GEORGETOWN — After struggling for two years to stay afloat, boat builder William Plummer IV is thinking about expanding his shop and building bigger boats.

When the industry crashed under the weight of economic recession and a luxury boat tax, Plummer worried that his Five Islands Boat Works could go out of business. He hung on by doing odd jobs and laying off two employees.

“I didn’t want to do it, but I didn’t have any choice,” he recalled.

This year, Plummer has built four 35-foot boats, two 23-footers, a 20-foot boat and about 100 dinghies. For 1994, he already has orders for two 35-foot boats and a 23-footer. And about 10 other potential customers have expressed interest.

“This year looks good, from what I can see,” said Plummer, who builds mostly powerboats.

A boat-building group with 1,600 members nationwide agrees that the outlook for 1994 is brighter because of the improving economy and repeal of the 10 percent federal excise tax on boats selling for more than $100,000.

With more people holding jobs, people will have money to spend on boats, said Greg Proteau, spokesman for the National Marine Manufacturers Association. Greater availability of credit and low fuel costs are other pluses for the industry, he said.

The industry expects retail boat sales to grow between 6 percent and 10 percent in 1994.

In 1993, boat and motor sales totaled $5.1 billion. Boat, motor and accessory sales in Maine totaled $36.2 million.

In 1988, the industry peaked with $18 billion in sales and 750,000 new products sold.

By 1991, though, the number of new products sold had been cut by half. The luxury boat tax was part of the 1990 deficit reduction package in the national budget.

Product sales have climbed slowly since 1991 and in 1993 were about 487,000.

“I don’t think that the boat builders generally are feeling as good as they would conceivably like to,” said Proteau. “I don’t think they’re making money like they did in the 1980s, but maybe that will never happen again. We don’t know.”

Key Bank’s marine finance department in Augusta has seen more people coming in to finance new boats, said Steve Osburne, the bank’s marine asset manager.

“A lot of people were waiting for the luxury tax to be repealed and for the economic indicators to point in the right direction,” he said.