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| All eyes on Brunswick All eyes on Brunswick - 12/28/2004 With its deep pockets and focus on quality, Brunswick is well on its way to transforming the industry. Boating Industry Tuesday December 28, 2004 When Hurricane Charley vented its wrath on the town of Lake Suzy, Fla., last August, Land ‘N’ Sea’s distribution facility wasn’t the only company-related casualty. Many employees also suffered significant damage to their homes and property. Within hours of hearing about the massive destruction, Land ‘N’ Sea’s management team at Pompano Beach started organizing convoys of food and other critical supplies. Within days, employees from other Brunswick Corp. marine companies started rounding up generators and raising money. Ultimately, they would donate about $30,000, matched dollar for dollar by the corporation, to help their Land ‘N’ Sea counterparts get back on their feet. As they responded to employee needs, the company’s management also made arrangements to get distribution going again despite the totally destroyed facility. A truck began shuttling product to Lake Suzy, and daily deliveries resumed five days after Charlie hit. Had the hurricane struck a few years ago, it might have been a different story. “It was a real benefit to have those kinds of resources available so that, as a small company, we weren’t put out of business,” said Tom Schuessler, chief operating officer (COO) for Land ‘N’ Sea, Pompano Beach. There’s been a lot of speculation about Brunswick’s so-called vertical integration since the Lake Forest, Ill.-based corporation purchased Land ‘N’ Sea in June 2003. But those acquired have only good to say about the experience. Whether it comes as a stronger safety net in a disaster or an infusion of capital for new product development, having the power of Brunswick at their back has made an impression. So far, the numbers support their enthusiasm. Brunswick’s boat segment reported sales for third quarter 2004 are up 40 percent compared to the same period in 2003, while the corporation’s stock price has doubled in the last three years. “They are very much on track with their plans,” said industry analyst Tim Conder, A.G. Edwards, Miami. “They have positioned themselves to lead the industry in the direction it has needed to go in for a long time.” While Brunswick asserts that its growth strategy is all about bringing consumers back to boating by delivering a reliable product and rapid service on the level of the automotive industry, the company has taken some hits from others in the industry who view the ongoing acquisitions with concern. According to Dustan McCoy, president of Brunswick Boat Group (BBG), Knoxville, Tenn., however, it is a matter of misperception beginning with the term “vertical integration.” “It seems to me that it creates unrest in that people believe that we have some strategy to own the value string from front to back in this industry,” said McCoy, “and that isn’t what we are attempting to do. “I do not consider that we are pursuing a vertical integration strategy at all. We are pursuing a strategy that gives us a full range of products and services that will permit us to make our dealers more successful and to connect with consumers in a way that we haven’t done in the past. All of the acquisitions we have been making are in pursuit of that goal and strategy.” Laying the foundation Access to capital is the biggest plus of becoming a Brunswick company. For Land ‘N’ Sea, the additional resources have already allowed the opening of a new distribution center in Houston, extending the company’s same day/next day delivery into a new region. Discussions are under way for establishing a presence in California and the Northeast as well. Much of the work done to date, however, has been internal implementing common processes. “It is these common processes that allow us to communicate, analyze and evaluate across all of the businesses while keeping the brands’ identities and not diluting them in the marketplace,” said McCoy. Common processes range from financial to IT to strategic planning. In addition, Brunswick has launched a high performance product development (HPPD) initiative that will eventually transcend the entire marine side of its business. A cross-functional team of about 40 people is working on the initiative full time, with another 80 taking part within the companies. “We are committed to having this process applied by the end of 2005,” said Fred Brightbill, president of the BBG Aluminum Group, Knoxville. HPPD consists of several workstreams, including voice of the customer, portfolio management and product development. In portfolio management, for example, the goal is to ensure that each brand is managed to maximize its customer segments. “That doesn’t mean that we won’t have some internal competition, but we want to make sure that we are facing the customer with a brand that is focused,” Brightbill explained. “For example, in the past, U.S. Marine and Sea Ray have had overlapping products at times. There will be a move toward more distinctiveness. They might sell product in the same size category, but it will be positioned to different customer segments based on the brand’s positioning.” The Aluminum Group is now engaged in major research to make its brands as distinct as possible for greater market penetration. Brightbill has his eye on the 80 percent of the market his group doesn’t own. In addition to HPPD, the Aluminum Group is also implementing the international quality ISO 9001 2000 standards and using some of the tools of Lean Six Sigma, a combination of Lean Product Speed and Six Sigma methodologies designed to achieve major improvements in cost, inventory and lead times in under a year. “We implemented Six Sigma at Mercury and in the first year saved $15 million,” said Brightbill. “The aluminum companies haven’t been exposed to those tools, and we are just starting to go through the training. We’ll use the tools selectively on projects, finish implementation of HPPD and then come back with a much more concentrated effort on using Lean Six Sigma tools.” BBG Six Sigma resources are also being leveraged at Land ‘N’ Sea, where a BBG Black Belt — a status reflecting mastery of the Six Sigma methodology — is working with employees to analyze processes and determine priorities for improvements. “He’s already had a significant impact on improving and streamlining our Seachoice brand in terms of packaging,” said Schuessler. One company, one voice Since Brunswick acquired Attwood Corp. in September 2003, the Lowell, Mich., parts and accessories manufacturer has implemented its own renewed focus on development. The result will be an abundance of new product introductions this spring. New ownership was welcomed enthusiastically. “It is refreshing to have someone come in who is marine-focused and who understands the industry,” said Dirk Hyde, COO for Attwood. Hyde, who was appointed COO following the acquisition, was the only major change in leadership in Brunswick’s acquisitions, and that was because the company’s previous president was ready to retire. Brunswick’s priority has been to purchase healthy companies with strong leadership, not entities that needed new management to get growing. “It has been a wonderful experience as we bring in different talents with different products in different segments of the marketplace, so that we are all learning together,” said McCoy. Collaborations have led to some consolidation. Attwood, for instance, moved all of its pedestal manufacturing to the SwivelEase plant, while SwivelEase operations were integrated into Attwood’s. All orders, billing and other electronic data now go through Attwood. And Land ‘N’ Sea’s distribution centers now stock Mercury Quick Parts, expanding that brand’s penetration, while Mercury’s Latin American sales organization has taken over Land ‘N’ Sea’s sales in that region. “While we’ve been able to help Mercury get more product in the marketplace in the United States, our situation in Latin America was almost the reverse,” said Schuessler. “Mercury has a sales force physically located there, and we were basically telemarketing into the region. So there was a significant advantage in combining our two groups.” That sort of collaboration will no doubt occur in other global markets as well. As yet, the acquisitions haven’t negatively affected the accessories and parts manufacturers’ relationships with their other customers. “We are considered competition in some cases, but we continue to push the fact that Attwood will always be a good supplier that will work with them on their goals,” said Hyde. “Our thrust is highly styled and innovative boat parts and systems that have an intuitive interface with the customers that are based on customers’ needs and desires. There is always going to be a need for a good high-quality supplier that you can count on.” A two-way street While the hurricane season brought destruction, it also is likely to have a positive affect on the marine industry as dealers and owners replace their damaged goods. That simply adds to what is already being touted as a strong season ahead. “The industry is in a sweet spot from a demographics perspective,” said Conder. “We see people very willing to spend money and pay for additional amenities, quality and service.” All of which will help Brunswick continue to gain marketshare with its existing customers even as it goes after more acquisitions. “Driven by the positive economic cycle, they should be able to outpace the growth of the industry given all of the steps that they are taking to make themselves more competitive,” Conder added. Brunswick’s latest steps were forming a new business to address water access issues and another to begin working with dealers in developing opportunities in used boats. Dealers are just now beginning to see some of the results of Brunswick’s vision. McCoy points to the Bayliner 175 as something dealers can expect to see more of. “With the Bayliner 175, U.S. Marine dealers have a product that is hyper-competitive, permitting them to take significant marketshare while making margins in the runabout Bayliner brands that they have never had before,” McCoy said. “So dealers are beginning to see much higher quality product and I hope beginning to feel the momentum that we are building.” There has been some trepidation among dealers about what might be asked of them as it goes forward. Improved service is a given, but Brightbill stresses that it is a two-way street. “They have to get better just as we have to get better,” he said. “We have to get them better quality product, better warranties and better engineered parts and subsystems so that they can be a one-stop shop for handling everything on the boat. But it isn’t us versus them. We will proceed down that path together.” McCoy estimates that it will be another three to five years before Brunswick can deliver product as reliable and service as quick as what is available today in the automobile industry. But in his mind, so far so good. “We are pleased with our vision and the rate that we are moving to implement it,” he concludes, “and we understand where we have to go and how we can get there. It is a matter of keeping the vision in the forefront and working it hard every day.” A Good Marriage It would be an understatement to say that the Hatteras management team was less than enthusiastic when Brunswick purchased Hatteras Yachts, Inc. in October 2001. The team had also bid on the company. It came in second. “If ever a marriage began in less than a positive environment, this was it,” said William C. Naumann, president of Hatteras, New Bern, N.C. “But every one of us is still here, and no matter who you ask, they probably would say the same thing: it’s the best thing that’s ever happened to us.” The most notable change is the accelerated pace of new product development fueled by Brunswick capital. Whereas new introductions used to be rolled out every 18 months, they debut about every nine months now. “We also have probably spent more on our facility in the last three years than we had in the previous seven to 10 years,” Naumann said. “This is now a better, safer place to work.” A Good Fit “We are a small company and we have no illusions that we can ever grow big because of our geographical location, but we can be the best,” said Ronald Schultz. For Schultz, sales manager for Mid-Maine Marine and R.V., Inc., in Oakland, Maine, being the best means offering consumers good service and the right inventory. The boat dealer is located in Maine’s Belgrade Lake region, a vacation area with 60 lakes within 50 miles. Mid-Maine Marine’s customers range from the locals, who could be as far as four hours away, to out-of-staters from as far away as Georgia who summer in the area. Schultz and his father-in-law Frank Prelgovisk, owner of Mid-Maine Marine, recently added Bayliner to their mix of Tracker, Four Winns and Trophy boats for 2005 to secure a new piece of the market. “We took it on because we can sell a boat at $11,300 completely ready to go,” he said. “The closest Four Winns we have sells for $16,900.” As a long-standing Mercury dealer, Schultz views Brunswick’s aggressive growth strategy as a plus, believing that it will help grow Mid-Maine Marine. “The customer now has a global view and compares buying a boat to buying an auto,” said Schultz. “And there’s no way that a small manufacturer can live up to the expectations of a consumer who is buying a Lexus. You need manufacturers with the technology and money behind them to do that. It is basically unavoidable in this day and age. – Kristine Ellis | |||
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| sworrall |
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Location: Rhinelander | This is a great example of how Brunswick works in the business, and is indicative of what drives the company on the Marine end of things. I get a kick out of it when someone says "Mercury bought Crestliner!!" No; Brunswick did, and that integrates the line but deosn't make it a Mercury product. Of course, Brunswick also has deep pockets, so as listed here, the benefits to the company that is purchased can be extensive. One thing for sure, things won't necessarily stay as they are in this business!! | ||
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