Brunswick Corporation (NYSE: BC) announced today that it will consolidate its yacht and motor yacht production at its Palm Coast, Fla., manufacturing plant. As a result, Brunswick will suspend manufacturing at its Sykes Creek boat manufacturing facility in nearby Merritt Island, Fla., at the end of June. The Brunswick Boat Group's (BBG) Product Development and Engineering center, located adjacent to the Sykes Creek plant, will remain in operation. In addition, BBG will continue to utilize the existing customer reception facilities, sales and customer service offices, and wet slips located on the Merritt Island campus.
The Sykes Creek plant, which currently manufactures Sea Ray and Meridian yachts and motor yachts from 51 to 61 feet in length, currently employs approximately 205 people in manufacturing. The Company is evaluating job opportunities for Sykes Creek personnel to help transition production to Palm Coast or at other BBG manufacturing facilities for those employees who are interested and able to relocate or commute.
"This action allows us to reduce production costs and shorten production cycle times of yachts. Further, the transition is planned so that we can take full advantage of initial retail demand for our new yacht models that we are bringing to the marketplace over the next two years. Concurrent with the transition, comprehensive marketing materials will be provided to our dealer network to support the pre-sale of the new yacht models under development. We can still support significant sales growth in these segments, as our post-consolidation manufacturing footprint will retain capacity to compete in a market in excess of 2.5 times current worldwide demand for yachts and motor yachts," said BBG President Andy Graves.
"Difficult as it was, this action was a necessary step to match capacity with market demand, position Sea Ray for success with new yacht product development programs, and work toward our near-term operational and financial objectives," Brunswick Chairman and Chief Executive Officer Dusty McCoy said.
When the entire consolidation is completed, the Company estimates that this action will result in annual savings of $3 million - $5 million beginning in 2014. Restructuring and impairment charges of $6 million - $8 million are expected to be recognized as a result of this action in 2013.