Boisjoli: BRP set for growth

On the eve of BRP, Inc.’s first birthday, President and CEO Jose Boisjoli appeared relaxed and confident with the direction of his company.

To be sure, 2004 was a trying year for the recreational product manufacturer, being divided and sold off from its parent company, restructuring and laying off hundreds of employees, closing down factories, and fighting to position itself appropriately in an outboard engine market so heavily dominated by four-stroke messages.

Even looking to the future could have been considered a daunting task, with more layoffs possible, a yet-to-be-decided dumping case that could significantly affect its outboard product lines, and the potential insecurity of taking the company public. But with all that in mind, Boisjoli is optimistic about this year.

“BRP has been managed by silos,” he said in a meeting with Boating Industry and its sister publications. “But now we will try to manage it as a whole and try to benefit from all the assets we have. I feel we have done a pretty good job this year to reposition the way we do things.”

Last December, Bombardier, Inc. finalized the sale of its recreational products division to members of the Bombardier family, Bain Capital, and Caisse de depot et placement du Quebec.

While the family owns 35 percent of the company now, as time goes by — Boisjoli indicated that it could happen as early as this coming year — BRP will move toward an initial public offering. Bain Capital will exit its ownership, and the Bombardier family will become the major controllers.

In the meantime, BRP showed a year-to-date revenue increase of 9 percent or $1.8 billion. Due to many outside factors — the increasing price of steel, aluminum and oil and the strengthening of the Canadian dollar —the company showed a decline in its gross profit from 20 to 17 percent.

Restructuring initiatives, however, have been set in place as part of a cost-reduction strategy that hopes to give the company strength prior to the IPO. This strategy should continue the consolidation of BRP processes by reducing product complexity, by capitalizing on products that can be made or bought at reduced prices, including those from outside the United States and Canada, and by managing the company as a whole rather than as separate companies.

E-Tec to go mainstream
The launch of the Evinrude E-Tec engine, while highly publicized at the onset, has been quiet at best — even with the introduction of four additional engines this past summer. That will all change, however, early this year as BRP launches its first significant advertising campaign.

Aimed directly at competing four-stroke engines and specifically at Mercury’s supercharged Verado, the campaign boasts the benefits of E-Tec’s features. A series of ads, which Boisjoli shared with us during our meeting, will use a side-by-side comparison of E-Tec’s numbers versus the Verado’s numbers.

“Our competitors are focusing on four-strokes, and we believe two-strokes are here to stay,” Boisjoli said. “Two-strokes [that are] clean have a lot of advantages compared to four-strokes. We are convinced that we can have a good business with a two-stroke engine in the outboard business because of the E-Tec technology.”

The hurdle to overcome at this point may be consumer perception. While BRP has been quiet up until now about the features and benefits of the E-Tec, its competitors all offer four-stroke power and have been boasting about its cleanliness combined with the “performance of a two-stroke.”

The ad campaign may claim that E-Tec has advantages over four-strokes — including lower emissions — but only time will tell if consumer perception of the two-stroke has been damaged.

“We believe with the E-Tec technology we have an incredible product and package,” Boisjoli said. “We could not be very aggressive promoting it up until now because we only had four models last year. Now we have seven models and, going forward, we will have a full range of models, and we will be very aggressive with this campaign at the beginning of the boating season.”

The numbers don’t lie. The E-Tec has faired well in comparison to its four-stroke counterparts in every aspect from emissions to miles per gallon to performance characteristics.

PWC, sport boats doing well
Most people know that BRP’s Sea-Doo line holds a dominant market share in the personal watercraft market. Sea-Doo gained share in the early '90s and despite the volatility of this market — including a 60-percent decline in industry unit sales over a seven-year period — has held on to the No. 1 position ever since.

While the market has stabilized, Boisjoli believes that there is potential for growth. The company’s latest product, the 3D, is targeted at the Gen Y consumer, boasting an adaptable riding style at a reasonable price.

The concept, which was introduced at a shockingly low price tag of sub-$7,000, has been slow to take off, however. In some areas, the 3D has sold well, while in others, it has not.

Company insiders say that the dealers who “get” the concept have done well with it, while those who treat it as just another model have not.
In the end, though, BRP hopes the 3D will attract the teenager, who will drag his or her father into the dealership, and the family will go home with a 3D and an RXP or RXT, high-powered four-stroke models that, with their $10,000-plus price tag, are more indicative of the PWC market’s price point.

Sea-Doo’s brethren, the sport boat line, make up a small yet strategic business for BRP. The company leverages as much technology as it can from Sea-Doo’s product development, using the same engines and pumps.

“We don’t want to compete with the customers we have in the outboard business,” Boisjoli said. “And we don’t want to go in the traditional boat area. We want to have our unique design, which is more sporty and is propelled by a jet pump.”

With that in mind, BRP distributes the sport boats solely through its powersports dealers, rather than traditional marine dealers. There are about 150 BRP dealers who sell both powersports and outboard products. In the end, though, Boisjoli said it’s a very good and profitable business for BRP and its dealers, noting that there are “many dealers” who sell 15, 20 or 25 sport boats in a year.

An uncertain future
At the time of our meeting last December, the future held many uncertainties for the outboard marine market. The dumping case, which sought to determine if and how much Japanese outboard manufacturers have harmed United States manufacturers by dumping product at a lower price in the U.S. than in Japan, was yet to be decided.

BRP’s business would be affected in many ways by the outcome of this decision, which was due on February. (For more detailed information on the decision, visit

Currently, BRP’s Johnson line of four-strokes is manufactured by Suzuki, and if a duty is levied on these engines, Boisjoli said, “it will have an impact, long-term, on our four-stroke volume.”

Of interest, however, is BRP’s ability to build its own four-stroke for the marine environment. Sea-Doo currently boasts the most powerful four-stroke ever to be manufactured for a personal watercraft. At 215 horsepower, the supercharged Rotax-built 4-Tec engine, we’ve been told, is capable of much more power. Could the technology be adapted to the outboard market?

Rotax, an Austrian company under the umbrella of BRP’s ownership, thrives on the ability to create purpose-built engines for any environment. Rotax builds ATV, snowmobile, motorcycle, go-cart, PWC and small aircraft engines. It wouldn’t be too difficult, Boisjoli agreed, for the company to produce its own four-stroke for outboard purposes.

“The way I would position Rotax is as the best in the industry to adapt existing technology to a package,” he explained. “To take a fuel injector, electronic box and different components and technologies from the car industry or other type of industry and then repackage it into an engine adapted to a product.”

Boisjoli acknowledged the uncertainty BRP faced when it acquired the remains of OMC. The bankrupt company had spent millions on the development of the Ficht technology and millions more on E-Tec, a long, expensive process that Boisjoli believes can be eliminated in the future by using the knowledge of the Rotax team.

“To be honest, we will never do that again,” he explains. “We have (the E-Tec technology) and because we believe in two-strokes in our industry, we’ll make sure we continue to evolve the technology, but to redesign the technology from scratch is a huge task.”

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