Boating Industry – You recently announced a financial agreement that increases equity and convertible debt by almost $200 million. How does that help position the company going forward?
Louis Chemi – It provides us with the financial backing to continue to invest strongly in our new product development and to support the ongoing business through these lean times.
BI – How do you expect the marine electronics market to evolve in the coming years?
LC – Of course none of us have that crystal ball that we all wish we had, but as I look at the market I envision that we’ll continue to see a down market — we’ll hopefully begin to see some growth in 2010, but I don’t expect huge growth. I don’t think we’ll be back to 2007 levels until probably four or five years out from now at a minimum.
And I see a lot of that being driven by the boat builder portion of the customer base. Because if people are still unable to get loans and get themselves into new boats, then the used boat sales don’t happen, and of course there’s a trickle down effect that goes all the way to the electronics that are going to get placed on those boats.
BI – Has the marine industry hit bottom yet?
LC – I believe — I’m hoping of course, without that crystal ball it’s tough — we view it as we’re right about at the bottom now. We see some signs in the economy that are starting to pick up, we see some of the markets are beginning to show some signs that people aren’t wanting to stay down forever. We don’t see it rocketing out, but likewise we do feel like we’re at the trough here.
BI – Can you talk about a specific challenge this economy has presented and how Navico tackled it?
LC – Just overall as you make your business plans — particularly for us, where we merged a series of different companies — our investors and ourselves had visions of continued market stability a couple of years back, stability and growth. And obviously all of us were disappointed sorely in that aspect — across the industry, not just in our company.
So of course that economy resulted in us having to make some very difficult decisions in terms of personnel and operations and how we could get more efficient. How to get lean and mean to face the new reality of the business level we’re on.
BI – Can you talk about some examples of things that make you lean and ready for the long-term?
LC – I guess one of the toughest ones, particularly for our customer base, was we had to do some layoffs in the sales force about nine months ago. And that was particularly hard because you had long-term relationships folks had built up with customers over the years, and they’re excellent folks.
As we consolidated companies, we did an initial stage where we got rid of the fat, the folks that maybe weren’t pulling their weight. But last fall, with the way the economy continued to go, we sat there facing the fact that we were going to have to cut into the real meat of the organization — and I’m pretty sure almost every organization in this industry has done the same.
BI – Navico has had an additional challenge with the amount of integration you’ve had to do. Can you touch on challenges and successes you’ve had with that?
LC – For us in particular, we kind of merged all these companies right as the economy started to fall apart. We had customer care operations in three different locations in the U.S. And each of those were based on historical setups. They had different folks who were redundant with each other and different systems and different skill sets. And we had to consolidate those. So we now have two.
In particular, we had to close down our Seattle operation, which was a historical Simrad location for many years. And that was extremely difficult to do, and in that transition we did a fairly poor job of managing the transition. We did it rather quickly and didn’t do very well with carrying the knowledge base over.
On the success side, though, we’ve now been able to stabilize and begin to grow again that organization. So we’re actually getting a lot of positive feedback from our customers that we too have reached the bottom and now are on the uprise in terms of giving them the level of customer care and satisfaction that they need.
BI – What advice would you give to other marine companies right now?
LC – The key is to stick with your core competencies and your core customer base. Continue to give them the attention they need through this time. Because it will get better — we’re not going to be here forever, the economy will improve and the market will come back. Who can say whether we’ll have as many boats or new boats being built in any given year for several years, but certainly it will get better than it is now.
BI – What is Navico’s No. 1 priority going forward?
LC – Well, that’s a tough one because we don’t have just one priority. The key here is to be the most innovative and the first to market with a lot new products that serve the customer’s needs well. That’s one side of it. The other side is customer care is the only way to keep customers satisfied and coming back year after year, and it’s an area that we suffered in through our various company transitions over the past few years. So we’re not going to let our foot off that new product and innovation pedal — that’s going to stay a very strong focus — but right along with that is the idea that we’re going to continue to improve our customer care so people find it a pleasure to do business with us.