Righting the Ship

By the end of 2001, it had become obvious that US Marine was in trouble.
The Brunswick Boat Group division’s 1999 first-quarter results were the first sign of the tumultuous five years to come. Though the division manufactures Maxum, Trophy and Meridian boats, Bayliner was the hardest hit. Its sales had plummeted 13.9 percent, compared to the first quarter of 1998. And that bad news was only the beginning.
The US Marine production machine, which didn’t seem to recognize the sharp decline in demand, kept on chugging. Dealers were stocked with 70 percent of the entire year’s inventory by July, and the division was sitting on an additional 4,000 boats in its factory yards. There was a tremendous glut of inventory – and nowhere to stock it.
To make matters worse, the Bayliner line-up was aging. Product life cycles had been mismanaged, according to Dave Taylor, vice president of sales and marketing, and the company was losing brand focus. Rather than concentrating on its strength of high volumes of smaller boats, Bayliner was building larger and larger boats that sold fewer and fewer units.
The company didn’t react fast enough to a shrinking market, continuing to produce large boats that wouldn’t sell and pricing smaller boats out of their range with extraneous features. All the while, retail sales lagged while wholesale inventory continued to fill the pipeline.
Forced to respond with heavy discounts when dealers reduced their orders, US Marine was in over its head.
Four boat plants were shut down, putting about 650 employees out of jobs in January of 2001. Parent company Brunswick was forecasting a 7-percent decline in the domestic market, and the company was looking to reduce inventory levels.
“[U.S. Marine] did all kinds of things that created short-term fixes but caused long-term damage,” said Taylor.
In March, division President John Russell was out, and Sea Ray head Bill Barrington replaced him. With the looming threat that BBG might pull the plug on its faltering division, Barrington was faced with some tough decisions. And he took drastic actions, which included completely suspending production at eight different plants for anywhere from one to five weeks.
This action proved to be the first in a line of long-term fixes. US Marine’s recovery has not been an easy one. But a sound plan and new strategies have brought it back to profitability for the first time since 1999.
Investing In The Future
Though the company was still losing money during the recovery, management knew it had to invest along the way. That focus began with the human resources, Taylor says.
“We all know that in this business, or any other business, it’s all about the people and energizing the people to get it done,” he explains. “We needed to look at our people resources and get them aligned with what we needed. Sometimes that means moving people, changing responsibilities and bringing in different types of people that can do what needs to be done.”
Barrington’s management – complemented by new heads of manufacturing, dealer development, and sales and marketing – gave the employees a sense of stability, something the company hadn’t had for some time. With a solid plan to rally around, US Marine was able to unlock the passion and potential of its employees.
Now that the company offered a stable environment, it launched numerous research projects in an effort to gain a better understanding of its customers.
“When you are investing in moving inventory,” Taylor explains, “you can’t invest in better products; you can’t invest in better marketing; you can’t invest in research to understand it.”
But as opportunities – and cash flow – allowed, US Marine took yet another step toward getting itself back on track. The company commissioned such projects as a migration study – tracking Bayliner customers through buying, using and exiting the brand – and a survey of owners of more than 30 boat brands on needs, attitudes, usage, purchase behaviors and overall perception.
The additional insight into new target markets and brand positioning is behind a plan to increase SKUs by 43 percent (from 70 to 100) by model year 2009. That translates to about 22 new, replaced or refreshed projects per year.
“In 2005, we have increased our research budget at US Marine alone by 2.5 times,” says Taylor.
As US Marine invests in its future growth, though, it has an eye on its past. The company won’t head down the same high-volume path it did in the late 90s, Taylor promises. With highly skilled database professionals on staff, the company monitors retail results on a monthly basis.
“We’re working in concert with sales and manufacturing on what we call our SNOP process,” he says. “And that process allows us to look at all of the indicators of inventory, retail and our plant rates. Then, on a quarterly basis, we’ll look at line rate adjustments to fit what’s going on in the bigger picture.”
A Quality Perception
Of course, equally important as creating more product is ensuring the quality of that product. And Taylor spoke candidly about the perception of Bayliner in the marketplace.
Currently, Bayliner holds roughly a 20-percent share across the 17- to 23- foot runabout market. The vast majority of Bayliner owners love their boat, he says; however, the 80 percent of boaters who don’t own a Bayliner believe it is the worst boat on the water.
US Marine aims to change that perception with an intense focus on quality.
“What we’re seeing is boat quality needs to be worked on in a big way,” Taylor said. “Durability needs to be worked on quite a bit. That is industry wide. We are falling short of meeting expectations, and we need to do a lot of things to improve that.”
With the focus on quality so crucial, US Marine has turned to efficient manufacturing systems, hiring experts in Lean Six Sigma and Five S to help.
Robotic and hand-held water jets cut hull fiberglass, robots apply gel coat, and small parts are molded in closed molds. US Marine water tests 10 percent of the boats leaving the production line. This means that warranties can be extended. Beginning in model year 2005, Bayliner and Maxum runabouts have a lifetime limited warranty on the hull, with a 5-year warranty on the deck. Bayliner and Maxum cruisers and sport yachts will have a prorated 5-year hull and deck warranty. All Trophy products will have a 10-year hull warranty.
In addition, US Marine received Mercury iQ certification in June of 2004, a quality improvement process for stern drive and gasoline-powered inboards. This certification bumps the warranty on Mercury engines to two years rather than the standard one-year term.
“We build a good boat,” Taylor said, “We are committed to changing the perception in the marketplace. We know it’s going to take time.”
Repeating History
Potential customers base many of their product perceptions on their experience at the dealership. That’s why strengthening its dealer support has been such an important part of US Marine’s turnaround.
According to Taylor, US Marine has a strong legacy of training at the dealer level. During the 1980s, the company had excellent regional sales managers who hit the road and worked with dealers to educate them on the product and sales techniques.
But over time, those roles began to disappear as resources were funneled to different areas. By the time current management arrived in 2001, there was no training to speak of. And dealers were complaining about the lack of support.
To solve the problem, US Marine moved Craig Dixon from his role as director of marketing to a full time training role. Dixon has a deep sales background, having worked for US Marine’s largest dealer as a sales manager.
“I have a passion for sales training and sales and what it takes to make money in the boat business because I understand it,” Dixon says. “I understand dealers’ language. I understand how to talk to them, so this became a huge opportunity for me. What worked well in our history was we simplified the process. We gave salespeople tools that were simple to grasp.”
Creating a new generation of training tools has been the key to Dixon’s success in his new role. In doing so, he has begun to restore the reputation the division once had for its strong dealer support.
Dixon is just one of many US Marine employees who have contributed to the division’s turnaround. And though its success story is due to many factors, Taylor believes it’s the employees who were most important.
“I really think it has to do with energizing people around a plan,” Taylor said. “What we’ve been able to accomplish is to get everybody to step back and focus on the customers’ needs and attitudes, and how we can go win in the marketplace.
“When you get a whole group of people that have all different types of skill sets and passions around the brand, you really start to get innovation and creativity. Because they are looking beyond [what’s expected,] they’re going ‘How can I fulfill this need?’ not, ‘How can I put this widget on a boat?’ It’s good stuff.”

July 1999
US Marine’s Bayliner reports a 13.9-percent decline in sales for first quarter of 1999.
January 2001
Brunswick announces plans to close four US Marine boat plants that manufacture Bayliner, Maxum and Trophy brands. Plants were closed in Spokane, Wash., Tallahassee, Fla., and two were closed in Valdosta, Ga. About 650 employees were affected.
January 2001
US Marine president John Russell says plant closures are due to reduced annual commitments from dealers.
March 2001
William J. Barrington replaces Russell as president of US Marine.
April 2001
Brunswick suspends US Marine production at eight plants and eliminates 170 positions across the division.
April 2001
Ian Calame, an analyst at A.G. Edwards & Sons in St. Louis, Mo., says there is a “potential for additional layoffs and management shakeups,” concluding that 2001 would be a “tumultuous” year for Brunswick.
May 2001
Regal Marine Industries, Inc. acquires Brunswick’s two Valdosta, Ga., plants.
July 2001
US Marine closes its Miami, Okla., manufacturing facility and distribution center, eliminating 150 jobs.
January 2002
Brunswick Chairman and CEO George Buckley indicates that there is still some boat plant restructuring to complete as the company remains too vertically integrated. He predicts domestic marine retail to be down 10 percent and Brunswick’s business to be flat.
April 2002
Brunswick announces plans to offer a Bayliner for $9,995 through production at a new Reynosa, Mexico, manufacturing facility.
July 2002
US Marine overhauls its brands for 2003, launching a Meridian Yachts line, focusing Bayliner on the affordable boating category, and re-energizing the Maxum brand with a “new, youthful look.” Meridian Yachts takes over an Arlington, Wash., plant where former Bayliner Yachts were manufactured.
July 2003
Stephen M. Wolpert is promoted to president of US Marine.
January 2004
Buckley announces during an earnings conference call that the company expects US Marine “to return to profitability in 2004,” adding that the company’s small boat strategy had been so successful that demand for the Bayliner 175 and Bayliner 185 was “well exceeding our capacity.”
January 2004
Buckley announces during the same conference call that the company plans to build several new manufacturing facilities in the next two years, including a second and possibly a third boat building plant in Reynosa, Mexico, in addition to considering constructing another boat building plant in China.
July 2004
Buckley references US Marine’s “remarkable turnaround,” in a statement from the company, noting that the division is operating profitably for a second-consecutive quarter, with sales up 29 percent for the quarter.
December 2004
US Marine realigns its organization by integrating its domestic and international sales efforts into one global structure.
January 2005
Buckley announces that US Marine has officially returned to profitability for a fiscal year in Brunswick’s earnings conference call.
Source: Boating Industry online

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