INSIDE THIS ISSUE SUMMER 2017
Turrning Point Turns 20 See the timeline, growth and Turning Point Propellers path to 20 years of success in business.
Fifth Circuit Court Decision Principal is not vicariously liable for alleged negligence of independent contractor.
Propeller Design & Race Frank & Jimmie’s partners with Marine Industry Cares Foundation for Summer Camps.
A PUBLICATION OF THE NATIONAL MARINE PROPELLER ASSOCIATION
Do Strong Economic and Marine Industry Statistics Equal Prosperity in Propeller Sector? Declining phase.
Dave DeWitt, of Mercury Propellers and NMPA president said, “The marine market continues its growth from 2016 into 2017 and the increasing use of boats makes the repair industry outlook strong for propellers.” He noted, “Extreme weather makes water levels vary throughout the country increasing the likelihood for scenarios such as propeller ground debris impacts. These
OUTBOARD BOAT SALES TRENDS
Unadjusted Core Wholesale Unit Retail Unit
Feb-17 = 190,211
200 150 100
R12M Units in Thousands
TRADITIONAL POWERBOAT SALES TRENDS
Unadjusted Core Wholesale Unit Retail Unit Feb-17 = 162,348
200 150 100 50
R12M Units in Thousands
ccording to the most recent National Marine Manufacturers Association (NMMA) Recreational Boating Statistical Abstract, boating in the U.S. in 2015 was a $121.5 billion industry comprised of 11,867, 049 registered boats which accounted for $35.9 billion in total expenditures on boats, engines, accessories and related costs. The propeller repair, sales and supplier/service world is a microcosm of the larger recreational marine industry with business for prop shops, manufacturers and the companies that service them generally following the strength and struggles of the industry and larger economy. In 2016, anecdotal reports from NMPA members on business performance indicated it was a good year, with some still expressing overall caution and a greater awareness of the need to improve their business development methods, customer service standards and the quality of the work they’re producing. Many noted that although business had improved and they saw that their customers were more willing to spend than in past years, they were also more careful with their spending and had become more sophisticated in their knowledge and expectations.
Source: NMMA, updated through 6-16; Info-Link, updated through 2-17
Source: NMMA, updated through 6-16; Info-Link, updated through 2-17
Through February, traditional powerboat retail unit sales were up 5.9% R12M YOY while wholesale shipments were up 3.6% through June R12M YOY.
Outboard boat retail unit sales increased 6.5% through February R12M YOY while wholesale shipments increased 3.8% through June R12M YOY.
Source: NMMA Recreational Boating Industry DATA DASHBOARD: Q1 2017
occurrences along with the general growth pattern should hopefully translate into increased growth in our businesses.” Powerboats made up 83 percent of the total number of registered boats in 2015 and have seen steadily growing numbers in both wholesale shipments and retail unit sales throughout 2016 and so far have recorded 3.6 percent and 5.9 percent increases in both areas respectively in 2017. Outboard engine sales have also recorded a 6 -7 percent increase in the first quarter of 2017. Both of these sets of data are positive indicators of strong business opportunities for the propeller industry segment. Measures such as the Consumer Confidence Index is also up in the first quarter of 2017 by 120 points and gas prices remain down at an average of $2.33 giving credibility to the positive outlook for the industry. But are these statistics and prospects proving true for the day-to-day propeller repair shops across the U.S., in Continued on Page 3
NMPA BOARD OF DIRECTORS DAVE DEWITT, PRESIDENT Mercury Marine - Fond Du Lac, Wisconsin Stew Foster - VICE PRESIDENT Prop Masters Inc. - Alberta, Canada Mike Jones, Secretary Coastal Propeller Service - Bridge City, Texas Paul Fox, Treasurer General Propeller Company - Bradenton, Florida Scott Baumann Baumann Marine - Houston, Texas Marcus Clements Power Tech! Propellers - Shreveport, Louisiana Jimmie Harrison Frank & Jimmie’s Propeller Shop - Ft. Lauderdale, Florida Rick Licare Rundquist Propeller Tools - Naples, Florida Gary J. Linden Linden Propeller Co. - Dubuque, Iowa Kevin Mitchell Michigan Wheel Marine - Grand Rapids, Michigan Darren Prouty, Precision Propeller Co. - Spokane, Washington pHIL STEPHANUIK Turning Point Propeller - Jacksonville, Florida NATIONAL MARINE PROPELLER ASSOCIATION 1043 SE 17th St., Ste. 201 Fort Lauderdale, FL 33316 p: 1 (954) 880 3588 f: 1 (954) 239 2600 e: firstname.lastname@example.org w: nmpa.net
NMPA’s MISSION: To foster our member’s success by providing training and support in product and technical knowledge, and to promote ethical business conduct between our members and the boating community. To sustain our vision and mission by seeking renewal via education, application of new technologies, and best business practices through association with one another. To provide a nurturing and growth oriented association which encourages our members to be highly productive and to grow personally and professionally.
2 | THE LEADING EDGE
President’s letter Summer 2017 is here in North America! With it comes our businesses busiest time of the year. The busy season is welcome but can be overwhelming. I like most of our members are running to satisfy our various customers. Marine activity is up all over the country and even the world. This makes our organization even more important to you our members. The National Marine Propeller Association give you and your company access to fellow propeller Dave dewitt, president repair shop. You can ask question and provide mutual support for one another. Additionally, you have familiarity with all types of propeller and equipment manufacturers. These contacts are the key to making your business as profitable as you can. After our busy season, it is time to plan for the future. Attending the NMPA Annual Convention is a valuable and worthwhile benefit of membership in this association to help accomplish this goal. I urge you to save the dates November 9 - 11, 2017 and plan to attend this year. Earlier this year, you received notice of changes in the NMPA Dues rates and renewal year. I can tell you that the Board of Directors does not take a dues increase lightly and for many years have held off of making any changes to the membership dues structure, focusing on reorganizing and improving membership value. Our revenue comes from two main sources; dues and the convention. Our expenses are primarily hosting the convention and management costs. We have maintained a very strict budget that limits our ability to add benefits and services, and while we will continue to have a strict budget, we hear the call to offer more educational opportunities and better promote and highlight the value of certification to the members and to the general public. On behalf of the Board I thank you for your continued support of NMPA and look forward to 2017 continuing the great start. Sincerely,
CONTINUED FROM PAGE 1 neighboring Canada, or in other parts of the world where NMPA members provide their services? “The economic outlook here in Alberta (oil country) is bleak. We have been in a recession here for the last two years and unemployment is rampant. I’m finding that our sales are down approximately 40 percent from two years ago and repairs are down at least 30 percent. That being said however, we are seeing signs of improvement,” said Stew Foster, owner of Prop Masters in Alberta, Canada and NMPA vice president. Foster continued, “Another negative that is affecting sales is the CDN to USD exchange rate. We are currently sitting at $1.38 rate differential to the USD which hurts Canadian propeller distributors like Prop Masters because everything must be imported from the US. It’s tough to try to explain to a potential customer that he must pay an additional 38 percent for his purchase because no propellers are manufactured here in Canada.” He concluded that, “One positive is that a smaller shop like mine can weather this economic downturn because I can keep my expenses to a minimum. Staffing is kept to a bare minimum which keeps me from having to pay out exorbitant wages. Being the only full-time propeller sales, service and repair facility here in Alberta does give us the advantage that any prospective customer will be in contact with us at some point.” Addressing the question of the state of the economy and business in his region, Bill Blackburn of Blackburn Marine Distributing in Friedens, Pennsylvania said, “Our propeller repair business started off VERY strong at the beginning of the year. We were actually in a bit of a situation where we were having trouble getting it all finished in a timely manner.” He added, “However, while we started off very strong, the weather turned a little rainy and cold and what should have been a brisk spring was actually quite slow. The weather has started to turn better for us now and business has picked up again, but we’re still slightly down from where we should be.” Blackburn’s sentiments have been echoed by other NMPA members in other regions who also reported either mixed fortunes, or strong business performances that are viewed with cautious optimism. The longtime Pennsylvania area businessman also noted that the economy in our area has improved somewhat, but there are still problems to contend with. He said, “This area has historically been a strong coal mining region and that industry has been declining for many years. A new mine has opened up (it was on the national news), which is good news for many workers, but the region still struggles with creating and maintaining good paying, family supporting jobs.” Blackburn concluded, “We are looking forward to a strong summer and we hope that the weather holds out so that the boating season can continue and finish strong this year.” Feedback, anecdotal data and industry stats suggest NMPA propeller repair businesses are seeing a generally positive business climate and are working hard to capitalize COMPARISON OF MANUFACTURER WHOLESALE SHIPMENTS on the opportunities despite TO NEW BOAT REGISTRATIONS various regional dynamics. Boat Wholesale Estimates (a) Retail Estimates (b) sales data suggest business Percent Change Percent January to June Rolling 12-Month CY 2015 CY 2014 Rolling 12January to 2016 Retail vs. Change 2015 2016 Retail Retail Comparison, Month December 2016 prospects are strong and NMPA 2015 Retail vs. 2014 February 2017 Comparison propeller manufacturing members Outboard Boats Fiberglass 25,615 47,168 51,063 50,200 6.6% 47,100 42,400 11.1% are reporting very good business Aluminum 58,837 101,206 111,285 110,700 104,500 97,300 7.4% 5.9% Total 84,452 148,374 162,348 160,900 6.1% 151,600 139,700 8.5% performance numbers for 2017, Sterndrive Boats 5,558 10,559 11,731 11,800 -3.3% 12,200 13,000 -6.2% lending additional credibility to Fiberglass 58 105 354 400 400 400 Aluminum 0.0% 0.0% 5,615 10,664 12,085 12,200 -3.2% 12,600 13,400 -6.0% the preliminary data. When asked Total 4,648 8,887 8,766 8,700 11.5% 7,800 7,000 11.4% about the current state of the Inboard Ski Boats 2,029 2,000 5.3% 879 1,806 1,900 1,700 11.8% business in the propeller sector, Ron Inboard Cruisers 2,530 4,892 4,983 5,000 8.7% 4,600 3,800 21.1% Bailey, president of Turning Point Jet Drive Boats 98,124 174,623 190,211 188,800 5.8% 178,500 165,600 7.8% Propellers in Jacksonville, Florida Total Traditional Power Boats 7.3% 47,055 60,370 55,000 47,500 15.8% Personal Watercraft 59,296 59,000 said, “The season has turned on full 145,179 234,993 249,507 247,800 6.1% 233,500 216,900 7.7% blast, the phones are ringing off the Total Power Boats hook!” Hopefully this statement (a) Wholesale shipment estimates are derived from NMMA’s June 2016 MSR and upwardly adjusted is true for most, if not all NMPA to reflect shipment volumes for the entire U.S. members and 2017 turns out to be a record year for profitability in the (b) Retail estimates are based on Info-Link’s Data Cube entire marine industry. Source: NMMA Recreational Boating Industry DATA DASHBOARD: Q1 2017
CALENDAR of EVENTS
icast - July 11-14, 2017 Orange County Convention Ctr. Orlando, FL Web: www.nmma.org/shows/icast-pavillion
ibex - September 19-21, 2017 Tampa Convention Ctr. , Tampa, FL Web: www.ibexshow.com
newport international boat show September 14-17, 2017 Newport, Rhode Island Web: www.newportboatshow.com
fort lauderdale int’l boat show November 2-6, 2017 Fort Lauderdale, FL Web: www.flibs.com
NMPA Annual Convention November 9-11, 2017 The Orleans Hotel & Casino Las Vegas, Nevada Web: www.nmpa.net Phone: 954-880-3588
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Turning Point Propellers Celebrates 20 Years
urning Point Propellers, of Jacksonville, FL, celebrated 20 years of Business in May 2017. Established in 1997, Turning Point has built an enviable reputation and brought to market an impressive array of Industry First’s in Marine Propulsion for the last two decades. “Our team takes great pride in developing some of the best performing aluminum and stainless steel propellers. Starting as an idea after a shortened weekend from a wrecked set of props, Turning Point has grown into a Global Supplier with manufacturing and warehouse facilities in three countries,” says company President Ron Bailey. “We are very grateful to all of our customers for making us the fastest growing prop company in North America. This rapid growth required recent expansion into our second US warehouse location in Jacksonville, FL, and a doubling of our Aluminum production capacity. To obtain and maintain our outstanding growth, we have partnered with the Best Independent Sales Associates in the US and
4 | THE LEADING EDGE
Internationally. This Sales Team allows us to focus on what we do best: New Product Development and continuous improvements in delivery, fill rates, and product quality,” according to Bailey. Turning Point is a World leader in high performance Aluminum and Stainless Steel propellers for powerboat applications in the 6-400hp+ range. They are a Primary Manufacturer operating Aluminum and Stainless facilities with ingot to pallet vertical integration. Branded Products include: Hustler® Three and Four Blade Aluminum Propellers, Express® Mach3 and Mach4 Stainless Steel Propellers, Aegis® Safer Propellers, MasterGuard® Installation/Hub Kits, Prop Wizard® and Prop Genie® Propeller Configurators. They are focused on New Product Development, Manufacturing, and Marketing excellence serving a global customer base partnered with Marine Distribution, OEM, and Mass Merchant companies. For more information visit www.tpprops.com.
Fifth Circuit Affirms District Court Decision Holding That Principal Is Not Vicariously Liable for the Alleged Negligence of Its Independent Contractors
PROPELLER REPAIR PARODIES
BY CHALOS & Co, P.C. www.chaloslaw.com
n May 12, 2017, the United States Court of Appeals for the Fifth Circuit affirmed a decision from the Southern District of Texas in Davis v. Dynamic Offshore Res., L.L.C., No. 16-40059, 2017 U.S. App. LEXIS 8464 (5th Cir. 2017), granting summary judgment in favor of Dynamic Offshore Resources (“Dynamic”) against a crane mechanic employed by an independent contractor. In Davis, Plaintiff Thomas Davis (“Davis”) brought suit against Dynamic for negligence and gross negligence. Davis was allegedly injured when, while being lifted in a personnel-basket transfer to an offshore platform in the Gulf of Mexico, the personnel basket dropped six to eight feet. The Fifth Circuit, in its decision, held that “[i]t is well established that a principal is not liable for the activities of an independent contractor committed in the course of performing its duties under the contract.” Bartholomew v. CNG Producing Co., 832 F.2d 326, 329 (5th Cir. 1987). The Court recognized two exceptions to this general rule: (1) “a principal may not escape liability arising out of ultrahazardous activities which are contracted out to an independent contractor;” and (2) “a principal is liable for the acts of an independent contractor if he exercises operational control over those acts or expressly or impliedly authorizes an unsafe practice.” Id. The Court held that a personnel-basket transfer was not ultrahazardous, despite high winds during the transfer. Louisiana law considers only whether the activity is per se ultrahazardous, not whether it is ultrahazardous in specific conditions. See O’Neal v. Int’l Paper Co., 715 F.2d 199, 201-02 (5th Cir. 1983). Furthermore, the Court found that Dynamic did not order the personnel-basket transfer, but that Davis requested it. The operator of the personnel-basket transfer was an independent contractor, and Dynamic was entitled to rely on their expertise. The Court held that Dynamic did not authorize, either expressly or impliedly, an unsafe working condition that caused injury to Davis. While the decision in Davis cited to and relied upon Louisiana law, the general rule that a principal is not liable for torts of an independent contractor (and the exception to the rule) is the same under general maritime law. See Richard v. Anadarko Petroleum Corp., 2014 U.S. Dist. LEXIS 35483, *26 (W.D. La. 2014) citing Landry v. Huthnance Drilling Co., 889 F.2d 1469, 1471 (5th Cir. 1989) (internal quotations omitted)(“It is wellestablished under general maritime law that a principal is not liable for the torts of an independent contractor unless the principal exercises operational control over or expressly or impliedly authorizes the independent contractor’s actions.”).
submitted by Gary Linden, Linden Propellers
Do you have a funny or bizarre photo of a prop or intriguing propeller repair scenario that you would like to share with other members? Send them to email@example.com. Make sure to include your name and company.
To read the full opinion of the Fifth Circuit, please www.chaloslaw.com. Reprinted with permission.
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Propeller Design & Race Challenge Program to Reach Nearly 100 Students at 2017 Summer Camp
or the third consecutive year, Frank & Jimmie’s Propeller provided NMPA’s Design, Build & Race Your Own Propeller Program to Ft. Lauderdale High-School students. With sponsorship from the Marine Industry Cares Foundation, students from South Broward, Dillard and Stranahan High Schools attend the Marine Industry Immersion Summer Camp. The two-week program introduces students to opportunities in the recreational marine industry, which pays 28% higher wages than the Florida State average.
In addition to providing NMPA’s Design, Build & Race Your Own Propeller Program at venues throughout Ft. Lauderdale, Frank & Jimmie’s also employs two high-school summer interns from the Broward County Public Schools and sponsored a third high-school student/part-time employee in his participation in SkillsUSA, a local, state and national program for students to develop and demonstrate personal, workplace and technical skills grounded in academics. Ricardo “RJ” Perez won the local and state welding competition and is on his way to participate at the national level.
The highlight of the program is, of course, propeller racing! As those of you who attended the 2016 NMPA Annual Convention in Las Vegas may remember (after all, “what happens in Vegas…”) we had our own Design, Build and Race Challenge poolside at the Orleans Hotel. NMPA Members are encouraged to sponsor their own DBR Challenges in their communities to introduce and promote the propeller repair and marine industries. Jimmie Harrison, of Frank & Jimmie’s said, “Providing high school students access to the businesses and leaders of the marine industry while showing them the opportunities in the propeller repair business is critical for the growth of our trade. Frank & Jimmie’s is thrilled to be doing its part to help grow and secure the industry’s future.” In addition to the Summer Camps, Frank & Jimmie’s hosts propeller racing at Ft. Lauderdale’s Annual Marine Industry Day and Plywood Regatta, now in its 21st year. “This summer, nearly 100 students will design, build and race their own propellers in Ft. Lauderdale,” said NMPA managing director Gordon Connell. “With the addition of an extra day of teaching and head-to-head competition, students have time to modify and adjust their designs and assess the tradeoffs between propeller diameter, blade areas and pitch on speed and performance. Combined with a tour of Frank & Jimmie’s Repair Facility, they get a real-world feel for propeller design, build and repair.
6 | THE LEADING EDGE
Don macrae and Robert Abrahamsen teach micf Campers about types of propellers during tour of fJ Props Fort Lauderdale “Our #1 focus every day is on our employees – both current and future,” said Don MacRae, Frank & Jimmie’s President and COO. “At Frank & Jimmie’s, recruiting, hiring, training and developing employees is our #1 priority. Our local high school students are a vital component of our future employee pipeline. It is exciting to see the interest these students have in our business when they’re given the opportunity to learn in a fun environment. Today’s students are the repair professionals and business leaders of the future; the Marine Industry Cares Foundation does a great job providing summer camps so the students can learn about the marine industry and the tremendous opportunities that exist right here in their own backyard. That itself is reward enough…”
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1043 SE 17th Street, Suite 201 Fort Lauderdale, fl 33316
WE NEED YOUR HELP TO PRODUCE A GREAT ANNUAL CONVENTION! Call for Shop Video Presentations! NMPA is looking for members willing to produce and share Shop Video Presentations in seminars at Convention. Tips, tricks & techniques that improve safety, eﬃciency and/or proﬁtability.
Call for Speakers & Topics! Share your expertise as a speaker, or suggest a topic for this year’s Annual Convention. Technical and business improvement subjects are always popular.
Contact NMPA oﬃce at 954-880-3588, or firstname.lastname@example.org 8 | THE LEADING EDGE