New Brunswick leader says company strategy is sound

LAKE FOREST, Ill. - Dustan E. McCoy became the 12th chairman and CEO in the 160-year history of Brunswick Corp., Dec. 7, after George W. Buckley left the position to become chairman, president and CEO of 3M Co.

McCoy, 56, who joined Brunswick in 1999 as vice president, general counsel and corporate secretary, had been serving as vice president of Brunswick Corp. and president of the Brunswick Boat Group before his election to the company's top post by its board of directors.

Speaking via conference call soon after the announcement, McCoy said his leadership role with Brunswick was “a unique opportunity in my life, but also a unique opportunity in corporate America, and I fully understand that and intend to push myself 24 hours a day to take advantage of what is, obviously, a once-in-a-lifetime opportunity.

“We need to start out with understanding that we do have a very solid strategy here at Brunswick and one that, frankly, I'm not only very familiar with, but I will humbly take some credit in developing. Most of the initiatives that we've been implementing, pursuant to our strategy, originated down in the Brunswick Boat Group and have been carried by the Brunswick Boat Group. I've had the great privilege of getting to work in the boat business for the past five years, and there is absolutely no reason, from my perspective, for us to change our strategic focus.”

McCoy said he has not yet made a decision regarding his successor at Brunswick Boat Group, but said he was confident in the team of people there.

He went on to say – in response to a question about what the company was doing to ensure that key management personnel stayed in place – that he was “incredibly comfortable” they would, and would be supportive as well. McCoy said he had spoken to Pat Mackey, Mercury Marine president, the night before and told those on the conference call, “You don't have to worry about Pat.”

Joining McCoy on the call was Pete Leemputte, Brunswick's senior vice president and chief financial officer, who said McCoy was the obvious choice to succeed Buckley.

“George was somebody who was a respected leader within our company, but it was a team-driven environment here over the last five years under his leadership and I will say Dusty is viewed as the natural leader to succeed him,” Leemputte said. “He has been a key player from all of our perspectives. One that we all looked up to and respect. And I think Dusty has our full support.”

Changes in store?

McCoy said Brunswick still has work to do to improve in a lot of different areas, including making its products more reliable and taking the “hassle factor” out of boating. He said the company had an obligation to give its dealers and customers a “full line” of quality products and said the company had been hard at work in its engine and boat businesses to develop and give dealers a product line so that they could compete in any market against any competitor.

Given that strategy, McCoy-who nearly doubled the size of the boat group by acquiring 13 boat brands during his time as president- said Brunswick's focus would continue to be on “filling in the white spaces” where the company finds holes in its portfolio. To do that, McCoy said Brunswick may look to international sources.

“We don't have a lot of holes, but we do have a couple,” McCoy said. “I've been committed from day one that we're going to have the right brands and the right products to take care of portfolio. So there's the signal to you.

“As we go forward, we're going to grow internationally, and a part of doing that is making sure that we have the right brands and the right products in every region. So as we begin to execute harder against that strategy it naturally will lead us to look outside the U.S. and perform the same sort of analysis and hopefully reach the same sort of conclusions as a result. From an acquisition perspective, there may be more opportunity outside of the U.S. then there is in, and we'll just have to see what happens from here.”

McCoy also said Brunswick would focus on giving its dealers the opportunity to have multi-year dealer agreements with “appropriately protected territories,” so that they could focus on making money and improving their margins, instead of “wondering whether they're going to have a continuing relationship with us.”

Analyst reaction

Industry analysts reacted favorably to news of the change.

Merrill Lynch said that while it was surprised and slightly disappointed by Buckley's departure, it was “encouraged by Dustan McCoy's track record at the company. Having said that, we are anxious to hear McCoy's vision for the company and future plans.”

The firm maintained its Neutral rating and earnings estimates.

An analyst for The Motley Fool, wrote on www.fool.com that “As a 3M shareholder myself, I'm satisfied with this choice, but as a prospective Brunswick shareholder, I don't see any reason to be spooked, either.

“I think Brunswick is on firm financial footing now, has room for improvement, and is engaged in a variety of businesses that may not be barn-burners but should provide, in the long run, solid growth opportunities. Here's looking forward to the upcoming boat season.”

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