar on foreign exchange markets helped exports to Germany during the remainder of the year.

Outlook for 1993

The value of musical instrument shipments is forecast to increase 3 percent in constant dollars in 1993. Most growth is expected to be in the same instruments which recorded the most growth in 1992–grand and electronic pianos, acoustic guitars, school band instruments, and high-end electronic instruments. Exports to Europe are likely to increase with improving economic conditions there.

Long-Term Prospects

The musical instrument industry is expected to register growth at a real compound annual rate of 2 percent during 1993-97. Improving consumer confidence, rising disposable income, and an annual increase in school age children of more than 1 percent per year will fuel domestic demand. Integration of the economies of the United States, Canada, and Mexico under NAFTA is expected to make many industries, including musical instruments, more productive. This will result in the U.S. industry becoming more competitive relative to those in Asia and Europe.–John M. Harris, Office of Consumer Goods, (202) 482-1178, September 1992.

Additional References

(Call the Bureau of the Census at (301) 763-4100 for information about how to order Census documents.) Musical Instruments and Parts, 1987 Census of Manufactures, MC87-I-39B. Bureau of the Census, U.S. Department of Commerce, Washington, DC 20233. 1990 Annual Survey of Manufactures, Bureau of the Census, U.S. Department of Commerce, Washington, DC 20233. The Music Trades, The Music Trades Corporation, 80 West St., P.O. Box 432, Englewood, NJ 07631. Telephone: (201) 871-1965. Music, Inc., Maher Publications, Inc., 180 West Park Ave., Elmhurst, IL 60126. Telephone: (708) 941-2030. American Music Conference Statistical Report, American Music Conference, 5140 Avenida Encinas, Carlsbad, CA 92008-4391. Telephone: (619) 431-9124.

BICYCLES

In 1992, current dollar product shipments of bicycles and parts (SIC 3751) reached an estimated $934 million, a 4 percent estimated rise in constant-dollar terms. The economy rebounded and the popularity of mountain bikes continued as apparent consumption grew an estimated 4 percent. In addition, imports grew an estimated 5 percent in 1992. Bicycling continues to be the third most popular sporting activity in the country, according to the National Sporting Goods Association, attracting 54 million participants in 1991. This growth can be traced to several positive factors in the industry.

The popularity of mountain bikes continues to fuel the sales of bicycles. The growth of the mountain bike sector has been a great benefit to certain domestic manufacturers that developed the product, and that still lead foreign manufacturers in product innovations and quality. The mountain bike’s popularity began in the mid- to late-1980’s and may be approaching its peak. This trend has led to growth in the bicycle market by, at least temporarily, cutting down the average number of years between purchase of new bicycles. The Bicycle Manufacturers Association of America (BMA) estimates that adult consumers traditionally purchase new bicycles every five years.

The economy’s rebound has also pushed up apparent consumption. Real disposable personal income grew 1.7 percent in the first six months of 1992 compared with the same period in 1991, and real personal consumption expenditures grew 6.8 percent over the same period. Consumer confidence, reaching a low in February 1992, gradually rose to 72.6 in June 1992. Retail sales at sporting goods and bicycle stores were 17 percent higher in the first half of 1992 compared with the first half of 1991.

INTERNATIONAL COMPETITIVENESS

The growth of exports slowed in 1992, increasing only an estimated 3 percent to $179 million. The popularity of U.S. manufactured bicycles remains high in foreign markets, but recessions and low growth rates in the industrialized economies temporarily slowed foreign sales. However, from 1987 to 1991, U.S. exports soared 91 percent annually. As a result of this export growth, the exports-to-shipments ratio has increased from 2.4 percent in 1987 to an estimated 19.2 percent in 1992.

In 1992, the Netherlands became the largest overseas market for bicycles, accounting for an estimated $43 million in U.S. exports. Bicycle usage in the Netherlands is quite high–an estimated 10 million bicycles for a national population of just 14 million people. In 1992, Japan was the second largest export market for bicycles, with U.S. exports reaching an estimated $25 million. The Japanese Government has tried to increase leisure time and create bicycle paths and parks with trails. Canada was the third largest export market, with U.S. exports reaching an estimated $21 million. U.S. exports to Canada have increased in each year since the U.S.-Canada Free Trade Agreement started phasing out bicycle tariffs over five years. Demand for U.S. bicycles has also increased in several developing countries, including Argentina, Hong Kong, and Venezuela. In 1992, U.S. exports to these markets increased an estimated 263 percent, 125 percent, and 114 percent, respectively.

In 1992, imported bicycles accounted for 51 percent of U.S. apparent consumption. Many of these bicycles entered with U.S. brand names. Imports of bicycles and parts totaled an estimated $781 million, up from $745 million in 1991. But foreign manufacturers have begun to produce higher-quality mountain bikes, enabling them to compete more successfully in the U.S. market, particularly in the mass merchandiser market. As a result, importers have maintained their U.S. market share in recent years, which had been falling prior to 1991. In 1987, the imports-to-apparent consumption ratio peaked, reaching 58 percent before falling to 50 percent in 1990. In 1991 and 1992, the ratio leveled at 51 percent.

Taiwan and Japan are the largest foreign suppliers of bicycles and parts, accounting for an estimated 62 percent and 14 percent, respectively, of total U.S. imports in 1992. U.S. imports from Taiwan grew an estimated 5 percent in 1992, while imports from Japan declined about 19 percent. Imports from China, the third largest foreign supplier, grew an estimated 47 percent. In 1991, China overtook Taiwan as the world’s largest exporter of bicycles. Chinese manufacturers have indicated that they plan to but more emphasis on selling bicycles to the U.S. market over the next several years.

Outlook for 1993

Constant-dollar product shipments of bicycles and parts are forecast to rise 4 percent this year. Exports will continue growing, at a rate of about 7 percent. This growth can be attributed to an improvement in economic growth rates for the industrialized nations in 1993. Imports of bicycles and parts will increase by an estimated 8 percent as foreign manufacturers continue to increase the quality of their mountain bikes. U.S. apparent consumption will increase an estimated 8 percent because of the continuing recovery of the economy.

Long-Term Prospects

Product shipments are expected to grow 2 percent annually in constant dollars during the next 5 years. The growth of bicycle shipments will be affected primarily by changing demographics, increased attention to the environment, and approval of the proposed NAFTA agreement.

The baby boom generation (ages 34-54) has always participated in a number of sports activities, including biking. This age group is reaching its highest level of disposable income. Consumers are likely to desire more high-priced and high-quality bicycles. This trend may help several smaller domestic manufacturers of mountain bikes and racing bikes.

In addition, many people between the ages of 35 and 44 have recently started having children, creating a “mini baby boom. ” These parents will likely be purchasing bicycles for their children during the next five years. Furthermore, bicycling is a favorite activity among family units. According to the National Sporting Goods Association, a male parent is 4 percent more likely to participate in bicycling than the average male.

Consumers’ and legislators’ concerns about the environment will also lead to opportunities for increased participation in bicycling. Many legislators and interest groups have been working to transform abandoned railroad rights-of-way into bike paths and to reclaim poorly used lands into parks and more bike trails. Environmental concerns have also led to an increase in bicycle commuting, a pollution-free mode of transportation.

The proposed NAFTA will likely have significant effects on the U.S. bicycle industry when it becomes effective. In 1992, Mexico was the fourth largest foreign market for US. bicycle exports, totaling an estimated $18 million in sales. Lower Mexican tariffs on bicycles will give U.S. domestic manufacturers further opportunities to increase exports. However, the bicycle industry is very labor intensive. Some bicycle companies, both foreign and domestic, may start to move production to Mexico to take advantage of lower wages there, displacing both domestic production and imports from third countries. However, imports from Mexico currently account for less than 1 percent of total U.S. bicycle imports.–John A. Vanderwolf, Office of Consumer Goods, (202) 482-0348, September 1992.

Additional References

(Call the Bureau of the Census at (301) 763-4100 for information about how to order Census documents.) Ship and Boat Building, Railroad and Miscellaneous Transportation Equipment, SIC 3751, 1987 Census of Manufactures, Series MC87-I-37C, (quinquennial). Bureau of the Census, U.S. Department of Commerce, Washington, DC 20233. Telephone: (301) 763-7304. 1987 Census of Retail Trade, SIC 5941, Sporting Goods Stores and Bicycle Shops, Retail, Series RC87-A-52, (quinquennial). Bureau of the Census, U.S. Department of Commerce, Washington, DC 20233. Telephone: (301) 763-7304. Personal Consumption Expenditures, “Wheeled Goods”, Bureau of Economic Analysis, U.S. Department of Commerce, Washington, DC 20230. Telephone: (202) 523-0778. American Bicyclist and Motorcyclist, 80 Eighth Ave., New York, NY 10011. Telephone: (212) 206-7230. Bicycle Business Journal, 1904 Wenneca St., Fort Worth, TX 76102. Telephone: (817) 870-0341. Bicycling Magazine, 33 E. Minor St., Emmaus, PA 18049. Telephone: (215) 967-5171. The 1991 Bicycle Market in Review, Bicycle Manufacturers Association, 1055 Thomas Jefferson St. NW, Washington, DC 20007. Telephone: (202) 333-4052. The Sporting Goods Market in 1992, National Sporting Goods Association, Mt. Prospect, IL 60056. Telephone: (708) 439-4000. Sports Participation in 1991, National Sporting Goods Association, Mt. Prospect, IL 60056. Telephone: (708) 439-4000. Sports Trend, Shore Communications Inc., Suite 300, N Building, 180 Allen Rd. NE, Atlanta, GA 30328. Telephone: (404) 252-8831.

MOTORCYCLES

Product shipments of motorcycles and parts (SIC 3751) increased an estimated 6 percent in real terms in 1992, due to a 20 percent increase in exports and continued growth of the domestic market. However, export growth, after a 37 percent annual compound growth rate from 1987 to 1991, slowed in 1992. U.S. apparent consumption increased an estimated 7 percent in 1992. Contributing to the growth of apparent consumption was an estimated 13 percent increase in US. imports of motorcycles and parts in 1992.

For the first time since the mid-1980’s, apparent consumption rose for two consecutive years (1991-92). However, much of 1991’s apparent consumption increase was due to a replenishment of dealer inventories rather than an increase in retail sales. In 1992, the growth was due to increased sales as real personal consumption expenditures for motorcycles grew 26 percent in the first 6 months of 1992 compared with the same period in 1991. One contributing factor to that growth was the increased popularity of heavyweight motorcycles (motorcycles with engine capacities over 700cc). These motorcycles have higher price tags, higher dealer profit margins, and greater dollar sales growth. In 1992, new motorcycle registrations increased only 3 percent through the first 5 months of 1992 compared with the same period in 1991, while apparent consumption increased an estimated 7 percent. Heavyweight motorcycles, particularly those produced by the sole American-owned manufacturer, Harley-Davidson, have become a symbol of quality, desired by many middle and high income adults.

The popularity of heavyweight motorcycles has boosted domestic production. In the 1970’s, Honda and Kawasaki, two of the major Japanese producers, built state-of-the-art factories in the United States. These two companies now produce most of their heavyweights for the U.S. market in the United States, and, along with Harley-Davidson, account for an estimated 90 percent of the heavyweight market in dollars.

Another factor contributing to market growth has been improved consumer perceptions of safety in motorcycle products. Many consumers now see motorcycling more as a challenging and enjoyable form of recreation, rather than one involving safety issues. The rate of motorcycle accidents has declined to 235 accidents per 10,000 registered motorcycles, down 6 percent from 1990. In addition, the Motorcyle Safety Foundation’s rider education programs have promoted the safe use of motorcycles.

Decreased dealer inventories of both new and used motorcycles have also boosted new motorcycle shipments. Since the mid-1980’s, the industry has experienced declines in motorcycle registrations and sales, leaving dealers and manufacturers with excess inventories, particularly of smaller imported motorcycles. These excess inventories tended to depress imports and apparent consumption. The disappearance of excess inventories led to an estimated 21 percent annual increase in imports the last 2 years (1991-92).

A minor factor restraining short-term growth has been the inability of Harley-Davidson to increase production sufficiently to meet market demand. In some areas of the country, there have been long waiting lists to purchase Harley-Davidson brand motorcycles. Although the company is committed to increasing production, it has stated that such increases will occur gradually so as not to risk reductions in product quality. In 1992, Harley-Davidson completed a switchover of all painting operations to a new paint center that it expects will increase quality and production capacity.

INTERNATIONAL COMPETITIVENESS

US. exports continue to be a major factor affecting domestic production. Although exports are growing at a slower rate than in previous years, the exports-to-shipments ratio still is climbing; in 1992, exports accounted for an estimated 56 percent of domestic shipments. US. exports have risen an estimated 34 percent annually from 1987 to 1992, reaching $528 million in 1992. The same trend toward larger motorcycles has been prevalent in many other foreign motorcycle markets. Many small entrepreneurs have reported selling surplus used units overseas in order to meet foreign demand. Most of these entrepreneurs are selling refurbished Harley-Davidsons. However, others are selling refurbished motorcycles regardless of where they are manufactured.

Germany was the largest export market for U.S. motorcycles, with shipments valued at an estimated $105 million in 1992, up 11 percent from 1991. Other major export markets were the Netherlands ($63 million), Japan ($57 million), and Canada ($47 million) in 1992. The fifth largest market was Argentina, which grew more than 1,000 percent in 1991 to $35 million, and another 790 percent in the first 5 months of 1992 compared with the same period in 1991.

In 1992, U.S. imports of motorcycles increased about 13 percent to $658 million. Japan is the largest foreign supplier of motorcycles, accounting for 83 percent of total US. imports. However, Japan’s share of US. imports has declined from 89 percent in 1989. Germany and Taiwan have gained the most import share, growing 42 percent and 23 percent, respectively; imports from Germany and Taiwan accounted for an estimated 5 percent and 4 percent, respectively, of total U S. imports. Japan’s drop in market share may be due partly to increased production in US. plants owned by the Japanese that has supplanted imports from Japan. The growth of imports from Germany is due to increased US. motorcycle sales by BMW. The growth of imports from Taiwan is due to increased demand in the United States for certain aftermarket motorcycle parts and mopeds.

Outlook for 1993

Product shipments of motorcycles and parts in real terms are forecast to increase 10 percent in 1993. Exports will continue to grow at the same rate as last year, an estimated 20 percent. U.S. exports of motorcycles should benefit from the economic recovery of the industrialized countries, the major markets for motorcycles. Imports are also forecast to rise (9 percent). Apparent consumption will grow an estimated 8 percent, as Harley-Davidson increases production and the U.S. economy recovers.

Long-Term Prospects

Real domestic product shipments are expected to grow at an annual rate of 3 percent between 1992 and 1997, as the free fall of motorcycle sales and registrations that occurred in the mid- to late-1980’s appears to have bottomed out. In addition, increased personal income and continued growth in foreign markets will also help product shipments to grow over the next five years. However, the current perception of motorcycle safety must remain favorable for sales to increase further.

Foreign demand for motorcycles is expected to remain strong. The industrialized countries should continue to be the largest foreign markets for US. motorcycles. According to estimates from Project Link of the United Nations, the developed market economies are expected to increase between 2.9 percent and 3.2 percent annually from 1992 to 1996 as they rebound from recessions or slow growth rates in 1991 and 1992. In addition, NAFTA may provide US. manufacturers with additional opportunities. If approved by Congress, Mexican tariffs, currently at 20 percent, will be phased out in 5 years.

As a way to increase ridership, motorcycle manufacturers and dealers are trying to offer more products that appeal to the 35-to-54 age group, a group that historically has the highest levels of disposable income. They can now afford more luxury items, such as heavyweight motorcycles. Manufacturers and dealers have had success selling these items, which have many luxury accessories, to this generation of consumers during the last few years.

Manufacturers hope to improve safety features and appeal to consumer demand for stylishness and the quality of motorcycles. The industry plans to expand education programs regarding safety, and they are working on designing motorcycles which are more stable and safer. With safer products, manufacturers hope to expand their consumer base.–John A. Vanderwolf, Office of Consumer Goods, (202) 482-0348, September 1992.

Additional References

(Call the Bureau of the Census at 301-763-4100 for information about how to order Census documents.) Ship and Boat Building, Railroad and Miscellaneous Transportation Equipment, SIC 3751, 1987 Census of Manufactures, Series MC87-I-37C, (quinquennial). Bureau of the Census, US. Department of Commerce, Washington, DC 20233. Telephone: (301) 763-7304. 1987 Census of Retail Trade, SIC 5571, Motorcycle Dealers, Retail, Series RC87-A-52, (quinquennial). Bureau of the Census, US. Department of Commerce, Washington, DC 20233. Telephone: (301) 763-7304. Personal Consumption Expenditures, Other Durables–Wheel Goods, (monthly). Bureau of Economic Analysis, US. Department of Commerce, Washington, DC 20230. Telephone: (202) 523-0819. The 1992 Motorcycle Statistical Annual, Motorcycle Industry Council, 2 Jenner St., Suite 150, Irvine, CA 92718. Telephone: (714) 727-4211. Dealernews, Edgell Communications, Inc., P.O. Box 19531, Irvine, CA 92714. Telephone: (800) 346-0085. Motorcycle Product News, P.O. Box 2338, 6633 Odessa Ave., Van Nuys, CA 91406. Telephone: (818) 997-0644.

BOAT BUILDING AND REPAIRING

In 1992, industry shipments rose for the first time since 1988, reaching an estimated $4.8 billion in current dollars. Both constant dollar product and industry shipments for the boat building industry (SIC 3732) were virtually unchanged. Offsetting the beginning of a recovery for domestic shipments was a 13 percent decline in exports. However, apparent consumption increased an estimated 6 percent in 1992, following an estimated 12 percent annual decline from 1988 to 1991. Imports increased an estimated 22 percent in 1992, reaching $253 million.

Dealer inventories were at an all-time low in the beginning of 1992. Much of the increase in apparent consumption can be attributed to dealers rebuilding inventories for 1992 and 1993. According to the National Marine Manufacturers Association (NMMA), dealer confidence, especially among those dealers selling small and mid-size boats, increased in 1992. Boating dealers believed that the worst part of the boating recession was over and that 1992 and 1993 sales would be stronger than 1991 sales. However, while manufacturers’ and importers’ shipments to dealers increased to fill depleted inventories, retail demand did not respond. Real personal consumption expenditures for boats fell 2 percent in the first 6 months of 1992 compared with the same period in 1991. Furthermore, in 1992, sales of large boats continued to decline, heavily influenced by the luxury tax on pleasure boats selling for $100,000 or more.

From 1989 to 1991, the industry experienced declining domestic demand for pleasure boats brought on three principal factors: consumers’ resistance to take on additional debt, the decline in the overall economy in 1991, and the Federal luxury tax on pleasure boats.

Consumers have been reluctant to take on additional debt after borrowing from future consumption during the 1980’s. During 1982-88, pleasure boat domestic product shipments experienced a boom, growing at a compound annual rate of 13 percent. From 1982 to 1988, the ratio of consumer installment debt to personal income rose from 12 percent to 16 percent. The ratio of consumer installment debt then fell to 14 percent of personal income in May 1992. However, the past accumulation of debt resulted in a 6 percent annual growth in consumer interest payments to businesses from 1988 through 1991.

When the overall economy weakened in 1991, demand for pleasure boats also weakened. In 1991, real GDP and real disposable personal income declined 1.2 percent and 0.2 percent, respectively, while real personal consumption expenditures on boats declined 11 percent. Because a pleasure boat is an expensive, discretionary purchase, consumers postponed buying these items until they were confident that the recession was over and their incomes were secure. From 1990 to 1991, the consumer confidence index as reported by the Conference Board fell from an annual average of 91.5 to 68.5.

Another negative factor affecting demand was the Federal luxury tax of 10 percent that falls on that portion of the retail price of a pleasure boat which exceeds $100,000. This surcharge has influenced many wealthy customers to cancel or delay purchases of large yachts. Several luxury boat builders went out of business; others survived by selling boats overseas. The National Marine Manufacturers Association estimates that in 1991, pleasure boats exceeding $100,000 in price accounted for 25 percent of the total pleasure boat market by dollar value, compared with 33 percent in 1990.

INTERNATIONAL COMPETITIVENESS

The U.S. pleasure boat industry continues to have a favorable balance of trade, estimated at $415 million in 1992. However, that trade surplus was smaller than its peak of $567 million in 1991. US. exports of pleasure boats fell an estimated $104 million, while U.S. imports of pleasure boats grew an estimated $46 million.

Exports declined as a result of recessions and slower growth rates in most of the major foreign markets for pleasure boats. However, U.S. manufacturers have remained committed to the export market and appear to have maintained their share of a shrinking world boat market. The exports-to-shipment ratio remained high in 1992 at 14 percent after peaking in 1991 at 17 percent.

Canada was the largest foreign market in 1992. Exports to Canada grew an estimated 22 percent, one of two top 10 foreign markets to experience positive export growth in 1992. US. manufacturers continue to benefit from opportunities generated by the U.S.-Canada Free Trade Agreement. In addition, several Canadian manufacturers went out of business during the pleasure boat recession from 1989 to 1991, opening the door for U.S. manufacturers. Many of the same circumstances associated with the U.S. boat market prevailed in the Canadian boat market, including low consumer confidence and a weak economy. Also, echoing conditions in the U.S. market, Canadian boat dealers similarly report that the boat recession bottomed out there in 1992.

US. exports to Japan in 1992 continued the decline which began the previous year, falling an estimated 41 percent to $71 million. Japan remains the second largest US. export market. The Japanese pleasure boat market experienced rapid expansion in 1989 and 1990, growing 74 percent and 49 percent, respectively, according to a study prepared for the United States and Foreign Commercial Service in Tokyo. Consumer apprehension regarding the future growth of the overall economy appears to have stopped the growth of the Japanese boating market, a major factor contributing to the recession of the U.S. boat industry. Japan’s real GDP was forecast to grow only 2 percent in 1992 compared with 5 percent in 1989 and 1991.

Spain was the only other top 10 foreign market to report an increase in US. exports in 1992–a total of $64 million, up an estimated 54 percent. This increase occurred in spite of Spain’s sudden enforcement of safety regulations from May to July of 1992. Following several discussions between US. Government and industry officials and Spanish authorities, an agreement was reached releasing boats which had been denied entry by Spanish customs authorities. Procedures were also established for certification of future US. exports of pleasure boats to Spain.

The growth of U.S. pleasure boat imports was due to dealers rebuilding inventories of small and medium size craft, the one sector that had greater domestic shipments. In 1992, Canada was the largest foreign supplier of pleasure boats, exporting an estimated $150 million to the United States, up 84 percent. Both Canadian-owned firms and U.S.-owned firms with Canadian production facilities shared in the trade expansion.

Outlook for 1993

U.S. boat manufacturers are optimistic about 1993, as product and industry shipments are expected to increase for the first time since 1988 in real terms, an estimated 3 percent. This increase will be fueled by the expected recovery of the overall economy, which should boost consumer confidence, personal income, and personal consumption expenditures. Real personal disposable income and personal consumption expenditures are forecast to increase 1.7 percent and 2.6 percent, respectively, in 1993. The growth rate of imports should remain high, an estimated 16 percent, with total imports reaching $294 million. Apparent consumption will grow an estimated 7 percent in 1993. Meanwhile, US. exports of pleasure boats will increase an estimated 5 percent in 1993. The economies of the major foreign boat markets such as Canada, Japan, and the European Community are expected to grow about 3 to 3.4 percent, which should boost boat demand, especially for U.S.-made pleasure boats.

It is expected that consumers will remain somewhat hesitant about the future of the economy during the recovery, retarding a rebound in boat sales. Through at least mid-1992, the consumer expectations index did not increase relative to 1991, when the economy was in recession.

Growth of pleasure boat industry shipments also is affected by fluctuations in interest rates. In the past, record-level shipments have occurred during years when interest rates dropped. In 1987, for example, real personal consumption expenditures peaked at $9.6 billion when the prime rate dropped to its lowest point in the 1980’s, 8.2 percent. Interest rates have dropped in recent years and are forecast to remain relatively low compared with rates in the mid-1980’s. Long-term rates should decline and short-term rates increase slightly in 1993, a condition which will help the growth of boat sales.

Long-Term Prospects

The pleasure boat industry should experience 3.5 percent annual real growth over the next 5 years, based on favorable demographics that will boost domestic demand, and continued strong foreign demand. The fastest growing age groups will be those 35-to-44 and 45-to-54. These age groups tend to choose more relaxing leisure activities such as boating. To appeal to consumers with higher levels of disposable income, pleasure boat manufacturers are likely to offer slightly larger and more comfortable boats and yachts. These larger boats should lead to a higher dollar volume of sales and potentially give manufacturers higher profits.

Foreign markets should continue to provide US. manufacturers with opportunities to increase pleasure boat exports over the next five years. Although the Japanese market declined in 1991-92, the Ministry of Transportation remains committed to the Marine ’99 plan that calls for substantially increasing the number of marinas and boating facilities in Japan. U.S. manufacturers may also benefit from a united European Community (EC), because the EC plans to adopt international safety standards that are being adopted in the United States. In addition, NAFTA, if approved by Congress, could provide US. manufacturers additional export opportunities. Mexican tariffs for pleasure boats, which are currently at 20 percent, would be scheduled for immediate elimination. Furthermore, the Mexican Government plans to develop the coastline to promote tourism, including the expansion of marinas and other boating facilities.–John A. Vanderwolf, Office of Consumer Goods, (202) 482-0348, September 1992.

Additional References

(Call the Bureau of the Census at 301-763-4100 for information about how to order Census documents.) Ship and Boat Building, Railroad and Miscellaneous Transportation Equipment, SIC 3732, 1987 Census of Manufactures, Series MC87-I-37C, (quinquennial). Bureau of the Census, US. Department of Commerce, Washington, D-C 20233. Telephone: (301) 763-7304. 1987 Census of Retail Trade, SIC 5551, Boat Dealers, Retail, Series RC87-A-52, (quinquennial). Bureau of the Census, US. Department of Commerce, Washington, DC 20233. Telephone: (301) 763-7304. Boat and Motor Dealer 3949 Oakton, Skokie, IL 60076. Telephone: (312) 982-1810. Boating, Diamandis Communications Inc., 1633 Broadway, New York, NY 10019. Telephone: (800) 525-0643. Boating Industry, 850 Third Ave., New York, NY 10022. Telephone: (212) 715-2600. Boating 1991, A Statistical Report on America’s Top Family Sport. National Marine Manufacturers Association, 401 N. Michigan Ave., Chicago, IL 6061 1. Telephone: (312) 836-4747. 1991 Export/Import Report on Recreational Boating, National Marine Manufacturers Association, 101 N. Michigan Ave., Chicago, IL 60611. Telephone: (312) 836-4747. Marine Industry, P.O. Box 2087-CVS, Thousand Oaks, CA 91360. Telephone: (805) 496-1979. Soundings Trade-Only, Pratt St., Essex, CT 06426. Telephone: (203) 767-3200.

SPORTING AND ATHLETIC GOODS

The sporting and athletic equipment industry (SIC 3949) produces equipment for golf, fishing, tennis, physical fitness, gymnastics, archery, bowling, billiards, winter sports, and team sports. This industry does not include camping equipment; athletic apparel and footwear; hunting equipment; or most leisure-related vehicles such as boats, bicycles, and motorcycles, covered earlier in this chapter, and snowmobiles.

In 1992, industry shipments totaled an estimated $7.6 billion in current dollars. Product shipments of sporting and athletic goods in constant dollars grew an estimated 4 percent in 1992. US. imports rose an estimated 24 percent. The growth of US. exports of sporting goods slowed from its double-digit pace, but still reached an estimated growth rate of 6 percent. US. apparent consumption jumped an estimated 11 percent. Despite an estimated 4 percent rise in constant dollar industry shipments, employment grew at a slower rate, 1.9 percent. Manufacturers delayed rehiring laid off workers as production increased, which translated into improved productivity.

Improvements in the overall economy, low inflation, and greater interest in many sports generated by the Winter and Summer Olympic Games drove up apparent consumption of sports equipment. With the economy’s slow turnaround, consumer confidence improved in 1992. The growth of personal income also led to an increase in personal consumption expenditures. Real personal consumption expenditures for sports equipment grew 6.9 percent on an annual basis in the second quarter of 1992, over 1991.

Low inflation in the sporting goods industry also helped fuel the demand for sports equipment. The industry’s producer price index rose only 1.9 percent during the first 7 months of 1992 compared with the same period in 1991, down from 3 percent and 2.4 percent increases in 1990 and 1991, respectively. Manufacturers appeared to be uncertain about the recovery and were cautious about raising prices. Retailers and consumers took advantage of these low prices as sales in sporting goods stores in the first half of 1992, compared with the comparable period in 1991, rose faster–a healthy 17 percent–than any other retail outlet category that is published by the Bureau of the Census.

Olympic excitement led to an increase in sales of such products as team sports equipment, skis, tennis, and exercise equipment. To a great extent, media coverage of such sports as ice skating occurs only once every four years during the Olympic Games. Retailers of hockey and figure skates report that they typically experience record growth of sales during Olympic years as consumers, stimulated by performances of Olympic athletes, purchase equipment to get themselves in shape.

INTERNATIONAL COMPETITIVENESS

U.S. imports expanded rapidly in 1992, an estimated 24 percent due to increased demand for sporting goods products in the United States. Total U.S. imports of sporting goods were estimated at $2.6 billion in 1992. As a result of this import growth, the sporting goods trade balance worsened. The trade deficit in this sector increased from $1 billion in 1991 to $1.4 billion in 1992.

The sources of U.S. sporting goods imports have begun undergoing several changes. Taiwan and South Korea supplied estimated totals of $872 million and $238 million, respectively, in sporting equipment, making them the largest and third largest foreign suppliers in 1992. However, in 1992, US. imports from Taiwan and South Korea increased only 15 percent and 5 percent, respectively. Several US. companies have relocated supply sources of labor-intensive sporting goods products. Higher labor costs, work stoppages, and the loss of the Generalized System of Preferences (GSP) benefits in Taiwan and South Korea have induced major U.S. sporting goods companies to begin acquiring products from other less-developed countries. U.S. companies have moved much of their production to China, Thailand, and Indonesia, which were the fastest growing foreign suppliers of sports equipment. Imports from these countries increased an estimated 90 percent, 82 percent, and 79 percent, respectively.

The US. embargo on products from Haiti had a major effect on trade in baseballs. Until 1992, U.S. manufacturers sent the cores and leather covers of baseballs and softballs to be stitched, stamped, and packaged in Haiti. The finished balls were then sent back into the United States. Haiti was typically a top 10 importer and exporter of sports equipment. However, US. imports from Haiti declined an estimated 81 percent while US. exports to Haiti fell 97 percent in 1992. U.S. manufacturers have shifted the final production process of baseballs to various other countries, including Costa Rica, China, and the Philippines.

With the dollar at a low value compared with other major currencies from 1987 to 1991, U.S. sporting goods exports increased at an annual rate of 17.5 percent. However, several major industrial economies experienced economic slowdowns, retarding the growth of US. sporting goods exports to an estimated 6 percent, or $1.2 billion in value, in 1992. US. sporting goods manufacturers continued to place more emphasis on exporting to counterbalance slower growth in the U.S. market following double digit domestic growth in the 1980’s. From 1986 to 1992, the exports-to-domestic shipments ratio grew from 13 percent to an estimated 18 percent.

In 1992, Japan was this country’s largest overseas market, accounting for an estimated $280 million worth of US. exports consisting largely of golf and exercising equipment. US. exports to Japan declined an estimated 13 percent as the slower growth of the Japanese economy affected sporting goods shipments, both foreign and domestic. The Japanese Government is trying to increase consumption in the Japanese economy, including the leisure sector of the economy. As a result, the government has taken steps to gradually reduce hours worked and increase leisure time, providing US. sporting goods producers with increased export opportunities.

Canada is the second largest U.S export market for sports equipment, increasing 21 percent in 1992 to an estimated $223 million. Meanwhile, U.S. imports from Canada grew an estimated 47 percent, as Canada became the fourth largest foreign supplier of sporting goods to the United States. The increase in trade between the two countries is a result of the U.S.-Canada Free Trade Agreement, which went into effect January 1, 1989. Lower tariffs gave manufacturers on both sides of the border better access to the other market. From 1989 to 1992, U.S. imports from and exports to Canada have grown at estimated compound annual growth rates of 32 percent and 42 percent, respectively.

Golf Equipment

In 1992, current-dollar domestic shipments of golf equipment, the largest product category within domestic sporting goods, totaled an estimated $1.6 billion, up 3 percent in constant dollars. Imports of golf equipment rose 17 percent to an estimated $357 million, while exports fell 10 percent to an estimated $390 million. With both imports and domestic production up, apparent consumption jumped an estimated 12 percent to $1.56 billion.

The popularity of golfing continues to increase. Participation in golfing grew 8 percent in 1991, becoming the 11th highest ranked sports activity, according to the National Sporting Goods Association (NSGA). The sport has traditionally been popular among the 45-to-54 age group, the fastest growing age group in the United States.

Because of its rapid growth in popularity, construction of new golf courses has not kept up with demand. The National Golf Foundation estimated that of 583 golf courses under construction at the start of 1992, 132 had been completed by the end of the first half of the year. These new courses are helping to ease a major restriction on the sales of golf equipment–overcrowded courses and long waiting periods to play.

Fishing Tackle and Equipment

In 1992, apparent consumption of fishing equipment was estimated at $833 million, up 17 percent from 1991. Current-dollar domestic product shipments were estimated at $576 million; they grew an estimated 5 percent in constant dollars. Imports totaled $333 million, up 34 percent, while exports increased only about 3 percent to $76 million. Imports, mostly from South Korea, Japan, and Taiwan, accounted for about 36 percent of apparent consumption. Fishing is the fifth most popular sports activity, attracting an estimated 47 million participants in 1991 according to the NSGA.

Exercise, Gymnastic, and Playground Equipment

The exercise and fitness sector of the sporting goods industry has been the fastest growing since the end of the 1980’s. Growth of apparent consumption of exercise, gymnastic and playground equipment was estimated at 8 percent in 1992. Exports jumped an amazing 60 percent to reach an estimated $198 million, while imports also increased dramatically, about 41 percent to $433 million. Product shipments for the sector reached $1.5 billion in current dollars; such shipments grew 3 percent in constant dollars. According to the NSGA, exercising with equipment was the seventh most popular activity in terms of participation. To increase awareness of new products, several manufacturers began advertising their exercise products on cable TV and local television stations. These advertisements usually are 30 minute information commercials showing how the product is used and its benefits.

Table 3: Sports Participation, 1991

(in millions of participants, except as noted)

Percent Change

Rank Sport Participants (1990-1991)

1. Exercise walking 69.6 -2.6

2. Swimming 66.2 -1.9

3. Bicycle riding 54.0 -2.3

4. Camping 47.1 1.9

5. Fishing 47.0 0.2

6. Bowling 40.4 0.6

7. Exercising with equipment 39.2 10.9

8. Billiards/pool 29.6 5.4

9. Basketball 26.2 -0.6

10. Aerobic exercising 25.9 11.5

11. Golf 24.7 7.7

12. Hiking 22.7 2.8

13. Volleyball 22.6 -2.6

14. Running/jogging 22.5 -5.6

15. Boating (motor) 22.4 -21.8

NOTE: Participation is measured as individuals, seven years of age or older, w

ho participated

more than once in an activity.

SOURCE: National Sporting Goods Association.

Other Sporting and Athletic Goods

This category includes all other sporting goods products including ski, water sports, and team sports equipment. Major segments that have experienced growing participation rates include in-line skating (up 100 percent), dart throwing (up 4 percent, snowboarding (up 8.4 percent), ice skating (up 22.3 percent), and archery (up 15.4 percent).

In-line skates continue to be the hottest sporting goods product. According to Fortune magazine, estimated retail sales of in-line skates totaled $150 million in 1990. Industry experts estimated that sales doubled in 1991 and 1992 and could reach $1 billion by 1995.

Outlook for 1993

Based on continued recovery of the economy from the recession of 1991, the sports equipment market is expected to improve. In 1993, U.S. apparent consumption of sports equipment is expected to grow to $8.9 billion, increasing 9 percent. Current-dollar product shipments are estimated to reach $7.3 billion, an increase of 5 percent in constant-dollar terms. The growth of imports should also continue, climbing an estimated 1 1 percent to more than $2.9 billion. Exports will continue to grow, at an estimated rate of 10 percent to reach a level of $1.3 billion.

The domestic market for sporting goods products should benefit from the continued growth of the US. economy. The above forecast for growth in apparent consumption is based on the assumption that the Gross Domestic Product will increase 3 percent while personal consumption expenditures for durable goods will rise 6 percent in 1993. U.S. exports will rise faster as a result of predicted recoveries in the economies of many industrialized countries.

Long-Term Prospects

Product shipments for sports equipment in constant dollars are expected to grow 3 percent annually over the next 5 years. The long-term outlook for the sporting goods industry is largely dependent on the continuation of the fitness boom that began in the 1970’s. In that decade, many individuals of the baby boom generation, then in the 24-to-44 age bracket, began participating in sports. The leading sports activities for the decade were baseball, football, running, and tennis. These sports were competitive and strenuous. In the 1980’s, this fitness boom generation continued to participate in sports, choosing less competitive sports, however, like aerobics and swimming. In the 1990’s, improving and maintaining one’s health and fitness has been a primary goal. The recent growth of sports activities such as exercise walking, golf, and bowling suggests a continued desire for fitness, but at a slower pace. Exercise walking was the single most popular sports activity in 1991. Among the most popular sports activities of individuals over 55 years old are exercise walking, swimming, golf, bowling, fishing, camping, and exercising with equipment. Products related to these activities should make up the fastest growing segments of the entire sporting goods industry in the 1990’s.

The baby boom generation is also reaching the age when it has its highest disposable income. Baby boomers, with higher levels of disposable income, have been buying more high quality sports equipment. In addition, higher incomes have allowed individuals to participate in multiple sports. As a result, several manufacturers have begun developing products that promote cross training. This trend should benefit domestic manufacturers who tend to produce the new sports innovations and high quality products for the U.S. domestic market.

Consumers in many industrialized countries have discovered the benefits of exercising, leading to changes in the work environment to increase leisure time for the enjoyment of sports. These trends will lead to strong growth in sports equipment sales. The Japanese sporting goods market is expected to increase an estimated 4.9 percent annually over the next 10 years, according to Japan’s Leisure Development Center. Other major sports equipment markets such as Canada, the United Kingdom, and Germany are all expected to grow between 3-15 percent over the next 5 years. U.S. sporting goods brand names are well respected for quality and service in those countries. The US. share of their import markets is expected to increase at an even faster rate than the growth of the overall sports equipment markets.

In addition, a key to growth will be U.S. manufacturers’ ability to develop new and innovative products. Most athletes want to improve their performances and are constantly looking for equipment that will give them the competitive edge. Other athletes look for new activities to motivate and challenge them. The goal for manufacturers will be to maintain athletes’ interest in sports by improving products in established sports and developing new sports products, such as in-line roller skates.–John A. Vanderwolf, Office of Consumer Goods, (202) 482-0348, September 1992.

Additional References

(Call the Bureau of the Census at (301) 763-4100 for information about how to order Census documents.) Sporting and Athletic Goods, SIC 3949, 1987 Census of Manufactures, Series MC87-I-39B, Bureau of Census, U.S. Department of Commerce, Washington, DC 20233. Telephone: (301) 763-7304 Personal Consumption Expenditures, Bureau of Economic Analysis, U.S. Department of Commerce, Washington, DC 20230. Telephone: (202) 523-0778. Sport Style, Fairchild Publications, 7 East 12th St., New York, NY 10003. Telephone: (212) 741-5971. Sporting Goods Business, Gralla Publications, 1515 Broadway, New York, NY 10036. Telephone: (212) 869-1300. Sporting Goods Dealer Sporting News Publishing Co., 1212 N. Lindbergh Blvd., St. Louis, MO 63132. Telephone: (314) 997-7111. Sporting Goods Industry, Financial Performance in 1990, Sporting Goods Manufacturers Association, North Palm Beach, FL 33408. Telephone: (407) 8424100. The Sporting Goods Market in 1992, National Sporting Goods Association, Mt. Prospect, IL 60056. Telephone: (708) 439-4000. Sports Participation in 1991, National Sporting Goods Association, Mt. Prospect, IL 60056. Telephone: (708) 439-4000. Sports Trend, Shore Communications Inc., Suite 300, N Building, 180 Allen Rd. NE, Atlanta, GA 30328. Telephone: (404) 252-8831.

[TABULAR DATA OMITTED]

COPYRIGHT 1993 U.S. Department of Commerce

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