Industry reacts to Genmar’s plans

MINNEAPOLIS – In a move that Genmar Holdings Chairman Irwin Jacobs said demonstrates his company’s optimism about the future of the boating industry, the boat-building conglomerate announced in a letter to the industry Wednesday that it’s planning to re-enter the aluminum boat market.

This move comes four years after Genmar sold its aluminum boat brands – Lund, Crestliner and Lowe – to rival Brunswick Corp.

“We have had many discussions with several Genmar dealers who were very supportive and successful with Genmar’s former aluminum boat segment, which included Lund, Crestliner and Lowe boat companies,” wrote Jacobs. “After carefully assessing and evaluating the aluminum boat market over the past several months, we’ve concluded there is a major need along with great opportunities in the aluminum boat segment of the fishing and recreational boat market.”

Indeed, the Genmar dealers contacted by Boating Industry seemed supportive of the announcement.

Nancy Smith, owner of Colorado Boat Center, a Ranger, Crestliner, Hurricane, Glastron and MB Sports dealer, suggested that the move would give consumers more engine choices, something she says the market is in “dire need of.”

“Currently, the majority of the aluminum market shares are controlled by a few boat lines that are owned by one company that also produces motors,” she stated. “Those boat lines are no longer selling boats, they are selling transoms for the parent company’s motors and although they are very good motors, the practice leaves dealers and consumers with no options.”

While she acknowledged that the cost of raw materials has increased dramatically, Smith suggested the addition of another aluminum boat line could be beneficial to the industry as a whole “because it would create more competition in the market and potentially lower prices by creating higher demand for all aluminum boats.”

Mike Hebert, president of Texas Marine, a Ranger, Stratos, Chaparral, Blue Wave, Crest Pontoon, NauticStar, Robalo, Silverton and Yamaha Boats dealer, also noted some positives.

“There are fewer aluminum manufacturers than there are in the fiberglass realm that make quality packages that the consumer wants,” he said. “Even some of the few that do seem to be behind the curve on quality manufacturing capabilities that consistently produce the fit and finish that consumers expect along with good dealer support systems in place to properly take care of the customer after the sale. There are a few that do very well but it is only a few.”

Hebert said he expects economic conditions and energy challenges to drive up demand for aluminum boats, allowing them to “outpace the rest of the industry segment.”

“Irwin Jacobs is forward thinking enough to see this,” he concluded.

Affordability a key theme

Jacobs explained Genmar’s plan to get back into the aluminum boat business, suggesting that the “high prices” being charged for today’s aluminum boats have created an opportunity for the company.

“When the aluminum boat business began decades ago, most aluminum builders then were focused on serving the boating consumers who, for the most part, either couldn’t afford or didn’t want to purchase a more expensive boat for their recreational and/or fishing needs,” he wrote. “Since those early years, and even including many of the latter years when Genmar was in the aluminum boat business, the industry lost sight of the fact that there’s a limit as to what dealers would or frankly should pay for aluminum boats and a limit to what they should in turn be retailing them for to their customers … In other words, I believe aluminum boats presently being offered both in today’s market are, in many instances, overpriced compared to many of the fiberglass fishing boats.”

Jacobs declared his intention to make Genmar the industry leader in aluminum boats by changing “the entire way aluminum boats are presently priced, manufactured and marketed to dealers and to the retail boat buying consumers.”

The company’s plans involve Genmar launching production in a completely new, modern aluminum boat factory sometime during the first quarter in 2010. The line will represent a completely new company featuring a new brand, the name of which is expected to be unveiled in late 2009 or early 2010. Genmar hopes to announce the location of the factory in the middle or third quarter of 2009.

The new company’s line-up will include products in all segments of the aluminum boat market from entry level to the upper end and everything else in between, according to Jacobs. Dealership distribution will initially include the entire U.S. and Canada and be offered first to existing Genmar dealers and many of those past Genmar dealers who were dealers when Genmar owned Lund, Crestliner and Lowe boat companies.

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