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WHO BUILDS WHAT BOATS?

Diversification is the name of the game. Whether companies sell cars, soft drinks or sporting gear, the strategy is simple: appeal to a wide audience by selling a variety of different products.

Large conglomerates like Brunswick Corp., Genmar Holdings and Tracker Marine Group are a significant part of the recreational boating industry and have dominated the scene ever since the economic recession of the late 1980s forced many small boat builders to sell out or shut down. A newcomer entered the field in late 2005, when industry veterans Godfrey marine and Rinker Boat Co. announced they had merged.

Brunswick, Genmar and Tracker have succeeded because they build a model for nearly every boater, in just about every price range and it is clear that the new Godfrey/Rinker family hopes for similar results.

THE ‘BIG FOUR’

Case in point is Brunswick. The self-described “world’s largest builder of recreational boats,” this Lake Forest, IL, corporation has long been synonymous with bowling and billiards, as well as other recreational equipment.

Brunswick’s boatbuilding empire began in 1986 with the acquisition of mainstream marques Sea Ray and Bayliner. Over the next two decades the conglomerate acquired a total of 20 boat companies in North America, as well as Sealine Industries, the largest boat manufacturer in Europe. According to information published by the company, Brunswick employs about 6,000 people, produces 543 different boat models, which are sold by hundreds of dealers in the U.S.

For the third quarter of 2005, despite the impact of Hurricanes Katrina, Rita and rising fuel costs, the company announced a 13% increase in boat sales. Net boat sales for 2004 totaled $2.3 billion. According to Statistical Surveys, a Grand Rapids, MI, firm that tracks retail boat sales, Brunswick controls over one-fifth of the fiberglass and aluminum boat markets in the U.S.

To top it off, owning Mercury Marine and MerCruiser means that Brunswick has a ready-made market for its engines. But they are also sold to rivals Genmar and Tracker, independent builders and retail dealers, which extends Brunswick’s influence throughout the market. Though the company does not publicize its market share, Brunswick posted $2.3 billion in net sales for engines in 2004, a 23% increase over the previous year.

The Brunswick group also includes marine electronics systems, engine controls, Attwood hardware and marine dealer management software.

Genmar Holdings, second to Brunswick in boat sales, in recent years has carved its own niche by pioneering two new types of boat construction methods using VEC resin-injection and Roplene roto-molded polyethylene technologies. The 250 boat models produced by 16 different Genmar builders range from luxury motoryachts, like the Italian design Nuvari, to Carver Yachts, Larson and Wellcraft runabouts and Four Winns deck boats.

The privately held firm led by Irwin Jacobs was founded in 1978. It employs about 5,000 people and has a network of over 1,000 dealers in the U.S. and overseas. Genmar owns no engine operation and thus equips its boats with Yamaha, Johnson and Mercury outboards and MerCruiser or Volvo Penta I/Os.

In the mid-1990s, the Minneapolis, MN, company and retailer Wal-Mart began co-sponsoring professional bass and saltwater fishing tournaments with jaw-dropping six-figure cash prizes, where even an angler in 50th place can go away consoled with a prize of $10,000.

In 2004, Genmar posted model year sales at about $1 billion. Genmar controls about 15% of the fiberglass boat market, but holds no share of the aluminum boat market, having sold its companies to Brunswick in 2004.

Meanwhile, Tracker Marine of Springfield, MO, is owned by Bass Pro Shops, Inc., which has operated “big box” retail stores specializing in equipment for anglers, hunters and campers since 1971. Ranking third in terms of overall boat sales, Tracker sells around one-fifth of all aluminum fishing boats and less than 10% of small fiberglass fishing boats. The conglomeration owns Fisher, Mako, Nitro, SeaCraft, Tahoe and Myacht houseboats. In 2004, the company acquired Travis Marine, which operates about 30 boat dealerships and stores in the south, the Gulf Coast states and the Midwest.

THE ‘NEW KIDS’

With their merger in mid-November, Godfrey Marine and Rinker Boat Co. created what they call the “fourth-largest pleasure boat manufacturer in the U.S.” Marine industry statistics show that the two companies combined produced over 10,500 boats in 2004.

Rinker employs about 500 people to build 17 different fingerless cruiser, cuddy cabin and bowrider models and has gained high marks in J.D. Power ratings in recent years. In 2005, prices ranged from about $28,000 for the top-of-the-line Rinker 410 Fiesta Vee. Rinker Boats, which has been in business at the same location in Syracuse, IN, since the 1940s, boats that their “whole manufacturing process comes together in one place in one town in the middle of the USA.”

The corporate culture shouldn’t change much. Godfrey Marine’s headquarters in Elkhart, IN< is less than 30 miles away as the crow flies.

In business since 1903, Godfrey produces 300 different pontoon, deck boat, fishing boat and pedal boat models in fiberglass and aluminum, ranging in price from $500 to $75,000. The Elkhart, IN, company employees over 1,000 people at eight factories and has 500 dealer sin the U.S. and Canada.

Rinker boats are fitted out with MerCruiser and Cummins inboards and Merc and Volvo Penta I/Os. Power packages on Godfrey boats include Yamaha, Volvo Penta, Mercury, Honda and Johnson and Evinrude engines.

THE INDEPENDENTS

In addition to the conglomerates, the marine industry market is composed of a number of significant independent builders like Chaparral, Carolina Skiff, Crownline that hold their own in the top 10 list of fiberglass boats sold. High-end builders like Cobalt, Grady-White and Cruisers dominate in the over 24-foot market. Despite Tracker’s scope of builders and models, Godfrey as an independent company, along with Alumacraft, Bennington Marine, SmokerCraft and Triton, rank in the top ten of all aluminum boats sold.

Many independent companies are able to keep their competitive edge by joining one of three alliances or buying groups, the American Boat Builders Association (including Chaparral, Cobalt, Regal, Rinker and S2 Yachts), the Independent Boat Builders, Inc. (including Albemarle, Bertram, Crownline, Cruisers, Godfrey, Maverick and Rampage) and the largest, United Marine Manufacturers Association (including Albin, Carolina Classic, Freedom Yachts, Key West, Parker, Sabre and Sylvan).

These groups allow individual builders to take advantage of bulk purchase discounts to obtain raw materials and OEM components like hardware, electronics and engines.

But, it’s more than just purchasing power that can give smaller builders an edge.

Longtime owners, like Eddie Smith of Grady-White, Pack St. Clair of Cobalt and Linwood Parker of Parker Boats are on the frontline when it comes to customer service. Have a question about your boat? Call one of these firms and you are likely to speak to a company executive. Want to visit the factory while your boat is being built? Its president could well lead the tour.

CORPORATE CULTURE

These days, fiberglass powerboats tend to have a look that screams, “Stick with what sells.” It makes sense from a business standpoint for the Big Three to rely on tried and true designs, but sometimes aesthetics can get left at the dock.

Uniformity is not all bad, however.

In the old pre-conglomerate days, it wasn’t exactly every man for himself for boating consumers, but construction quality, warranties and customer service were certainly all over the map. Some companies offered exemplary service and products, while others barely gave such considerations a nod.

While originality may have suffered, accountability has gained.

Warranty policies and customer service philosophies tend to be consistent across the board within the Brunswick, Genmar and Tracker families. The same will probably hold true with Godfrey/Rinker. The independent companies have more leeway, but still must be on a par with the conglomertes to stay competitive.

So, standards overall tend to be higher. No longer are boats and engines sold with one-year non-transferable warranties. Multi-year warranties that focus on hull structure are the norm.

In addition, size means that the conglomerates have the resources to go the extra mile. For example, when Genmar purchased a number of boat building companies following the bankruptcy of OMC a few years ago, the conglomerate initiated a safety defect recall on hundreds of OMC-built Stratos boats with hulls that made them unstable. Genmar also voluntarily offered warranty coverage on certain OMC-built boats. The company announced it was taking these steps as a means to gain consumer confidence following the OMC bankruptcy.

So, from the consumer’s standpoint, the competitive climate created by the conglomerates might be likened to the proverbial high tide that raises all boats.

(c) Copyright BoatU.S. Magazine, January 2006

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