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Boat industry needs to ‘rethink how boats are made’ says McCoy in METS keynote

McCoy-Brunswick

By Craig Ritchie
November 19, 2013
Filed under Features, Top Stories

Brunswick Corporation CEO Dusty McCoy identified four areas in which the boating industry must improve during his keynote presentation to kick off the 26th Marine Equipment Trade Show (METS), held this week in Amsterdam. Above all else, he said, it must hold the line on retail pricing.

“We surveyed 50,000 boating consumers – current boaters, former boaters and future boaters – in the United States, Canada, Europe and Brazil. And we learned a striking fact. It is not important for us to sell boating as an attractive lifestyle. People get that. They know that boating is fun, and they know that boating is a pastime that brings families together. What they’re having trouble with, however, is balancing the benefits of boating with the costs of boating,” said McCoy. “If we look at real market pricing, the cost of new boats is rising dramatically faster than the rate of inflation.”

The answer, he said, is for the entire industry to rethink how boats and their various components are made, pointing to the auto industry as an example. New cars include numerous features and refinements not found on older vehicles, McCoy noted, while manufacturers have managed to hold retail price levels at a more consistent level while protecting operating margins. “As an industry, we’re beginning to price ourselves out of business. It’s difficult for a lot of people to wrap their heads around that because we’ve all become very good at adding features and letting the costs fall where they may. But we now need to become better at engineering boats so they provide better value.”

McCoy said, the boat industry needs to rethink how boats are produced, and adopt the just-in-time supply chain model that has helped automakers significantly reduce costs. He identified supplier flexibility and speed as a key requirement for this to take place, along with ensuring all partners within a given supply chain have sufficient operational capacity. “Nobody wants to carry inventory today – dealers don’t want to have money tied up in it, nor do distributors, manufacturers or anyone else in the supply chain. But we all need inventory, and we all need to be able to supply it faster than ever. The days of building product then waiting for a sale to come along are over. Suppliers need to be as quick and flexible as suppliers in the automotive industry are.”

Comments

16 Responses to “Boat industry needs to ‘rethink how boats are made’ says McCoy in METS keynote”

  1. Mitch on November 19th, 2013 7:47 pm

    We need value for the money and a 70 or 80k 25 foot open bow that has a sticker over 100k for most people just has no real value. We need to make owning a boat affordable and not just by financing for 50 years!

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  2. Richard on November 20th, 2013 3:41 am

    Boat builders/sellers need to bear in mind that seasoned boaters know, and new boaters very quickly find out that buying a boat is only the first step in the financial obligation chain of events necessary to be able to get out on the water safely. I’ve often said, buying the boat is the easy part – the hard part is coming to the realization that the ancilliary costs can often exceed the boat payment, i.e., insurance, storage/dockage, utilities at marinas, electric/cable/satellite TV, operating costs like fuel, comfort supplies, safety equipment, electronics, maintenance of engines and all other equipment, repairs, etc., etc., it is an on going never ending stream of out going cash. I have been a boater for over 50 years and still have 2 boats, a 36′ twin engine diesel cruiser (purchased new in 1987) and a 16′ Whaler – a 2007 model purchased used in 2010 for hauling grandsons around on wakeboards, and I can honestly say, even though I have the financial ability, it has become most difficult to “cost justify” the cash outlays even though my boats are paid for and are on a fresh water lake requiring a bit less maintenance than a salt water environment. It is becoming more equitable for me to charter and/or take ocean cruises to satisfy my desire to be on the water than keeping and maintaining my boats. I see the costs of new boats far above what I paid in 1987 and I think my boat came better equiped than most of those of today.

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  3. tom on November 20th, 2013 9:49 am

    I have been involved in boating for over 40 years, as an employee who worked his way up the ranks form sweeping the floors all the way to the top and as a recreational boater. I have seen the bad times (which are here again) and the good times (which I believe we will not witness again). The manufactures in my mind are to blame for the own demise, they have for over 10 years thought that they could just add so called features and charge the consumer for these over priced non essential items, (lets call it what is really is, over priced ginger, thought up by out of touch manufactures) and then expected the dealers to try and sell this to the smart, informed consumer, when the dealer really new what the consumer was looking for (a product built for fun and a lasting value at a reasonable price) the dealers new they would have a hard time reaching the goals and commitments set by the manufacture, which are not the true line of consumer confidence, the dealer and now the dealers are in control to a degree and the manufacture 10 years to late are starting to listen to the dealers. All I can say good luck to the boat, motor and to some point the parts and accessory distributer in the future, you should have been listening to the dealers and not the marketing and bean counters.

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  4. Bob Johnson on November 20th, 2013 12:13 pm

    In 1983 Bayliner came out with their 1950 Capri Bowrider I/O with Trailer advertised for $7,995 (yes I’ve heard the stories) but like it or not Bayliner was very instrumental in getting new blood into boating and all of a sudden boating was affordable for young families. Should we compromise quality for price NO but with water access shrinking, more Government regulations (i.e. New York’s boating law) and ageing boaters we need to be able to attract the next generation of boaters by making it affordable again.

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  5. Chris Johnson on November 21st, 2013 10:06 pm

    Having a degree in marine design and working in shipbuilding and custom Yacht manufacturing for a number of years it’s easy to see how this can happen to smaller vessel manufactures. However it is nothing short of business malpractice to hear that a company as large as Brunswick is just now talking about JIT, frankly if that is their starting point they can expect to be parted out and sold to someone who can resurrect such a uninspired operation from the scrap heap of the boat manufacturing history. I mean really, just in time was all the rage in the 80’s so you are 30 years behind the ball. Most all customer focused manufacturers are past 5S, past simple lean, past simple supply chain management. Continuous Improvement Programs, Lean Beyond Manufacturing and global supply-chain management is fully implemented. Most comparable sized companies are focused on becoming “world class” in their respective sector. They are implementing Overall Equipment Effectiveness (OEE), Overall Production Efficiency (OPE) and many other fun acronyms that would make your head spin. Either Mr. Ritchie lives in a bubble or he was lazy in putting together his keynote, either way its embarrassing.

    I am a bass fisherman, a guide and a tournament angler. I choose to have a new boat and motor to assist me as I chase my passion for fishing. I am fortunate to be able to afford this lifestyle but the industry is eating itself and it will reap what it sews! I am not rich by any stretch just stupid or fortunate depending on your view to spent 50 to 60 thousand dollars on a 21′ boat with a 250hp motor. If you were a young angler wanting to get into the sport you either risk it all or wait till your in your 50s or 60s so you could afford a similar rig. It’s a rich mans sport if you make 30 – 60k a year. The cost of boats today is bad for sportsmen, bad for the future of the sport and bad for the boating industry! You might be living on my back today but you will be flattened under the feet of the upcoming generations as they completely turn to more reasonable ways to enjoy the waters of our country. Every year at boat show time I think of the materials in my 21′ bass boat, the cost of it and as I walk through a boat shows and see recreational boats with two or three times the materials that could be bought for the same money it makes me sick. Lets all hope for the sake of the industry Brunswick and all other manufactures take that step into the 21st century!!!

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  6. Ed Calderone on November 22nd, 2013 7:13 am

    As an old bass fisherman who has a 16 year old, well kept boat my chief complaint is the boating industry thinks the “Elite” fishermen are the ones who buy stuff. The grass roots fishermen have been forgotten. The old adage that for every 10 lures made, nine are to catch fishermen and one is to catch fish is true. Same for the boating. How ever did Clunn catch a fish without a double power pole. Or a Hummingbird super 60 wasn’t truly electronics. The fishermen of 25 years ALL knew how to fish and how blessed they were. Wake up. Go to any bass event and see how few youngsters there are today that fish and own their own boats. Perhaps as another idea. The minor leagues. Less cost. Less travel. Less expenses. All equal more. Just my .02

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  7. Russ on November 22nd, 2013 4:02 pm

    An industry so dependent on outside vendors is fortunate a few of them are still in business to supply the assembly lines at all after some industry “movers and shakers” failed to pay them when the recession hit, orders dried up and they bankrupted their companies.

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  8. Stephen Oglesby on November 27th, 2013 11:19 pm

    I’m glad this topic came to light….first off I was a bass tournament fisherman back in the 80’s and 90’s and left the sport to raise my family back in 2000. I decided the past couple of years I wanted to re-enter the sport. I knew boats had gone up but was just absolutely floored that boats that I used to buy in the in the $18K to $25K range now cost $45K to $60K and higher. I understand the reason they are higher and that is ultimately the cost of the raw materials to build them going through the roof because they are directly tied to the price of oil.
    I look at the bigger boat dealerships in my area of the country and see that they are holding not just bass boats but all kinds of boats in large numbers that date back as far as 2011 manufacturing dates, this can’t continue much longer without there being some sort of financial repercussion between the financial institutions that back them and the dealerships. Could bankruptcy be on the horizon for these for these dealerships? Who knows but it don’t look good…….I figure my options are to either buy a 17 foot boat with a small motor or wait to see these dealerships go down and by the rig of my dreams at an auction for a really deep discount. I don’t want to see the later I mentioned happened but right now I don’t see any other way out for these folks……my two cents

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  9. Mike Whatley on November 30th, 2013 7:27 pm

    The original cost of boats certainly is a consideration at the time of purchase, but it becomes less painful over the years since payments don’t usually rise. The breaking point for me was the constant rising of dock fees, winter storage, and the high cost and low quality of repairs. I felt the local marine businesses were over charging me since my boat was not tow-able. Where else could I go? I finally gave up, sold my 38 footer and went back to trailer boating. So much happier.

    One last thought… most boat manufactures do not fully reimburse dealers for warranty repairs. When my boat was new I was told I would have to make up the difference between what the manufacture reimbursed warranty work for and the dealers hourly rate. I paid it because the next closest dealer within 200 miles was inland.

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  10. Tom on December 1st, 2013 1:09 pm

    It’s refreshing to hear someone at the top saying what boaters already know. Just take a look at some of the forums, you’ll be hard pressed to find many 1-3 year old boats for under $50k. I blame the top circuits to an extent as well, turning the 21ft bass boat with 250HP engine into the standard.

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  11. Rick Pierce on December 2nd, 2013 6:49 pm

    Stepping out on a tattered limb, Dusty needs to understand more than just his direction on replicating mass motor production techniques of six sigma and black belts. The facts are what they are no matter any opinion. Options have grown greatly in the bass boat world as the writers above pointed out. Costs also grew similarly and no one wants less on their boats. As equipment, length and horsepower grows so does pricing.

    The real issue is the close proximity of engine pricing where there is no large relative step difference between a 115, 150, 200, 225 and 250, when compared to the retail price tag of the full rig. Those costs are simply too close and retail buyers expect to pay $8,000 less for a 225 rigged boat than a 250 HP unit. The difference in the price tag is about $1,000 and there is no spread to reduce the number. A 200 is only $3,700 less than a 250 Pro XS though the retail price package difference in the rigs they are mounted on ranges $25,000. A 15% of difference on a 38% range variation.

    The MSRP between a 115 Pro XS and a 250 Pro XS is $9,585. While retail costs on those boat packages range from $25,000 to $65,000. The engine comprises 31% of the $65k rig and 42% of the $25k rig. Obviously there is not enough spread in the engine pricing.

    On our actual production cost of a 17′ boat with a 115 engine the engine, engine harnesses, key switch, fuel line, cables, propeller, trolling motor (Attwood) consumed almost 50% of the actual cost of of materials. All to 2 Brusnwick companies. Thus leaving us only a miniscule portion for production of the 17′ 7″ boat and trailer. Labor on a 17′ 7″ boat is no different than Mercury labor on a 115 vs. a 250, not that significant. Marketing costs compare for both companies. Motor companies cannot expect boat companies to reduce pricing at exponential levels when their pricing is done sequentially. Ben Sherwood (OMC) was and now Dusty McCoy is preaching the same chorus while needing to look in the Mercury mirror on smaller boat packages and cost controls.

    Obviously bass boat companies have not shown the ability to weather those financial storms as have some engine companies. The success of stand alone bass boat companies is limited. Most either came from a bankrupt entity, emerged from a failure or were purchased from over leveraged parts. Obviously those were not profitable enough and the cycle has repeated itself since bass boat companies were started.

    Facts are hard here, though they are facts.

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  12. Anthony on December 3rd, 2013 11:58 am

    I have been telling people for the past several yrs. that the boat business is putting them selves out of the boat business.
    I have never in my life seen a boat sell for $185,000.00and only be 26′.
    With that kind of boat, I could buy a house and make model boats in my basement and still have enought to go out to dinner,
    Bayliner Boat co. Did It the wright way, in the days when boating was Fun.
    16′ Boat $6995.00 Fully equiped, all you needed is to add the gas.
    Now you need a banker to stand behind you and give you a push into buying a boat.

    If this is the way things are going to go, then we should start to ,
    Rethink, and maybe start to buy up all the ( Older Boats and start to rebuild them and sell them back to the boating people) and then let’s see where the Industry will go.
    Even If we put Reman Engine (pkg’s) we will still be ahead,

    The Boats will Not cost $185,000.00 For a 25′ boat, heck you will have enough $ to buy gas for several yrs to come.

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  13. Ken Stofflet on December 4th, 2013 9:33 pm

    Well look who’s smelling the Starbucks now! JUUUUUST a little late to the party there Sparky don’t you think. All those corporate MBA’s and lawyers and number crunchers had to do was LISTEN to the customer. But no one wanted to admit that the dealers and field sales personnel had the keys to the future. All those call reports and sales meetings with the dealers and reps that went to waste. Well better late than never I suppose but why did it take almost 30 years?

    All I know is I sure wouldn’t want to explain it to my shareholders, talk about being asleep at the helm!

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  14. tom willard on January 5th, 2014 9:54 am

    I spent many years working for an oem marine supplier. the jit idea is a good one, but is it achievable in the marine industry? unless things have changed, my recollection is that the foremost problem of being an oem supplier was that the boat mfgr. was not able to forecast or schedule their production schedule, and therefore their material needs. how jit when you don’t know what you need and when?

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  15. tom willard on January 5th, 2014 10:12 am

    the bayliner “element”……….great idea! during the past slow period in the boat bsns. the industry introduced small jet boats to attract people to boating in an inexpensive starter boat. jet power is not universally understood, but the outboard motor power is. moving up in an understandable and popular power spectrum is a much better approach than can be expected from introduction by virtue of a foreign power (to most people) field.

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  16. Mike on February 9th, 2014 11:29 am

    Another side of the issue is when the Pros fish out of 20′ bass boats with 250 hp engines, the weekend guys want to look like a Pro, so they buy the big rigs with 250 hp engines. Maybe if the Pros would go back to fishing out of 18′-19′ bass boats with 150-175 hp engines, the average Joe could afford the new boats. I never understood why average working men felt the need to boost their egos buying a big boat and motor and financing forever. In their case, the boats sits most of the time. It is America and you have the freedom to go into as much debt as you want, but probably not very practical. The manufacturers need to rethink their profit margins also.

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