Brunswick buys Rampage plant in N.C.

LAKE FOREST, Ill. – Brunswick Corp. has purchased a boat manufacturing facility in Navassa, N.C., near Wilmington, from KCS International, Inc. – parent company of Cruisers and Rampage Yachts – that will provide the company added capacity to build larger boats, Brunswick reported in a release yesterday.

Terms of the transaction were not disclosed.

Brunswick said it would transfer cruiser production from its Salisbury, Md., plant to the new North Carolina facility. Initially, Brunswick will produce Bayliner and Maxum cruisers at the site, which the company said would help improve efficiencies, reduce costs and offer better geographic balance for Bayliner cruisers, now made largely on the West Coast.

“The market segment for boats 45 feet and above is growing, and we are stretched for capacity,” said Dustan E. McCoy, Brunswick’s chairman and CEO. “The Navassa facility, with its ample space and deep water access, will help Brunswick meet this demand, particularly for our popular Meridian Yachts, which is one of the brands we intend to produce at this facility. We will also transfer
Salisbury production of Bayliner and Maxum cruisers to this plant, where we will have the ability to more easily adjust model production to demand by more efficiently utilizing common manufacturing capabilities.”

Located at the juncture of the Brunswick and Cape Fear rivers, the plant offers deep water access – important for testing and efficient delivery of large boats – and more than 336,000 square feet of existing production space. The site’s 60 acres also offer room for further expansion, McCoy noted.

“We hope to retain the current Navassa work force of approximately 250, and plan to add employment as we ramp up production,” McCoy said. “Within five years, we anticipate that Brunswick will employ more than 850 people at the Navassa facility, and the total retail value of the plant’s anticipated annual production will be among the highest of any boat plant in the world.”

McCoy said Brunswick would eliminate 180 production and support positions in a phased shutdown of the Salisbury facility, which it expects to complete in 2008.

“While we regret having to take this action in Salisbury, we recognize the need for more efficient and cost effective manufacturing,” McCoy said. “This decision is no reflection upon the Salisbury work force or product, but the result of our need to better serve our markets with a more efficient manufacturing footprint, while building long-term value for our shareholders.”

Larger Meridian yachts planned
McCoy said part of building that value means pursuing market opportunities and that Brunswick plans to do that by using the additional manufacturing capacity the plant provides to expand production of Meridian yachts.

“Currently, Meridian is produced exclusively at our plant in Arlington, Wash., and we are at capacity,” McCoy said. “We will use the Navassa plant to increase capacity, manufacture larger models we plan to introduce, and better balance our production geographically by making some boats closer to our dealers in the East and Midwest.

“We are particularly excited because Navassa will provide the manufacturing space to allow us to build larger Meridian sedan bridge and pilothouse models in the 48- to 65-foot range,” McCoy said. “Combined with our Arlington facility, which will see little change in its production volume, our Navassa plant will help us to grow Meridian and better serve the large boat market segment.”

Brunswick said that severance and other costs associated with the Salisbury plant closure, as well as start-up expenses and product development costs for new boat models to be manufactured in the facility in North Carolina, will reduce its operating earnings by approximately $11 million over the next 12 months. Approximately half of the costs will come through in the second half of 2007 with the remainder in the first half of 2008.

North Carolina reacts
North Carolina Gov. Mike Easley said in a separate release yesterday that Brunswick would create 858 jobs and invest $51.2 million in the state in the next five years as part of its acquisition. Easley said the project was made possible, in part, by a Job Development Investment Grant, which the North Carolina’s Economic Investment Committee voted Monday to award.

“We are proud that Brunswick chose North Carolina as the best location for these jobs,” Easley said. “Brunswick’s decision shows that one of the industry’s premier companies recognizes our state offers both an experienced workforce and opportunities to make sure those workers have continued training so businesses can grow and succeed.”

Under the terms of the JDIG agreement, a 10-year grant will be established. Over the life of the grant, the N.C. Department of Commerce estimates the project will:

  • Generate a cumulative gross state product value of $909.4 million
  • Produce a positive, cumulative net state revenue impact of $24.2 million
  • Contribute up to $1.45 million to the state’s Industrial Development Fund for infrastructure improvements in economically distressed areas of North Carolina. (This contribution is required of grant recipients that locate in the state’s more prosperous counties.)
  • For each year the company meets required performance targets, the state will provide a grant equivalent to 60 percent of the state personal income withholding taxes derived from the creation of the new jobs. If Brunswick creates all of the jobs called for under the agreement and sustains them for 10 years, the company could receive a maximum benefit from the JDIG of $4.36 million.

    Job Development Investment Grants are awarded only to new and expanding businesses and industrial projects whose benefits exceed the costs to the state and which would not be undertaken in North Carolina without the grant. Since the first grant was awarded in 2003, the program has been responsible for creating more than 20,000 jobs and $3 billion in investments in North Carolina.

    “Last year’s big news in the boating industry was Chris Craft’s move out of Florida to North Carolina,” said Mike Bradley of the N.C. Small Business and Technology Development Center. “The year before that Cobia’s move. This year it is likely to be Brunswick’s purchase of the North Carolina Rampage facility in Navassa and the subsequent plans to add 858 jobs and invest $51.2 million during the next five years.

    “North Carolina has been very aggressive in the past few years in its efforts to gain boating industry businesses into the state. With over 100 boat builders and 3,000 existing boating businesses already in the state, we have been able to develop some very strong industry clusters. These clusters allow builders to have nearby support businesses, strong supply chain access, quality product transportation routes, and the support of a state that understands boating as one if its key heritage industries.”

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