Dec 2007 - NC Marine TradeWinds Newsletter

This edition made the 2007 deadline but not by much and it is not in the more professional SBTDC format of our traditional newsletter. My apologies.

[If you receive this email version and have not been receiving this newsletter during the past year, please notify your SPAM system that NCwaterways.com is a “good” source. Or send me an email and I will try to work it out from this end.]

Most of the first few items in this newsletter will play out in 2008, will demand your attention, and will result in unbudgeted expenditures for hundreds of NC boating businesses. I predict that compliance with boat pressure washing and non-pressure washing regulations, new coastal stormwater restrictions on working waterfront expansion and like new project development, and the renewal of coastal non-point source permits for marinas, boatyards, and boat builders could easily cost NC boating businesses tens of millions of dollars.

Another regulatory issue that will need a solution in 2008 is the problem of Stinger loads of multi-boat shipments classified as over-width and/or over-length requiring multiple shipment loads on North Carolina state roads (not required on Federal roads). Doesn’t sound like much, but we have over 40 companies building boats that would require special and costly transport.

The biggest player in 2008 will be the economy and the perception of the economy by the boat buying public. For North Carolina, almost all the boats built and bought in the state are for recreation, and recreation expenditures come after the bills are paid. Not far behind in concern is the drought along the central portions of SC, NC and VA where a lot of our boats are sold and used. If you can’t get to the boat or get it into the water, it is hard to ski, fish and play. Not unlike builders across the county, many of our production builders have seen a slow down in demand and this has repercussions back along our NC supply chain. One of the key roles we expect to play this coming year is the role of SBTDC business consultants to help our NC boating OEM and supply businesses expand into new markets and increase sales – reducing some of the dependency on the boating sector of their customers.

2007 welcomed Palmer Marine (Shamrock, Tiderunner, Defiance, and Voyager lines) into Bladen County, Hi-Tide Sales into Beaufort County, Florida Bow Thrusters and Vetus Marine into Carteret County, Millennium Marine USA into Chowan County, Riverpoint Boats into Carteret County, Lee's Tackle of Miami into Pender County, Impulse Marine into Craven County, and Brunswick Corporation (Bayliner, Maxum, and Meridian Yachts) into Brunswick County. All told, this will result in over 1,200 new jobs and new investment of over 62 million dollars. We have a few more to announce soon, but they couldn’t “squeeze” into 2007.

For 2008, our state’s impressive role in boating business relocation will be a mixed bag of continued success but slowing activity. Some of the companies with which we have ongoing activity are setting deferred dates for relocation – hurt by the national slow-down in boat purchases and lacking sufficient cash flow to finance the relocation at this time. In addition, the damaged housing markets in several states have held up planned moves as key players in relocating companies cannot sell their homes in those states and the companies cannot move without those key employees. And finally, our success at luring boating companies has increased the efforts of several states to provide new and more competitive incentives to keep some of these companies from making the (better) move to North Carolina.

One of the bright spots for North Carolina has always been our easy access to boatyards and marinas from the ICW and through our many inlets from the open ocean. Several of our waterfront communities and counties are now aggressively developing marine parks with shared water access points and cluster development opportunities for like and supporting boating businesses. In addition, at least three counties have private and state properties that have deep water access properties suitable for megayacht and large vessel construction and restoration. We are working with our regulatory and permitting agencies to develop these “shovel ready” sites where new boating companies can come in and know they will have the water they need to access wide and deep draft vessels.

Our Boating Industry Services Program has been developing information on our 3,000 boating businesses for over 15 years and we are about to overhaul our website and database to provide uniformity for product and service identifiers. Our 2008 objective is to better define our NC supply chains so that our NC businesses can identify NC companies for business-to-business sales and services. We will be working with our Department of Commerce, several of our statewide university business schools, and many of our 58 community colleges to accomplish this task. The resulting effort should make it easier for competitive supply opportunities within the state and increased incentives and rationale for national and international businesses to want a “North Carolina address”.

Some of most commonly heard excuses for not sending key employees for certification or training is the lack of time to pull them off the production line or out of sales. This might be the time for the time if the costs can be absorbed. The same is true for dedicating time for LEAN or Six Sigma or other production strategies. And if you really want to boost production, sales, and teamwork, sign up for one of our SBTDC management retreats – I personally guarantee them to improve how you think about your company and how your key employees think about your company.

Upfront, DWQ (Div. of Water Quality) are not the “bad guys” in this. They have been trying to control power wash contamination for years and conducted a study in 2007 that provided the data they were looking for to quantify these new enforcement efforts. In 2008, the DWQ will start enforcing water quality criteria at all waterfront [and land-locked] boat facilities across the state – most likely starting with coastal facilities. More exactly, if your business provides wash down, sanding, sand blasting, painting, or pressure washing for boats or it builds boats, your business will be visited and the quality of that visit for you will depend on what you are doing or can demonstrate that you are planning to do in the immediate future. The “to do” is to contain the resulting residue and waters from these services so that any water that can find it’s way into the surface waters or navigable waters of the state meets the quality standards designated. And it is important to know that there is no possible way that any of the water from these services will ever meet these criteria.

This means that you will be manipulating and processing this residue-containing water by some third-party system that either contains the bad water and you ship it out by special and paid service or your wash areas become a car-wash-like service that collects and recycles the water until it is sludge and you then ship this sludge out by a paid service. This is really the sum of it without exception or wiggle room. It most likely means that you will be setting up a payment or revenue component associated with these wash services.

To see what this is all about, you have to take the time to look at the testing information and the summaries provided by a quite thorough study by D QR. These can be found at the Clean Marina website http://www.nccoastalmanagement.net/Marinas/workshops.htm. At this site, click on the Pressure Washing Regulations & Requirements link and go through every slide, and pay attention to the Wash Water Results slide well into the slide show. What this says in simple terms is that your power wash and your hand wash efforts at your boat service business or boat building facility will never provide resulting waste water that can meet the 3 micro grams per liter Copper for salt water sites (or 7 micro grams per liter Copper for fresh water sites) criteria. End of discussion.

Next click on the next link down: Pressure Washing Solutions and Economic Analysis. This link will take you through a study done by NC Sea Grant that discusses the technology, solutions, and economic analysis related to what your business will have to do in order to develop the strategy to meet the DWQ requirements.

It would be exceptionally helpful here to be able to tell you what you need to do, what equipment you need to buy and how much it will cost you – but almost every answer is site specific and the unknowns outweigh the knowns at this time. There will be more soon from the DWQ as they will be writing a letter to every facility. The Clean Marina staff, NC Sea Grant staff DWQ staff will be working to provide you assistance. And our newsletter, website and special emails will try to keep you appraised of the status.

Most owners understand the importance of controlling the powerwash residue and resulting contaminated water from traditional powerwash stations. The big hurdles are: (1) the difficulty and expense of retrofit for the existing yard needed to accommodate an acceptable washdown pit with sump and (2) the unknown (currently unknowable) mechanics, acceptable equipment and expense of meeting the NC requirements to respond to the less than 3 micrograms per liter of copper allowable in salt water locations.

These proposed new regulations are for coastal counties and will dramatically impact useable / buildable acreage on waterfronts and will have an impact on plans to develop important working waterfronts planned along our sounds and ICW. These regulations are contentious and have several counties and municipalities developing countering proposals to mediate the (real or perceived) negative impacts of these regulations.

In short, if adapted as proposed, the likely results are seen by many as too restrictive resulting in wholesale loss of waterfront acreage for development. On the other side, many in the regulatory arena and the general public feel that these new regulations are necessary to satisfy the real concerns associated with waterfront developments.

Thousands of words have been written on this topic and you should be aware of the issue. Go to this site to see the Universal Stormwater Management Program as proposed:

On November 14, the Occupational Safety and Health Administration (OSHA) announced a new rule clarifying the employer/employee responsibilities for payment of personal protective equipment (PPE). The final rule requires employers to pay for almost all PPE required by OSHA’s general industry, construction and maritime standards.

The final rule does not, however, create new requirements regarding what specific PPE employers must provide. It also contains exemptions for certain ordinary protective equipment such as safety-toe footwear, prescription safety eyewear, everyday clothing and weather-related gear.

“When first proposed back in 1999, NMMA submitted written comments opposing specific provisions of this rule such as requiring employers to pay for prescription eyewear,” explains John McKnight, NMMA director of Environmental Safety & Compliance. “Fortunately, the final rule recognized the need to exempt certain PPE and clarify the employer’s responsibilities regarding its possible replacement.”

The new rule states that if an employee chooses to use their own PPE, the employer is not required to reimburse the employee; the burden of making sure this equipment meets the OSHA standard, however, remains on the employer. If an employee has lost or intentionally damaged PPE, the employer is not required to pay for its replacement.

The Recreational Boating Act would restore the longstanding permitting exemption for benign water discharges like engine cooling water and deck runoff from boats deemed “necessary to the normal and safe operation” that were struck down in an unrelated federal court case last year. Without Congressional action the nation’s estimated 18 million recreational boats will be subjected to an unnecessary, complex, and costly permitting system imposed by the EPA.

This issues and its resolution is one of the biggest national issues that could impact boaters and hence our NC boating industry in a long time. Both the NMMA and BoatUS are actively involving there membership in letter writing and congressional arm twisting.

The threat is imminent. The EPA and 50 states will have to figure out how to regulate more than 18 million recreational boats, likely through burdensome permitting, which may lead to: (1) New yearly fees for family boaters – plus the need to obtain different permits for each state a boat may travel through; (2) bureaucratic red tape—different in each state—associated with getting a permit; (3) an increased burden for the taxpayer as governments develop new programs and entities to implement these regulations; and (4) new enforcement regimes” (see these links: http://www.boatus.com/gov/fed_alert.asp and www.nmma.org/lib/docs/nmma/gr/policy/Recreational_Boating_Act_Policy_Brief_11-30-07.pdf.

More than $24 million in congressionally-directed funding will go to Southeastern North Carolina beach renourishment projects and waterway funding. The funds are included in the Fiscal Year 2008 $555 billion Omnibus Appropriations Act (H.R. 264) which passed both Congress and the Senate and currently resides in a pocket somewhere. The Army Corps of Engineers dredging projects slated to receive funding and the amount include:

Carolina Beach Inlet, $1,210,000; New Topsail Inlet, $841,000; Wilmington Harbor Deepening, $3,745,000; Atlantic Intercoastal Waterway, $5,494,000; Wilmington Harbor Maintenance, $10,362,000; Lockwoods Folly Inlet, $458,000; Masonboro Inlet, $467,000; and Cape Fear Locks and Dams, $544,000.

McIntyre is co-chairman and founder of the Congressional Waterways Caucus, whose main purpose is to try to bring attention to the neglect of America's waterway infrastructure.

From the December 20 newsletter from Representative Mike McIntyre and an article by Suzanne Ulbrich of the Jacksonville Daily News written f December 23, 2007.

The cost to register a vessel in the state will increase from $10 to $15 for one-year registrations and from $25 to $40 for three-year registrations. The fee increases will apply to new and transfer registrations, as well as renewals on existing registrations. The cost of vessel titles will remain $20. The money generated by the fee increase will be used to develop public boat access areas as well as preserve existing access.

The North Carolina Department of Commerce’s Division of Tourism and the North Carolina Wildlife Resources Commission will share our SBTDC Boating Industry Services booth this year. The event will be held February 14-18 this Spring. To see the event information, click here: http://www.miamiboatshow.com/.

The Mariners School of New Bern has been approved by the USCG for On-line Captains License training programs [Mariners Learning System™].

This is a one of a kind training system that was based on Mariners School original Coast Guard approved classroom courses. Students who successfully complete the course will be awarded a certificate that will be accepted in lieu of the standard Coast Guard examination!

Over the years Mariners School has trained more than 15,000 students to get their Captains License. For more information about Mariners School classes, contact 1-866-SEA-CAPT (nationwide) or Judy Swanson, Director of South East Operations at (252)514-0015, email CaptainJudy@MarinersSchool.com.

The new Vessel Hull Design Protection Act (VHPDA) would amend the original bill passed in 1998 to clarify that the Act’s protections extend to both registered hull and deck designs to protect against a copycatting technique called “hull splashing.”

Hull splashing is a copycatting process where an infringer makes a mold from another manufacturer’s vessel hull and then uses the mold to manufacture copies. Congress passed the Vessel Hull Design Protection Act in 1998, but a lack of clarity in the act’s language created confusion as to when a boat design was protected. A resulting court case exposed a loophole in the law.

The legislation, S. 1640, would close this loophole by clarifying current vessel hull design protection laws with a clear definition of a hull and deck in the judicial process.

If enacted into law, the measure would stop companies that “splash” a competitor’s protected hull, only make changes to the deck, and then escape violating copyright laws, according to the National Marine Manufacturers Association, which supports the bill.

The legislation is similar to companion bills in the previous Congress that passed both the House and Senate, but failed to become law because of minor differences in the wording that was not reconciled in the final hours before Congress adjourned last December, according to the NMMA.

The four rates of Sales & Use Tax affecting the Boat Manufacturing Industries are:

Prior to December 1, 2006, the general rate of State tax is 4.5%. Effective December 1, 2006, the general rate of State tax is 4.25%. Other State rates of tax that may apply to articles of tangible personal property or services that are not subject to the general State rate or are exempt by statute are 3%, 2.83%, 2.6% (effective July 1, 2007) 2.5%, 2%, or 0.17%.

Every person who is engaged in the business of selling at retail or wholesale and/or renting or leasing tangible personal property or providing taxable services in this State or who operates a laundry, dry cleaning plant or similar business or a hotel, motel or similar business in this State is liable for a Certificate of Registration. There is no fee for a Certificate of Registration. The registration will allow the issuance of a Streamlined Sales and Use Tax Agreement Certificate of Exemption, Form E-595E, to obtain property or services for resale. A purchaser is liable for a $250 penalty for each misuse of a Certificate of Exemption. See the Certificate of Exemption for instructions for its proper use

The “combined general rate” of sales tax applies to sales of certain tangible personal property and services. That term is defined as “the State’s general rate of tax set in G.S. 105-164.4(a) plus the sum of the rates of local sales and use taxes authorized by Subchapter VII of [Chapter 105] for every county in the State.”

A use tax at the applicable rate is levied on taxable tangible personal property purchased or received from within or without this State for storage, use or consumption in this State. The liability for the tax is not extinguished until it is fully paid, except that payment of the tax to a vendor who charges such tax shall relieve the purchaser of further liability with respect to the tax so paid.

“Use” is defined as the exercise of any right, power, or dominion whatsoever over tangible personal property or a service by the purchaser of the property or service. The term includes withdrawal from storage, distribution, installation, affixation to real or personal property, and exhaustion or consumption of the tangible personal property or service by the owner or purchaser. The term does not include the sale of tangible personal property or a service in the regular course of business.

Every person who buys taxable tangible personal property or taxable services for business use from out-of-state vendors for storage, use or consumption in North Carolina is required to obtain a Users or Consumers Use Tax Registration except:

2. persons who have paid their vendors all taxes due on their purchases for storage, use or consumption.

G.S. 105-164.13(9) exempts from sales and use taxes sales of boats, fuel oil, lubricating oils, machinery, equipment, nets, rigging, paints, parts, accessories, and supplies to persons for use by them principally in commercial fishing operations within the meaning of G.S. 113-168, except when the property is for use by persons principally to take fish for recreation or personal use or consumption.

Sales of tangible personal property to a manufacturer which enters into or becomes an ingredient or component part of tangible personal property which is manufactured.

Examples of such items are nails, bolts, screws or other pieces of hardware, thread, cloth, paint, varnishes, bleaches, oils and other finishing materials, including chemicals which actually enter into manufactured products at some step between the initial and final steps of production, labels attaching to manufactured products and name and trademark fixtures. The exemption for sales to a manufacturer of tangible personal property that enters into or becomes an ingredient or component part of tangible personal property that is manufactured does not include electricity.

The SBTDC is administered by NC State University on behalf of The University of North Carolina System

The SBTDC is partially funded by the US Small Business Administration.
SBA's funding is not an endorsement of any products, opinions, or services.
SBA-funded programs are extended to the public on a non-discriminatory basis.