When sales go down during a recession, most business leaders pull back on spending.
But not Andrew Brown. During the past few years, this boat building executive has taken a bold leap of faith by investing to form the Power Cat Group, further penetrating the power catamaran segment.
“Buying a boat company when you’re not building boats sounds crazy, but it makes logical sense,” says Brown. “Our strategy at the time was to buy assets, not to build boats. We were trying to reduce inventory and building boats would just add to the problem for our dealers.”
Brown’s initial asset – acquired in 2002 – was World Cat. In the years prior to the recession, the company developed a retail strategy for this brand that was designed to provide dealers with three turns a year. It involves equal pricing and rebates for all dealers, as well as generous, protected territories. This positioned World Cat and its dealers to quickly adjust to the downturn.
In 2008, the company sold 180 boats, leaving the company with approximately 70 boats in the channel in the beginning of 2009.
“We had to hunker down, reduce inventory and halt production from February to August in 2009,” says Brown. These efforts were so effective that, today, there are only 27 World Cats available for sale across the country.
“What we did [during the recession] was focus on acquisitions,” he explains. “We just went out to see who we could buy and who would fit.”
In February 2009, Brown acquired Glacier Bay. Livingston was purchased in December of the same year, and he launched Carolina Cat in July 2010.
Meanwhile, production resumed in August 2009, and since then the company has been building a consistent 20 boats per month between the four brands. With the majority of the aged inventory cleared from the market, the boat builder was able to invest in designing new models with higher margins in 2010.
“We are at an advantage now because we are working with higher-grade dealers as we have all three brands,” explains Brown. “Before, there’s no way a dealer would have the three separate lines. There would be too much of a risk for the different builders. Today, a dealer can take on all three at a much lesser risk. That’s really our main incentive and that changes the dealer’s mindset. Imagine controlling five percent of the outboard market with a small amount of inventory and all the competition for catamarans?”
As a result of these efforts, the Power Cat Group is on track to nearly double its unit sales this year to 380 boats, compared to 190 boats in 2010.
The key to this growth is keeping his dealers profitable, explains Brown. In an effort to make that happen, the company has invested approximately 80 percent of its cash flow over the past 12 months on new product. As of press time, two new Glacier Bay models were scheduled to launch in September with three new Carolina Cat models planned for January, February and April.
“Andrew’s financial acumen, hands-on dedication and vision has helped the company not only survive the last five years,” says Pete Peterson, the company sales rep who nominated Brown, “but also minimize the decline, maintain profitability and position the company to be a major player as the economy improves.”