Boat Building Industry Editorial Page

Editorial Page

We will be posting some of our own ideas and views about the industry here

Brunswick Corporate Direction

This item is posted both in the news and on the 
editiorial page as it seems to fit both categories. 
The RBBI comments are by Gary Polson 7 May 1997

Brunswick 2nd Quarter 1997 Report Discusses Plans

Stillwater Newspress 4 May 1997 Pages D-1 and D-3

"... evidence that our strategy to grow our active recreation business through expansion of our product families, effective marketing and acquisitions is working," said Peter N. Larson, chairman and chief executive officer.

"We remain focused on our strategy to build Brunswick's active recreation business," Larson said. "In addition to Igloo coolers and the Hoppe's line of hunting accessories acquired earlier this year, we recently announced an agrement to purchase the Mongoose brand of BMX mountain, cross and road bicycles for the independent distribution channel. In the first quarter, sales of fishing and camping equipment, bicycles and bowling equipment along with revenues from bowling center operations accounted for 32 percent of total sales, versus 26 percent a year ago, with marine product sales accounting for the balance."

"We will continue to emphasize aggressive marketing programs and innovative product introductions to increase sales in each of our business segments, and to acquire active recreation businesses to supplement internally-driven growth," Larson said. "As a result of these actions, our marine operations are expected to grow, but at a slower rate than our other business units.

Over time, marine segment sales are targeted to represent about half of total sales, compared with 68 percent in the first quarter and about 75 percent historically."

RBBI editorial comment - we interpret the above to read, "Rather than re-investing profits from our marine segment in capital equipment, marketing and R&D, we are going to "milk" our marine segment to acquire active recreation companies, resulting in growth and more stable stock prices. Engineering will focus on cost reduction of existing products in our effort to maximize profits for acquisitions. Stop new product development." Did somebody forget to tell him about Toyota entering the marine industry?

Conglomerates dominated by cyclic industries (like the boating industry) must choose:

Be cyclic (which amounts to swinging stock prices and swinging workloads (employee layoffs)
Try to balance at the plant level (find ways of balancing the load at each major plant)
Try to balance at the corporate level (acquire some stable businesses or businesses that swing opposite from yours to help reduce the overall swings resulting in a more balanced output, but still sacrificing employees at certain sites)
Combination of 2 and 3.

Its a tough decision to pick one and takes great leadership to do any of the 4 choices well. Mr. Larson has chosen "#3" and is doing quite well at the moment. With Brunswick, the C.E.O. not only has the long term economic cycle to deal with, they also have to deal with the seasonal swings of the boating industry. Additionally, Brunswick's "changing of the guard" from Reichert (perhaps being a bit of a lame duck at the end), apparently to Reilly (cost cutting, efficiencies) (appointed next in line Sept 9, 1993 - resigned June 9, 1994), and then to Larson (acquisition) (appointed April 4, 1995) has everybody a little flustered. At RBBI we are obviously more focused on the boating industry than on Brunswick's more global picture. We would like to see Brunswick more involved in "gee whiz" products in the boating industry, but let's all give Mr. Larson the chance to experience the wild ride of a major economic cycle and see how he and Brunswick come out.

MARKETING SECTION

Some general marketing areas we think the industry may have a shortfall in are segmentation of the end users, collecting data on used boat sales, and creating a model for the boat market. We hope to try to bring about some improvements in these areas.

Market Segmentation

Many companies in the industry just consider the "end user" a boater and try to lump them all together. When you look at the wide span of powerboats from small fishing boats, to ski boats, to pontoon boats, to large cruisers and high performance boats it is apparent that not all of the end users share the same personal characteristics or have the same needs. We think some work could be done in the area of segmenting the industry and getting better descriptions of the customers of the various segments. This could allow you to identify potential customers in your segments and communicate with them. Drive Companies and Boat Builders could get their inputs into new designs. Boat Dealers could sell them the products they really want.

Used Boat Sales Data

Currently used boat sales data is not easily available. This data (size, type, and number of used boats being sold, seller (individual or dealer), purchaser information (dealer, new boater, experienced boater), etc.) needs to be collected. It will be very difficult to move onto the next step (Modeling the Boat Market) without the availability of used boat sales data. When new people come into boating what percentage of them buy a new vs. a used boat???? How does this ratio change as some of the industry driving forces change and as new boats begin to slash their prices when the market is tough??

Boat Market Model

A model of the industry that showed how the various groups interacted with one another and what the driving forces of the industry really are (low interest rates, consumer confidence, good weather, available water, good facilities, ??????) could be of great use to the industry. It could show how changes in one area would effect another. It might have to be done on a SEGMENT by SEGMENT basis. It could also show which areas of the country have the greatest potential for boating growth if only one variable was influenced. It should also show where the market is the easiest and the toughest today.

Quit Keeping the Cost of Boating a Secret

Another area I think needs some more research is the actual cost of boating. Some basic information in this area is available in some on the Economic Boating Studies in the Economics Folder. Boating is obviously an expensive leisure activity and the public needs to better understand that before they pick it up and are forced to drop out due to the high cost of participation. You do not want to use the cost of participation data to "run people off". You just need to be honest with them and find ways of presenting the data and comparing it to other leisure activities. You might try showing costs on a per hour basis?

A good reference in this area is, "Recreation Economic Decisions: Comparing Benefits and Costs" by Richard G. Walsh at Colorado State University. This 600 plus page 1986 book published by Venture Publishing in State College PA shows many ways of calculating and comparing the costs of various leisure activities. It also includes quite a bit of data, but the data is now old. The calculations can be redone with today's data and some interesting insights can be gained.

Partnership Ownership of Boats

Why not more partnership or group ownership of boats. It is prevalent in small airplanes. It seems like dealers and others could do some work to find those in their area interested in pursuing joint ownership, bring them together, and help them with some legal forms, etc. This would seemingly introduce a lot more people to boating by lowering the participation costs??

Subsidize Fun and Needed Boating Activities

How about some of the big companies in the industry subsidizing some "mom and pop" operations that help make boating more fun. Things like "boat in" hot dog stands at the lake, "boat in" movies, people to organize and manage on water activities such as boat rallies, people to train marinas in how to keep their places clean, provide "day care" facilities near the water, provide aerobic classes on a floating dock, teach swimming lessons, people to assist rangers in very busy times, teach ski lessons, floating pop stand, drive in theater for families to go to at night, provide religious services on or near the water, etc. Many of these operations cannot financially sustain themselves. With a little help from the big manufacturers they could make boating much more fun, which would result in many more boats being sold. One family might actually be able to provide several of the activities.