Q&A with Brunswick Chairman & CEO Mark Schwabero

In February, Mark Schwabero succeeded longtime Brunswick CEO Dusty McCoy, following a nearly two-year stint as president and COO of Brunswick Corporation.

Schwabero joined Brunswick in 2004 as president – Mercury Outboards before being named president – Mercury Marine in 2008.

We recently caught up to Schwabero to talk about what he sees for the future of the industry and Brunswick, and other top issues facing boating today.

Boating Industry: As we head into the summer, what are you hearing from dealers? How have sales been so far this year?

Schwabero: In general, dealers are showing some optimism. … They feel their inventories are in pretty good shape and, in fact, some are reporting it might be a little lower than they’d like to have it going into the season, which basically says they’ve had some retail leading up to the season.

From the data out there … retail’s up about 10 percent through March, which is about same as it was last year. … I think everyone would be satisfied if there was another year that showed similar growth to what we saw last year.

Boating Industry: Are you seeing any parts of the country performing better or worse than others?

Schwabero: There’s been a pretty good geographic mix. We get a lot of questions, “Gee, Texas has to be down because of the oil situation,” but Texas is actually an area showing strength because they’ve had some of the drought conditions of a few years ago are rectifying themselves now.

I think there’s always shorter-term cause and effect that people think is going to [cause regional downturns] than actually happens. We’re just seeing a good mix from a geographic perspective. Places like Texas, Florida, Minnesota, some others … those bellwether states have been good so far.

Boating Industry: Any segments of the market that have been particularly strong?

Schwabero: We’re continuing to see some of the strength in pontoons and aluminum fishing, although at a little lower growth rate than we’ve seen post-recovery, but still good growth in those segments. Center console is showing strength in the saltwater category.

I don’t see anything really emerging new. The pontoon and fishing boats is something that has been there for a little while and has just continued.

Boating Industry: How about the sterndrive segment? How do you guys feel about that part of the market?

Schwabero: I think sterndrives are really a viable part of the market. As a category, as the three-liter has gone away, the category is naturally going to be shrinking in size. I think it’s more a case that the outboards, for certain types of vessels, have come such a long way in improvement that it’s a viable alternative. That’s just the reality of the situation.

The good things on the outboard side and the remixing of products are changing some of the dynamics out there. There are clearly boats out there that are best served by having sterndrive product in them.

Boating Industry: Canada has presented some challenges recently. Is that market starting to improve?

Schwabero: When you look at some of the most recent data, Ontario is showing some pickup in retail, albeit small. It’s awfully early in the season, particularly with Canada, to be making generalizations. … The good news has been a little uptick in places like Ontario, which is 40 percent of the Canadian market.

Boating Industry: The company recently named Huw Bower as president of the Boat Group, a role that hasn’t been filled since 2014. Why make that move now and what does he bring to the role?

Schwabero: When I became COO in May 2014, I really became the de facto president of the Boat Group. Having been in Mercury and really understanding Mercury operations, the COO role allowed me to have folks like Huw and Tim Schieck and Jeff Kinsey and other significant members of the boat teams working directly for me, which was great as I was in the COO role.

Becoming CEO, it was really our intention to refill that position, because I really need someone that the boat group gets their undivided attention. Moving into the CEO role, that’s a little harder to do.

Huw is a very talented executive, he’s got a great track record and I really feel he’s the right person to lead the group. We’re quite excited to have Huw in that role.

Boating Industry: You talked about the transition to CEO. For a long time we’ve been used to seeing Dusty in that chair, so what do you think you bring that’s different? How are you guys similar?

Schwabero: From a background standpoint, I’m a little more operational. Just given the nature of the industry and Brunswick as a corporation, you’re likely to see me more focused on the growth aspects of the business. We’re in a different place and a different time than when Dusty was leading the organization.

In terms of our overall values, ethics, beliefs, things around how we lead an organization, Dusty and I are extremely similar.

Boating Industry: You also recently announced plans to expand Mercury’s Wisconsin facility. What is prompting that expansion and how do you see that helping the company?

Schwabero: We’ve been on an expansion path up there for several years where we’ve been adding additional foundry capacity, machining capacity, coding capacity, we’ve added some assembly capacity. It’s been almost a regular cadence of bringing additional capacity online. Really, fundamentally it all goes back to one of two scenarios. Predominantly, it’s about expansion and growth in our four-stroke engine production and then, secondly, it’s just the success of any number of new products.

As we do these expansions, we look for ways to improve our process capability and ultimately those things lead to improved productivity.

Boating Industry: You mentioned the successful new products. What products have really stood out for Brunswick among the recent launches?

Schwabero: We’ve had lots of new product, but it goes well beyond just the Mercury side. One of our three fundamental strategic pillars in the company is to have product leadership. That is really focused around two things: It’s about keeping our product fresh and the average of our product, but it’s also about having the idea of having designs and products that are more intuitive. Things that consumers can more easily relate to or transition form existing products or being new to the category.

You’ve seen a lot of things on the refresh cycle where we’re updating about 30 percent of our portfolio annually. You look on the Bayliner side, we’re extending the Element. We’ve had great success with that. Sea Ray, it’s been the SLX. We have the 350 and we’ve been bringing that down, many of those characteristics to the 25, 28, 31. [Boston] Whaler has been a real home run with all the new products coming out of there, most notably the 420.

Then Mercury, the most recent things have been around the 350 and our 400 horsepower, but also under the intuitive design has been the Active Trim elements.

Boating Industry: Brunswick has made several acquisitions over the last couple years, especially on the parts and accessories side with companies like Whale and Garelick. What is the strategy driving these and what makes an attractive acquisition target?

Schwabero: We said back in 2014 that we wanted to grow our parts and accessories business by about $350 million over five years and we said that we would do that by making acquisitions in the product area – and that would be whether we wanted to get into a new product category or have a greater presence in a product category that we’re actually in. In the product category, we’ve done the acquisition of Whale and Garelick, doing things on water systems and seating.

We also said we would do it in the case of distribution and that would be through either trying to get into different market segments or trying to grow geographically with our distribution. There again we’ve done two. We did Bell Recreation — which had a good [mix] of about 50 percent marine, 50 percent RV and power sports, so gave us some entrée into other segments – and then we bought BLA, which is the largest marine distribution company in Australia.

We’ve done four deals in ’14 and ’15 and it’s the expectation that we will be doing this growth over five years.

We think No. 1, it helps us from the standpoint that it buffers us from a cyclicality standpoint in the overall marine industry, given the stability in parts and accessories, but the other thing is that with the kind of products and delivery metrics that we’re able to do … we think it is a continued way to differentiate us from some of the competition.

Boating Industry: How is the strong dollar affecting Brunswick and how are you trying to deal with that issue?

Schwabero: The strength of the dollar has impacted our ability to export, there’s no question about that, but given our overall manufacturing strategy and our manufacturing base, we have a fair amount of our engines that are manufactured outside of the U.S. and we are also manufacturing boats in Brazil, Europe, New Zealand, so we’re in those markets and in those currencies with localized manufacturing. The ability to export has been hit a little bit with the strength of the dollar, but we’re doing fine in the markets where we’re manufacturing locally.

Boating Industry: One of the top challenges facing the industry is trying to grow our customer base, reaching out to more Hispanics, more women, younger buyers. How is Brunswick trying to do that?

Schwabero: I’m going to give you a couple dimensions to this. We start with something as fundamental as bringing more diversity to our company. In terms of the role of women in our organization today, Hispanics and other diverse groups … so one of the areas I think you’ll see is [Brunswick] trying to bring more diversity to our own company to help us be more mindful of what’s going with Millennials and different ethnic groups.

From an industry perspective, it’s really having some active participation in things like the Grow Boating initiative that goes across the entire industry. I think one of the things is just being mindful of the differences that are out there and one of the key ways that we are trying to do that is just the diversity in our own company.

Boating Industry: What other challenges do you see facing the industry today?

Schwabero: There are a lot of different things we could talk about, but I’d focus on just a few. Our customer base is getting a little older, which in the near term is not as much of an issue as in the longer term.

I think the second thing is just the rate of … technology changes that are coming to products and the distribution channel’s ability to attract, train and retain the technical resources to support that product in the marketplace. We’re moving more and more from the mechanical capabilities to the electronic capabilities. That puts some real needs on the dealer partners and the distributor partners to be able to support that.

Boating Industry: What makes you optimistic about the boating industry going forward?

Schwabero: First of all … the fact that the people who boat have a passion for boating, the people who fish have a passion for fishing. That’s a real exciting thing. … They’ve got a water gene in their DNA. It’s the love of the outdoors and doing these kinds of things.

The optimism is that it’s not some kind of fad. It’s literally about a lifestyle that people have elected to live and be part of. People are being born everyday that are going to have that water gene.

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