It’s been a little over a year since Brad Gates took over as the CEO of Nautic Global Group, manufacturer of several boat brands including Hurricane, Rinker, Sweetwater, Polar Kraft and more. In March 2014, Gates succeeded Jim Malone, who had filled the role on an interim basis for several months after the 2013 departure of Mike Kitson. Before joining Nautic, Gates was president of EMEA (Europe/Middle East/Africa) at Capital Safety Group, a privately owned company engaged in the manufacturing and distribution of fall protection safety equipment. Gates also previously held several business and marketing roles at The Toro Company.
Over the last year, Nautic has focused on improving the dealer and customer experience, acknowledging past concerns about issues such as product delivery and lead time. As part of that, Nautic is focused now on five core strategies: operational excellence, brand leadership, innovation, winning relationships and market expansion.
Boating Industry talked to Gates about how the company is changing and where it’s headed in the future.
Boating Industry: When you look back on the last year at Nautic, what are you most proud of?
Gates: Quite a few things actually. We’ve put a strategy in place. We have five key strategies that are driving our business. It really starts with operations. … We’ve addressed that, we’re delivering on time and we have capacity. Our parts and services operations have improved tremendously.
We’re investing in innovation and getting closer to our customers. We’ve implemented a dealer council. We’re becoming much more voice-of-customer driven in a lot of things we’re putting together.
The company has a clear vision in what we’re trying to do and what we’re trying to accomplish. I think going into the next year the time and energy spent around putting those together and aligning the organization around them will start to show in the industry.
Boating Industry: You talked about connecting better with the customer. Why is that important for Nautic?
Gates: I think it’s important for any company. If you listen to your customer and understand need and unmet need, the better you’re going to deliver solutions that delight people. In my previous industries, that’s always how I’ve been brought up.
We’re definitely engaged much more in soliciting customer input, being customer friendly. We’ve made some investments in research to better understand our customer.
We’ve spent a lot of money in the last year on product development and that’s going to bear fruit coming up in the new model year. We’ve got 13 new models that are coming out. Driving that based on customer feedback should help our chances of maximizing our potential to win not only for us but for the dealer as well.
Boating Industry: You mentioned starting a dealer council. How are you working with them now?
Gates: We started it last July at our dealer meeting and there are 12 dealers from around the country that participate. As we’re going along and tying initiatives to those strategies … we shared with them what our plans were, solicited their input on what they thought was most important for them, and taken that feedback to drive a lot of activities that we have going on today. We use them on a regular basis as we come up with new concepts or we’re developing product.
Boating Industry: Anything that has surprised you about the boating industry?
Gates: What really stands out is how fragmented the industry is and how many players there are. Probably even more specifically, how much variability there is in the specific products and customer expectations around that. That variability in the boat business probably makes this industry a bit more challenging than I would have expected.
Boating Industry: How do you think your experience in other industries has helped you at Nautic?
Gates: I’ve come from companies that manufacturer and sell product through a dealer channel. And that recipe is very similar within the industries.
I happened to grow up in a couple of companies that were very customer focused and had great relationships with the dealer. I think in the marine industry, relationships with the dealer are extremely important. Having that experience has helped both Nautic and the dealers get more connected with each other and understanding the dynamics of how manufacturers should support their dealers to maximize the benefits for the entire channel.
Boating Industry: We’ve been hearing a lot of good buzz about boat shows so far this year from dealers and manufacturers. What have you been seeing?
Gates: The boat shows have been going pretty well. We’re hearing we’re up over previous years. Our Miami show was a success. I think we’ve had more successes than not. Some of the recent weather problems have probably hurt attendance a little bit, especially in the Northeast.
Boating Industry: What segments of the market are you most optimistic about this year?
Gates: We see continued growth in pontoons and deck boats and aluminum fish …
We definitely feel good about those segments. We have a great dealer network and if we continue to provide them tools to succeed, they’ll continue to succeed, because we’re only as good as they are.
On the pontoon and deck boat side we have a number of new products coming out. We’ve got some new exciting things that we’re working on around branding and marketing.
I’m optimistic about aluminum fish as well. I think that category, from an industry perspective, is still on a growth trajectory and we have a strong brand in Polar Kraft. And Rinker, we just came out with the new Rinker 170 outboard and we’re cautiously optimistic about a recovery there. As most people are in that segment, we’re waiting to see what’s going to happen.
Boating Industry: Nautic has a significant footprint in pontoons. Can that segment of the market continue to grow?
Gates: I think it’s going to continue to grow. I don’t know that it grows at the pace it was a few years ago, but it’s still a growth segment.
Boating Industry: Why has the increased investment in product development been important to what you want to do at Nautic?
Gates: [Innovation] is one of our five core strategies. … We believe innovation is how you win. Nautic, while innovative in the past, has probably not been innovative enough and we’ve made a number of investments in that area and we feel it’s important to long-term growth not only for us but also for our dealers.
Boating Industry: In your opinion, what are the obstacles to industry growth?
Gates: When I first started, I went out on a tour and met about 70 dealers and asked this question of just about everybody. I was actually surprised that the No. 1 answer was usually weather. While it’s not in our control, I think that’s a short-term obstacle, not a long-term.
In the long term, it’s really around getting new boaters into the industry that’s important. Affordability is important. Getting younger buyers into the category. We know our demographic is a bit older, but I think it’s important that we continue to get interest from new boaters.
Boating Industry: What is Nautic doing to try to manage costs and address affordability?
Gates: The brands of Nautic are all value brands. I think it comes down to being efficient internally. From an operations perspective, we’ve implemented a number of lean initiatives to get our costs down and keep striving toward efficiency.
In the entry level, variability adds cost. In the recent launch of our Rinker 170, we spent a lot of time making sure we hit the mark with that. It hits a price point and has a good amount of features. We have to continue to do that with our entry-level products.
Boating Industry: How is Nautic trying to help attract more people to boating, such as a more diverse audience or younger buyers?
Gates: We participate in Grow Boating and contribute to that cause. … We also have some good partnerships with companies like Freedom Boat Club, where it’s a different type of ownership. We do a lot of business with them and I think that’s an emerging trend that I don’t see as a threat to the marine dealers. I look at it as an opportunity for them to get new customers as people get into boating easier.
In general terms, the younger buyers are shopping differently, so going forward we need to develop tools that are creating more visibility for the younger buyers in the ways that they want to be reached.