Boating Industry Intelligence You Can Profit From
LAKE FOREST, Ill. – Brunswick Corp. will accelerate its previously announced efforts to resize the company and remove $300 million in fixed costs by the end of 2009 in light of what it called “extraordinary developments within the global financial markets that are affecting the recreational marine industry,” in a release yesterday.
Brunswick had planned to close four boat manufacturing facilities in early 2009, but will now accelerate that process with plants in Roseburg, Ore., Arlington, Wash. and Navassa, N.C., to be shutdown by the end of 2008. The fourth facility, Brunswick’s plant in Pipestone, Minn., which manufactures Bayliner Boats, is expected to be shutdown during the first quarter of 2009, the company reported.
The facilities in Arlington – which builds Meridian yachts and performs research and development as well as some headquarters functions for the company’s U.S. Marine unit – Pipestone, and Roseburg – which also manufactures Bayliner Boats – are to be closed permanently. The U.S. Marine facility in Navassa will be mothballed, Brunswick said.
Production of the fiberglass boats manufactured in these plants will be transitioned to other Brunswick facilities. The company said the actions would result in the eventual elimination of approximately 1,450 hourly and salaried positions at these facilities, while increasing the efficiency and utilization at the receiving plants.
Brunswick will also temporarily suspend production at three of its boat manufacturing facilities near Knoxville, Tenn., beginning the week of Oct. 27 and continuing through the remainder of 2008. During this period, the transition of boat models from the plants that are closing into these facilities will begin.
Brunswick’s two Sea Ray plants in East Knoxville and one in Vonore, Tenn., employ about 1,800 people. Only workers directly involved in the manufacture of fiberglass boats will be furloughed, the Knoxville News Sentinel reported in a story yesterday. Nonproduction employees such as administration, marketing and customer service, will continue to work while production is suspended.
“In these difficult times as we move into the slowest selling season in the marine industry, it is clear that we must aggressively support our dealer network as they cope with the effects of the economic turbulence,” Brunswick Chairman and CEO Dustan E. McCoy, said in the Brunswick release. “Among the significant actions we can take is to meter the production of boats consistent with demand, which is in a pronounced downturn across all consumer durable industries, including the recreational marine industry.
“We remain on target to reduce fixed costs by $300 million by the end of 2009 compared with 2007 spending levels, and expect to exit 2008 with more than $125 million of fixed-cost reductions implemented. In fact, actions completed or currently under way will deliver about $75 million of cost savings this year. We also continue our intense focus on liquidity and expect to report cash at the end of the third quarter of approximately $340 million.
“As noted above, however, we will be closing plants and temporarily suspending production at others, which will result in significantly lower sales in the fourth quarter. Given the effect of lower fixed-cost absorption on these reduced sales in the remainder of 2008, we are no longer confident of achieving our goal of posting positive earnings for the full year, excluding restructuring and impairment charges.”
- For more of the latest news, click here.