Aug. 9, 2010 – Oil spill’s impact on dealers

The economic aftershocks of what has been called the worst oil spill in U.S. history is certainly reaching the industry.

BP’s spill in the Gulf of Mexico is going to cost gulf coastal communities $22.7 billion in lost revenue over the next three years, according to recent U.S. House testimony. Although that staggering total was linked just to tourism, the final cost of BP’s spill will clearly impact the powersports industry.

Jim Evans, dealer principal at Pensacola Kawasaki in Pensacola, Fla., could testify to that.

“It’s hurt everybody on the coast,” Evans said of the oil spill.

The aftereffects of the spill remain a mystery as scientists and Gulf Coast residents alike wonder what unforeseen ramifications will occur in the months and years to come. The spill’s known impacts continue to be measured. The Louisiana National Guard, for instance, said it has now collected 1,200 pounds of oily debris off a single island, National Public Radio recently reported.

The industry, including Evans’ dealership, has been involved in the cleanup. Evans’ dealership has supplied a number of Kawasaki Mules for the cleanup that has occurred near Pensacola, which is located in west Florida near the Alabama border.

“The cleanup is contracting dramatically,” Evans said of the local efforts.

The BP oil spill originally occurred on April 20 and cleanup efforts have stretched at least 100 days.

“We haven’t seen oil, floating oil or anything, on our shores for quite awhile,” Evans said. “Since they stopped the flow of oil, there really isn’t any amounts of oil on the surface. We don’t know what’s going to happen, whether it’s going to show up or just dissipate. Nobody knows.”

Pensacola Kawasaki is one of a number of Kawasaki dealerships that sold Mules or ATVs to BP or its independent contractors for the cleanup effort.

John Griffin, the government/fleet sales manager for Kawasaki Motors Corp., U.S.A, said the number of vehicles that were necessary for the cleanup and the speed in which they were needed was certainly unique. Griffin estimates Kawasaki and its dealer sold approximately 300 Mules for the cleanup effort.

The number has been so great that it caused some production changes at Kawasaki’s Lincoln, Neb., facility.

“We have been working to try to ramp up a little,” Griffin said. “We’ve worked hard with the vendors, with the dealers and to the customer to try to recommend models that we do have in stock or did have some production on hand.”

The requests for Mules for the cleanup started in late April when the oil started hitting Gulf Coast beaches.

“We heard a couple of dealers saying, ‘Can we get more product?’” Griffin said. “’We just sold the five units we had on the floor and we think we’re going to need more.’ Lot of this happened to coincide with our June shipping order period for Mules so it worked out pretty well for Kawasaki because we had a little bit of a buildup.”

Griffin said the Mules were used to transport people on beaches some but more often to take loads of trash bags filled with the substance that was being used to absorb the oil.

“They’ll pull a trailer full of these trash bags and drive it off the beach to an awaiting semi that hauls away that trash,” Griffin said of the cleanup efforts.

Orders for Mules for such efforts have slowed down, but there are still questions about where oil could appear on other beaches.

Unfortunately for the Pensacola dealer Evans and other dealers, the damage has been done.

“It completely eradicated the watercraft season,” Evans said of the spill’s effect on his business.

PWC sales historically make up at least half of Evans’ annual business, but more than three-quarters of it in the summer. Because of the spill and its horrendous impact on tourism, his store’s PWC sales this summer fell more than 80 percent compared to just two years ago.

“On top of that, the motorcycle market also fell,” he said, noting the two-wheel market usually makes up consumers who rely on the area’s tourism industry.

“I think we might have missed the season completely,” he said. “We do have a lot of people that come down and spend the winter here, but the kinds of dollars the retirees spend is nothing like the dollars the tourists spend.”