Coronavirus crisis: Manufacturing

By David Gee

It ended well – and began well; 2019 and 2020 that is. 

At the end of 2019, NMMA’s Marine CEO Sentiment Survey found business confidence among marine manufacturer CEOs increased in the fourth quarter with 88% of marine CEOs saying current conditions were stable or expanding.

And slightly over half of all marine senior executives at recreational boat, marine engine and accessory manufacturing businesses expected business conditions to improve in the subsequent six months.

That sentiment aligned with where retail sales of new boats finished in 2019, with more than 280,000 units sold, the second highest total since 2007.

And when 2020 began the momentum continued. U.S. boat registrations were up 10% year-over-year in February, with year-to date sales for the first two months of the year up 11%.

Most major volume segments posted YoY growth, including aluminum fishing (+18%), pontoon (+11%), and fiberglass outboard (+7%), 

Even as COVID-19 took hold of the country, retail boat sales initially held up fairly well according to industry analyst Michael A. Swartz, director, equity research at SunTrust Robinson Humphrey in Atlanta.

But then things kind of fell off the proverbial cliff and Swartz is now estimating that new unit boat sales in the U.S. will decline in the 20 – 25% range for calendar 2020.

Who really knows at this point though? June and July seem a long way off, never mind November and December.

Coronavirus closings

Brunswick Corporation was the first major manufacturer to announce it was suspending production at certain of its propulsion and boat operations.

That was followed by Yamaha Motor Corporation’s U.S.-based manufacturing subsidiaries, Groupe Beneteau in Michigan, Malibu Boats, MasterCraft, Chris-Craft, Dometic Marine, Ritchie Navigation and scores of others who also announced complete or partial shutdowns.

In a different approach, Regal Boats announced the consolidation of its three product lines at its Valdosta, Ga. facility to its headquarters in Orlando, Fla.

According to Regal CEO Duane Kuck, consolidation and closure of the company’s Valdosta plant was prompted by the projected economic impact associated with the coronavirus.

“We concluded that consolidating manufacturing operations will lower costs while providing a sharper focus, more streamlined operation and an accelerated emphasis on continual improvement,” said Kuck. 

More recently, Polaris Inc. announced it made the strategic decision to focus its marine investments and growth efforts on its flagship boating brands. As a result, Polaris will stop producing Rinker, Striper and Larson FX boat brands at its Syracuse, Indiana plant in June.

“This decision was made after extensive consideration of every available alternative,” said Bob Mack, president of Global Adjacent Markets and Boats, and senior vice president of Corporate Development & Strategy, Polaris. “We were fully prepared to expand these brands and our presence within their respective segments of the marine industry. But today, considering market dynamics and the continued uncertainty around the sustained impact of the COVID-19 pandemic, we have decided not to move forward with investing the necessary resources to maintain and grow Rinker, Striper and Larson FX, and will discontinue production of those brands.”

The action entails closing the Syracuse facility which will result in the elimination of 120 jobs. Some of the employees impacted by the decision will have opportunities at Polaris Boats’ Elkhart campuses. 

“We deeply regret the impact this will have on our employees, boat dealers, sales representatives, suppliers – and, of course, our Rinker, Striper and Larson FX customers,” Mack continued.  “However, today’s decision will allow us to concentrate our investments on driving growth and innovation within Bennington, Godfrey and Hurricane and strengthening our leadership in those segments.”

Polaris will continue to provide customer service and parts support for Rinker, Larson FX and Striper boats and will honor the warranties of boats purchased from Polaris.

The company will continue to produce its Bennington, Godfrey, and Hurricane boat brands in its two campuses located in Elkhart, Indiana. Polaris purchased the Larson FX and Striper brands in 2019 and the Rinker brand as a part of its Boat Holdings acquisition in 2018.

The most recent NMMA survey

NMMA did another survey from the end of February to March 9 of its member companies on the impact of the COVID-19 outbreak to manufacturers.

The 558 respondents were asked about effects to their supply chain and operations, their financial expectations and their emergency response plans.

More than 78% say that uncertainty around the COVID-19 outbreak is likely to have a (negative) financial impact on their businesses.

More than 53% of manufacturing firms anticipate a change in their operations in the coming months.

A little over 35% of respondents say they are facing supply chain disruptions.

Respondents were split between having an emergency response at their company (50.8%) and not (49.2%).

Respondents were also asked in an open-ended question about the resources that would help them prepare. They generally cited five types of needed resources:

•  Nonpolitical and non-sensationalized information, particularly company-specific.
• Clear and timely updates on new restrictions and health advisories
• Information about how other companies are responding.
• Clear guidelines and protocols from the Centers for Disease Control and Prevention and National Institutes of Health.
• Quick and early detection resources.

When commenting on supply chain disruptions, respondents noted issues with parts arriving late and delivering to customers late as a result. While some say these disruptions are “manageable at this point,” they do create “some additional costs.”

Many mentioned having to find “alternative suppliers,” and while disruptions are characterized as “minor now,” they are expected to become more serious “if slowdowns continue beyond next quarter.”

When discussing operations, respondents are anticipating slowdowns and “reduced customer demand.”

Other responses mentioned “evaluating work schedules and inventory levels,” fielding “work from home requests” and implementing “business continuity” response plans that include curtailed travel, workplace sanitation, restricted face-to-face interactions and “staggered shifts on the shop floor to help compensate for higher-than-normal absences.”

On emergency response plans, respondents noted restricting external visitors, “fine-tuning” existing continuity plans and offering a “more lenient leave policy.”

Others replied they do not yet have an emergency response plan but are working on developing one.

Marshaling marine manufacturing resources

To end this report on a slightly positive note, the recreational boating industry has heeded the call to help with the coronavirus response.

Tige Boats Inc. announced they began producing Personal Protective Equipment (PPE) on April 3rd at one of its boat manufacturing facility in Abilene, Texas.

The company says it will produce and donate some 500 face shields per day, along with other high-demand PPE equipment such as face masks.

“Our team has been working tirelessly and moving quickly to support the first responders during such a tough and unprecedented time,” stated Charlie Pigeon, founder, owner and CEO of Tige Boats Inc. “Our goal is to use embrace the talents of our workforce to combat COVID-19 and return to normal life as quick as possible.”

The Tige Team, comprised of more than 200 employees, will be running in alternative shifts and will continue to produce the PPE as long as they remain in high demand.

The company also donated over 2,000 protective suits to local hospitals in the area of their headquarters in Texas.

Tige created a training video and templates to several other boats manufacturers so that they may begin mass-producing shields. If you feel your business is capable of producing PPE and are in need of design specifications and instructions, please contact Jean Wagner (jwagner@tige.com).

Correct Craft’s team also stepped up to join in the fight against COVID-19.

Centurion and Supreme Boats donated PPE gear to supply Memorial Hospital and Doctor’s Hospital in Modesto, Calif. They also made approximately 1,000 face shields to donate to their local health care community.

The Nautique team is sewing face masks for local health care facilities in the central Florida area. Their upholstery department team offered up home sewing machines and fabrics to be used as part of this process. Nautique also purchased additional sewing machines and fabric to produce the masks.

Orlando Health reached out to Nautique because they had special medical fabric but no capacity in their supply chain to convert them into masks. Nautique is converting the fabric into masks for the hospital.

Watershed Innovation and Nautique partnered together to produce medical quality face shields. Coca-Cola Florida donated plastic in rolls of 1,700 pounds but needed a facility and machinery that could maneuver these rolls. These plastic rolls are being laser cut into manageable sections in Correct Craft facilities.

Parker Boats has donated N95 certified face masks and protective suits to healthcare facilities in Beaufort, N.C.

“Our team is unlike any other. Their drive, creativity and teamwork to help people in their local community during this crisis is inspiring,” Bill Yeargin president and CEO said. “Our team has diligently worked to bring as much help and encouragement to our local health care community as they can. I am honored to serve on this team who, even during this crisis, continue working hard at ‘Making Life Better.’”

The Brunswick Private Foundation recently made a $50,000 donation to the Red Cross and has asked Brunswick employees from around the world to consider contributing to the cause. All donations made by Brunswick employees will be matched by the company.

In addition, the Private Foundation donated $10,000 to the Salvation Army Metropolitan Division.

“During these very challenging times, it is important for us to continue to look for opportunities to help our employees, customers and the communities where we live and work,” said Dave Foulkes, Brunswick CEO. “We all need to do our part right now to flatten the curve and lend our resources to those that need them the most.”

Around the world, Brunswick brands are looking for opportunities to produce masks, parts for ventilators and other products that are critically needed by first responders. The Brunswick Boat Group, for instance, has donated 15,000 masks to first responders in the US near its boatbuilding facilities around the country.

Mercury Marine has also donated more than 11,000 masks to local hospitals and emergency responders near its headquarters in Fond Du Lac, Wisconsin.

Marinco, a Power Products Brand and part of the Advanced Systems Group, is producing electrical equipment used in mobile hospitals and temporary emergency treatment centers such as those recently established in New York.

Chaparral Boats, through its parent company, is donating $100,000 to The Caring Place; a spiritual, physical and social resource non-profit serving the Nashville area. In addition, Chaparral Boats has donated hundreds of N95 masks to local medical facilities in south Georgia.

Finally, marine equipment manufacturer HydroHoist Boat Lifts announced that its subsidiary, RotoMoldUSA, has been contracted to produce critical medical material handling equipment.

The company will expand the focus of its rotational molding facilities to manufacture U.S. Food and Drug Administration (FDA) approved plastic pallets for shipping medical supplies nationwide, while still manufacturing boat lift tanks to keep up with continued demand. These pallets are re-useable, due to the smooth surface which lessens the transmission of bacteria and viruses, are non-porous and easy to sanitize.

“In this time of great need, many companies within the boating industry have the power to help,” said Mick Webber, CEO, HydroHoist, LLC. “Our facilities can easily produce large quantities of products that are necessary in the fight against the spread of coronavirus. While we are very proud of the quality and innovative design of our boat lifts, we are even more proud to be part of the effort to help the greater good.”