When a boat builder goes bankrupt, it’s tough on everyone. There are a lot of unanswered questions, whether you’re an employee, a supplier or a dealer. And while it’s good news if the company finds new ownership, that only adds to the list of questions.
During this process, dealers are often kept in the dark the longest. After all, their questions are the hardest to answer. Will their customers’ warranties be honored? What is the new owner’s dealer network strategy? When will boats be available to order? To what extent will the company invest in R&D?
These questions and more flooded the industry when Genmar Holdings LLC went bankrupt in 2009 and private equity firm Platinum Equity bought up many of its assets in early 2010. Answering those questions was one of the first priorities of Rec Boat Holdings President Roch Lambert when took the helm of Four Winns, Glastron and Wellcraft in May 2010.
This isn’t Lambert’s first time rebuilding a brand in the wake of a bankruptcy. He was in charge of the Evinrude brand when Bombardier Recreational Products acquired it following the Outboard Marine Corp. bankruptcy. As such, he understands the importance of transparency and the dangers of leaving so many questions unanswered for too long.
In fact, one of his team’s key strategies at BRP was the launch of an award-winning weekly newsletter, The Real Deal, which was vital to Evinrude’s rebirth, squelching rampant speculation before it poisoned any of the outboard engine brand’s positive momentum.
Lambert is pursuing a similar strategy at Rec Boat Holdings. As with BRP, he launched a newsletter – The Inside Channel – to keep dealers in the loop about initiatives and updates from the new management team.
In addition, the Rec Boat Holdings team created a Dealer Satisfaction Index, the first survey of which was launched last December. Eighty percent of the company’s dealers participated. Going forward, surveys will be sent out every six months.
“It’s a great tool to reset the clock on some of the things we haven’t done great,” Lambert comments.
Last summer, his team set up meetings with Glastron and Four Winns dealers to update them on the company’s plan for the future.
In the case of Glastron, the company invited the dealers to Cadillac, Mich., to visit what was for them a new plant.
The company took a different strategy with Four Winns dealers, who knew the Cadillac plant well. Instead, the team, including Jeff Brunson, Four Winn’s new vice president of sales and marketing, spent late September and early October at meetings in Chicago, Toronto, Atlanta, Denver and Hartford, Conn.
The Rec Boat Holdings team shared a similar presentation with both groups.
“Every time we had a meeting, we were rewarded with orders,” says Brunson. “If they didn’t like what we were saying, they wouldn’t have invested their money with us.”
“You could see that they were skeptical,” says Bruce Sargent, Glastron vice president of sales and marketing. “But after the presentation, they said, ‘This is what we’ve been wanting to hear.’”
The presentation consisted of an explanation of the role of Rec Boat Holdings new owners, Platinum Equity, as well as the company’s plan for its boat brands going forward.
During the presentation, Lambert shared Platinum Equity’s commitment to Rec Boat Holding’s success, its expertise in turnarounds, the resources it has available to help the company position itself for success, and its plan to exit the business within five to 10 years. He explained that the company is well positioned financially, as it was bought with cash and therefore has no long-term debt.
But Lambert also addressed the challenges the boat builder is facing. Between 2005 and 2010, the volume of boats produced by the segments in which Four Winns and Glastron operate dropped by almost 65 percent. The remaining 30 percent consisted mostly of small boats, on which boat builders make very little margin. Therefore, margins were down about 95 percent.
“The magnitude of the change we had to face, dealers were stunned,” comments Lambert.
“Before you do business with us, you’re going to see reality,” adds Brunson. “Dealers are looking for leadership in this industry to turn it around.”
At Rec Boat Holdings, this new reality includes increased boat prices and a decrease in traditional advertising, as well as a new focus on Internet marketing and a substantial investment in product development.
To be profitable in a much smaller market, boat builders have to be very selective about where they spend their money – and where they don’t, suggests Lambert.
Quality, efficiency and agility
One area where the company quickly identified that it could save money is in production. By consolidating the manufacturing of the Glastron, Four Winns and Wellcraft boat lines into one plant (its seven production lines manufacture 79 models), the company was able to cut costs dramatically.
“Without running a plant close to capacity, you can’t make it,” comments Lambert. “We are at 75 to 80 percent of capacity in that building today.”
Next, Rec Boat Holdings introduced new processes to measure, track and drive improvement in areas like lost time and quality. In fact, the company spent $1 million on a group of consultants to help it become more efficient and deliver higher quality.
Among other things, the consultants conducted a time study to determine the amount of time a boat needs to spend in each station. By adjusting the production process, they were able to standardize this “tack time.” As a result, each boat now spends 52 minutes in each station, after which the cable system that attaches each boat to the next one in the production process pulls the line of boats ahead to the next station.
Changes like these allowed Rec Boat Holdings to improve its efficiency by 45 percent between September and December 2010.
The consultant also instituted a system through which two boats per day now receive an audit, which consists of a 500-point checklist. As of January, the boats were passing with an average of 486 out of 500.
“Today, we are in the middle of the pack in quality,” says Lambert. “We’re good, but we don’t stand above the crowd. Our goal is that quality will be one of the criteria that will make us stand out in the crowd.”
Finally, Rec Boat Holdings has spent a lot of time and energy trying to build more agility into its manufacturing processes. It has re-evaluated its raw inventory supply levels by asking itself what it needs to carry and what it can order as needed. As a result, the company has reduced its inventory by 60 percent since last May.
The area where Rec Boat Holdings is focusing the most significant portion of its resources is engineering.
Already, this department has realized some impressive achievements. Perhaps its greatest feat in recent history was the redesign of the entire Glastron line – 22 boats – in four and a half months as part of its transformation from the VEC closed mold process to a more traditional open mold process. However, that’s only the beginning.
One of the company’s highest priorities is differentiation—both of the Four Winns and Glastron product lines from each other and of those product lines from their competitors.
In the case of Glastron, which currently runs from 17 to 28 feet in length, the company intends to focus on the brand’s roots in the small boat market. Rather than expanding into models above 28 feet, it will build even smaller boats as part of its efforts to revamp the entire line over the next 36 to 48 months. The vision for this brand’s future is small, exciting, young and in pursuit of family adventure with a design inspired by the Glastron boats of the 70s.
The vision for Four Winns is akin to that of Buick, explains Lambert, a little more subdued and higher-end than Glastron.
“I want a guy who purchases an 18-foot Four Winns to buy a little bit of the yacht,” he says.
The vision for Wellcraft is still in development. Lambert explains that his team began by creating well-defined plans for Four Winns and Glastron. By the end of the spring, a similarly detailed plan for Wellcraft will be in hand. The team tasked with building that plan includes Pat Bucci, national sales director, and Mike O’Connell, former Wellcraft president. Lambert is confident that by refocusing the company’s efforts to better support the brand, it will generate some “pretty interesting results.”
“There were around 40,000 Internet searches for boats in the month of November,” says Lambert. “Twelve thousands of those searches were for Wellcraft, making it sixth on the list. There is a ton of equity around the brand.”
Between May and December 2010, the engineering department took on 15 projects. In 2011, 13 projects are planned, including six new boats, as well as modifications and redesigns of current models. And Lambert says in 2012, the company will invest four times more than it has this year.
“Not having long-term debt gives us financial flexibility,” he explains. “We’re going to try to be as aggressive as we can be in this time.”
Ultimately, Rec Boat Holdings isn’t expecting a smooth path ahead. It’s not banking on sales volume returning in the short-term, for example. And as a result, it expects further consolidation at the boat builder level. But the company is intent on positioning itself to succeed when the volume does return.
“I want this to be a world class organization,” concludes Lambert. “We’re never going to be perfect, but I want us to be as predictable as we can be and upfront with the people we deal with. We’re building a professional organization here that will create value for everyone involved with these brands.”
Wellcraft line of boats has to be one of the greatest with best designs on the waters. the St. Tropez and Monte Carlo, Grand Sport with the open concept in cabin is superior to any on the waters even today. Many of our boating group are looking for the type and working a refurbishedment. The 80's styles are like collecting an 80's type Corvette. the 90's and up boats did not allow for walk around decks and docking and locking was a real problem. Automotive companies went retro so can Wellcraft with a style for the boomers and even the younger class is giving thumbs up to the style of class ship we are keeping on the waters.
Wellcraft has had very good product offerings in the past which achieved "cult" status: Steplift V-20 comes to mind. Small, affordable, sea-kindly hull was key for success. Introduce a 2015, sell to the Great Lakes market, maintain quality, follow-up with customers, and watch sales take off!
Design a Steplift V 25 and a V 30 to enable move up-ability.
It is very hard to find a traditional, high quality, moderate cost practical boat today. Hinterhoeller, Rossiter, and Slickcraft-gone-by are examples.
I own a 2006 four winns 348 vista cruiser, purchased new. one of the reasons i bought four winns was their reputation and lifetime warranty of the hull and other areas. After it went bankrupt the new owners rec. holdings said that the warranty was no longer valid. now Benetaeu owns the company. needless to say I am extremely disappointed and have expressed to four winns my concerns, with no help. I now make sure that everyone knows of this and I will never purchase a boat from them again.