The New Brunswick: A win for the independents?

Regardless of your feelings, Brunswick deserves respect for execution of its plans to consolidate over the past two years. The acquisitions of Lowe, Crestliner and Lund are but the latest moves toward a vertical integration, which includes boat and power production, parts/accessory distribution, and retail sales through a planned network of semi-captive dealers.
In executing this plan, Brunswick achieved a potential influence well above any independent company. So what does this mean for the independent boat builders, dealers, and alternative power or accessory suppliers? The implications are not all bad.
There is a big difference between market leadership and market dominance. Only in stern drives does Brunswick’s MerCruiser have a dominant market position. However, even in this category, Volvo has made strong gains in recent years, greatly reducing MerCruiser’s leadership.
Even though Mercury is the top-selling outboard brand, its total share is far less than 50 percent. More important, it has virtually no technological advantage. The Japanese dominate the four-stroke segment and Bombardier’s elegant new E-Tec engine may well revolutionize the outboard market.
Likewise, the collective share of Brunswick’s boat lines represent a relatively small share of the total market. While some of its brands have a substantial market position, its total market share is dwarfed by its combined competitors.
Ownership interests in MarineMax and Olympic Boating Centers, and a supply agreement with Bass Pro Shop’s Tracker Marine (which controls Travis) do not control the dealerships. Despite Brunswick’s influence, these groups must remain competitive with the greater market and cannot place all of their eggs in the Brunswick basket.
Even the acquisition of more boat companies does not ensure conversion to Brunswick power. Among their three new aluminum companies, more than 15,000 were packaged with other brand outboards.
Yamaha, having the largest share, has already declined to sell outboards to these companies after June 30. This begs the questions: Will those Yamaha dealers continue to sell these boat brands without Yamaha power? Will Yamaha sell directly to the dealers?
Current answers may change as Brunswick begins transitioning transoms to Mercury power, stepping on the toes of other Mercury dealers currently selling these boats in the same markets. What will happen to its profitability? Will the dealers seek replacement boat brands or, at least, alternative power?
If I were an independent boat dealer, I would be skeptical of a program that was so obviously geared toward controlling my business. Most independent dealers don’t like masters. To purchase power, boats, accessories and services from one company may not be attractive, particularly when competing with an increased number of dealers offering the same products.
I don’t happen to believe that “bigger” is necessarily “better.” Despite the push for consolidation, the industry and its customers have been well-served by its diversity. Our organization alone, United Marine Manufacturers Association, includes 90 boat builders, collectively representing far more outboard transoms than Brunswick. Our members are prospering, yet Mercury represents a fairly small percentage of UMMA’s outboard purchases.
In fact, Mercury’s UMMA market share would be even less, except for Brunswick’s sale of its aluminum and bass boat companies a few years ago. That change led some members to feel less threatened. However, these recent acquisitions may lead some of the remaining Mercury OEMs to re-evaluate their positions regarding Mercury power.
Will Brunswick gain market share as a result of these acquisitions? Regarding power, for the short-term, certainly yes. However, with respect to total market share of those boat brands, it may actually lose ground as some dealers seek alternatives that better match their chosen motor lines.
For the independent boat builders and the independent-minded dealers, these latest acquisitions may distance them from an organization that seeks to control as much of the supply chain as possible. I doubt that many independent boat builders will want to endorse this philosophy. Likewise, I am sure that other companies like Bombardier, Honda, Suzuki, Yamaha and Volvo will seek to capitalize by aggressively partnering with independent builders and dealers to gain or retain market share.
If the independent builders, dealers and suppliers choose to regard Brunswick’s actions as a frontal attack upon their future existence, they might, in fact, be motivated to unite as a much more powerful alternative to Brunswick and its partners.
I, for one, would prefer to have these lines in the hands of Brunswick, clearly defining its intentions, rather than in the hands of Genmar. Now, we have one clearly defined mega player, where a few months ago, we had two.

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