Brunswick to close Knoxville Sea Ray plant
Brunswick Corporation will close its Sea Ray manufacturing plant in Knoxville, Tenn., and consolidate U.S. cruiser production for Sea Ray in Palm Coast, Fla., and Vonore, Tenn., while producing Bayliner cruisers in Brazil, the company reported Tuesday. Production at the plant will cease by the end of 2012.
"This will be more efficient and still allow us to retain capacity equal to three times our current worldwide cruiser demand, enabling us to adequately increase production when the market improves," Andrew E. Graves, president of the Brunswick Boat Group, said in a company statement.
The plant currently has a full-time workforce of about 225. Brunswick estimates the actions will save approximately $10 million - $12 million a year once implemented.
The move is part of a larger repositioning of the Bayliner brand as the result of continued weakness in the cruisers segment. Bayliner will make Brazil the center for its cruiser business but will suspend the brand's cruiser sales and production outside of South America, leaving Sea Ray to represent Brunswick in the cruiser segment in North America.
"Though the U.S. marine marketplace has improved recently, the recovery has been uneven across the various market segments," Dustan E. McCoy, Brunswick's chairman and chief executive officer, said in the statement. "While sales of smaller boats, such as popular fishing boats and pontoons, have improved, demand for cruisers and larger boats remains weak. We believe this is due to a number of factors, including continuing economic uncertainty as well as a cautious and evolving consumer. The actions announced today are a necessary step in enabling us to reach our near-term operational and financial objectives, while positioning the Company to exploit future market growth in the fiberglass boat segment."
The company says Bayliner will refine its North American and European product portfolio by focusing on its core bowrider and deckboat models as well as categories new to the brand, such as jet boats.
"Our current plan reflects a change in focus for Bayliner's global product portfolio to emphasize and expand its leadership across a broader set of recreational day boat craft types," said Graves. "In doing so, we continue Bayliner's legacy of successfully anticipating and adapting to the marketplace for more than 50 years. Over the next several months, we will introduce an all new line of bowriders, a new series of deckboats with innovative and modern design, and we will launch the 'Element,' our newest concept in affordable boating. In 2013, Bayliner will enter the jet boat category with a new series of boats. We believe this effort will solidify our position in the market and offer dealers and boaters a wide variety of choices and models."
Separately, Brunswick reported that a portion of its assets pertaining to certain boat brands, including Hatteras, Cabo and its European and Asia-Pacific boat brands, have been impaired and that impairment charges related to these brands will be recognized in the third quarter.
The company's estimate of total restructuring and impairment charges in the third quarter will be in the range of $25 million to $32 million pretax. These charges primarily include non-cash asset write-downs, but also include charges for severance, facility closing and other costs. Brunswick anticipates that additional charges pertaining to these actions will be recognized in future periods.