A View from Here

Bill's Sisson's weekly Trade Only blog

Jacobs says Brunswick’s strategy is flawed

I am outlining some of my thoughts and candid views regarding the recreational wholesale and retail boating market in conjunction with what I believe is going to create both several opportunities as well as some very difficult times for certain boat manufacturers and dealers in the recreational boating market in 2007 and beyond.

Although the recreational boating industry has not been exactly robust over the past two years, there surely has proven to be several independent boat manufacturers and dealers who have been able to more than hold their own and in several cases certain manufacturers and their dealers have even grown their businesses in spite of the fact that the market overall has been flat to down.

I believe that Brunswick’s acquisition binge of several boat companies over the past three to four years has up till now proven to be nothing short of a disaster for Brunswick.  Based on the public information available both from Brunswick itself and from Statistical Surveys, I don’t believe there is a single boat company that Brunswick has purchased over those three to four years that are better off today than they were at the time that Brunswick purchased them.  In fact, most of them, if not all of them, have continued to substantially lose market share and business far in excess of the overall difficult market conditions.

I further believe that Brunswick’s poor timing of being extremely aggressive in purchasing the boat companies they acquired over the past three to four years is going to offer several of the well-run independent boat builders and their dealers a golden opportunity to grow their businesses in 2007 and beyond at the expense of Brunswick, even if the retail recreational boat market continues to show little or no growth in 2007 and beyond.

The fact that the independent boat builders and their dealers have the flexibility to offer the retail customer their choice of engines, I believe that it in itself is enough to take market share from Brunswick’s boat companies.  Whereas Brunswick offers, for the most part, only their Mercury engine products and the fact is by their own admission, Mercury has outright lost market share for their engines over the past several years in the U.S.

A further fact, I believe, is that Brunswick’s overall strategy to become a vertically integrated marine company is flawed for the simple reason that in order for Brunswick Boat Companies and their Mercury Engine Company to grow they cannot do it without the support of the independent boat builders (their competition) and their dealers.

Therefore, my conclusion is simple “why would any competitor of Brunswick’s want to help them grow there businesses at the same time that Brunswick is competing against them every day in the recreational boating business?”

I believe the answer is quite simple and I predict that Brunswick is going to continue to lose market share and businesses both in the boat and engine business to the well-run independent boat manufacturers and their dealers who compete with Brunswick Boat and Engine Company.  In other words, even with a continued difficult boating market I believe there is going to be a lot of business out there for the taking.

Irwin L. Jacobs

Chairman and CEO, Genmar Holdings



22 comments on “Jacobs says Brunswick’s strategy is flawed

  1. Ed McKnew

    I believe Mr. Jacob’s comments regarding Brunswick are prescient and worth serious consideration. I’ve had many conversations with readers of our publication who have expressed frustration that they can’t purchase a Brunswick-owned product without being forced to take a Mercury engine. Boston Whalers are terrific boats — certainly among the best in their class — but how many sales are lost because a potential buyer can’t fit one out with Yamahas? Like it or not, there are plenty of buyers out there who don’t want Mercs.

    Mr. Jacobs may not be everyone’s idea of an industry sage, but he’s done a good job of identifying a genuine Brunswick weakness. This engine issue has the potential to become a huige Brunswick liability.

  2. Keith V. Maling

    In support of Mr. Jacobs comments the boating industry lost a competor of Searay by Brunswicks aquisition of Sealine Yachts of England. As soon as they had purchased the company they began to destroy the brand. This was a profitable company and dealership that was establishing a foothold in the American market. A product that offered an alternative choice to the consumer but was surpressed and taken out of the market through dealership litigation, poor customer support and intentional destruction of it’s market share.

    First hand knowledge reveals that as a company expands and takes over it’s competitors through aquisitions, it also inherits a responsability to maintain profitability of the companies it takes over. This was not apparrant in the Sealine aquisition as a matter of fact it has destroyed the brand.

    These aquisitions reduce the choices of the consumer. This enables price fixing and market share control. It surly benifits no one as the cost of owning a company you aquired and destroyed is passed on to the consumer. A once profitable company becomes a liability of Brunswick. Again the consumer is the ultimate looser.

    Brunswick is headed for disaster as the independant boat builders can control thier product production and marketing of thier brand while still offering personal service to the consumer Brunswick cannot and has toataly lost touch with consumer relations.

    This is just one example of corporate leadership and the board rooms handling business when it is best left to the family owned and operated brands.

    Good luck to all the small independant boat dealers that deserve more market share for thier hands on conumer oriented approch to boat building.



  3. Warren Lally

    It seems odd that A CEO would bash another company using this media outlet . More unusual is the content of the post considering Mr. Jacobs previous history for buying and breaking up companies costing good people their livelihood.I own a repair company and find that most people that own gasoline powered boats are very faithful to the mercury product line and also faithful to what are now Brunswick owned boat manufacturers .We all know sales are down but perhaps another way to look at low sales figures is people are happy with the boats they have and would rather repower or maintain/repair those boats with products that can be purchased at a reasonable cost with easy availability . What really strikes me as strange is Brunswick bought three brands from Mr Jacobs company Genmar Holdings . By the way, does anyone recall that Conseco debacle ? Remember Mr Jacobs , people in glass houses…….

  4. Fred Muehl

    Jacobs is still a heroic voice in the wilderness. Although his motives are probably driven by Genmar self interest, he speaks with non forked tongue. Eighteen months ago I sold York Harbor (ME) Marine Service (YHMS). Although I was ready to retire, my decision in part was due to the lessening of my business by Brunswick. For twenty five plus years, twenty under my ownership, YHMS was a Boston Whaler dealer offering Johnson/ Evinrude product. Sales were robust, even through slumps and constantly showed steady growth.;significant enough that it became a profit center in a service oriented company. Along came Honda and we were one of, if not the first, dealer of these 4 stokes engines in Maine. YHMS were pleased that this small company offered the consumer choice in powering their Boston Whaler boats. Our customers always wanted top rated product. Boston Whaler was my ticket to customer satisfaction. When OMC stumbled, the Honda reputation filled the gap and my Whaler sales hardly missed a beat as we switched to Honda power. Along came Bombardier and we were ecstatic that we now had a top notch 2 stroke to again offer our customers. Just think you could offer you customer (the one that is actually giving you money) consumer choice!!
    Life was good. Sales were good. Along comes Brunswick as it acquires Boston Whaler. The boats become homogenized and look like a host of other boats running around with reverse transoms. Metals show the signs of mass purchasing;rust spots on stainless. Warranty times go up as the Whalers look as if the were put together on a production line staffed by a temp agency. More devastating power options have become dark –I should say black. I’m now dealing with a com[any that believes consumer’s are dopes and the company knows what’s best. for the first time my customers are pressuring me to look at (god forbid) boat lines other that Whaler. Not that they do not want the Whaler, they wanted engine choice. They wanted top notch progressive that held up the reputation of the old Boston Whaler they loved so well

  5. Rogenald Jean Keller

    I believe, Irwin’s arguement is correct as far as it goes; but, I believe, the industry, with it’s great number of independent boat manufacturers, should be free to buy and sell anything, new style or old, that their potential custumer may have heard of and want to see.

    My new style, KROP System, with it’s safety and other efficiences, can “Grow Boating” for all.

    Rogenald Jean Keller, Inventor and owner

  6. mike webster

    I was employed by a well established high volume Johnson dealer who decided to sell Yamaha in the 1980’s,therefore I certainly understand the draw “branding” has on the buyer.
    That was then. The fact is the engine packages offered for all of the Brunswick vessels are just fine.The service aspect is more critical than perceived or real product feature/benefit.
    Give the Brunswick product sales staff training on the order I witnessed during the Yamaha US market entry (…”expect a lot” ) and the playing field just got even more competitive.I hold fond regards for Mr. Jacobs. Here he is off the mark.

  7. jim

    All this hot air coming from a guy who is anything but “independent”..Glastron, Larson, Four Winns, Ranger, Carver, Hydrasports, Triumph, Wellcraft, Stratos, Carver, SeaSwirl & Marquis.

  8. Bob

    Mr. Jacobs’ ‘holyer than thou’ attitude has come to be known by many in this strugling business as ‘consider the source’ drivel. Wasn’t it HE who gobbled up the dregs of OMC at dirt cheep prices? How is that any more righteous than Brunswick’s “aquisition binge”?

  9. Ed

    Irwin salvaged bankrupt companies from OMC, companies no one else wanted at the time including Brunswick, created jobs at the factory and supplier levels, strengthened dealers, made money and sold to Brunswick at a profit I’m sure. That’s what smart people do.
    Brunswick bought some of those profitable companies, ran them into the ground, jobs were lost at the factory and supplier level and the dealers suffered.
    Brunswick wants it’s non-boater shareholders to think the market is down. If they only knew the real reason for Brunswick’s decline, I’d say a change in top management would be forthcoming.

  10. Larry Tague

    Although I do not usually agree with Mr.Jacobs ,I have to agree with his comments about Brunswick. Brunswick has been on a bing to buy any market share they could not own otherwise. I can not see that there current position has done anything except harm the customer base of independent dealers and there own dealers by limiting the customers options. Every time someone sells a Brunswick product you put another nail in our own coffin.

  11. Blaine

    I’m Not a Gen Mar dealer but there is some substance to what Mr. Jacobs is saying. Think back guys, remember when Brunswick owned AMF and Harley? They pounded Harley in the ground. It took the son of the founder to bring Harley back. Procraft, they built a ton of bass boats, where are they today. They don’t have the market share that they once did. Brunswick has distroyed every boat company it has bought. Yes the names may still be around but the “family -ness” of those companys is gone. Dealers want a good relationship with the brands they are selling. As a former Triton dealer, Procraft dealer, I saw a change when the buys out happend. And it was ALL down hill. Now I don’t know who reads these things, but If the powers to be do, be warned….Omc went out, you could be next. I for one will never put all my eggs in one basket ever again!

  12. Joel Glickman

    In my opinion manufacturer consolidation is very bad for our industry and it hurts the dealer in so many ways.

    The life blood of our industry is the independent marine dealer. He is virtually the only one who can give a future for marine products. Todays consumer will not tolerate inferior products and service. In my opinion the proliferation of big box stores will move some products for the manufacturers who supply them. This includes Genmar as well as Brunswick and Tracker.

    The sales people who work at these facilities are generally not well compensated for the sale of big ticket items. As a rule they have little or no training. Service historically is poor or non existant. Some consumers who buy this way will leave boating soon, a few will migrate to a better product and a better dealer.

    Boats should be sold at big box stores when BMW’s are sold there.

    The motor companies showed their lack of concern for the dealers health when they made the decision to market outboards through the builder oem. Now the dealer is at the mercy of an oem who makes 10 to 14 points on a motor that he never touched in most cases.

    We were a lot better when the dealer was made strong with a loyale commitment to a motor line. This promoted innovation from the motor manufacturers.

    I feel the quality dealer will always be strong and survive. He will market products that impress the consumer and he will service them.

    Bad decisions are made from afar, good ones after observing the battle close at hand.

    I am in the cocktail hour of my career in the marine business. The large conglomerates are not helping our future very much. I have worked boat shows every weekend so far this year and I have yet to see the first grow boating promotion at a show. Sincerely. Joel Glickman

    Brunswick, Genmar Tracker and others are motivated by 30 day goals. Long term and the good of the dealer and consumer is generally sacrifised for keeping ones job. This is just the nature of big business. These people are just trying to survive in a corporate enviornment that many

  13. Jeff Sanborn

    I can’t tell from other comments how big of a dealership they represent but many seemed larger than ours. We are a longtime family operation, over 80 years and 4 generations starting out with Johnson in about 1926. We have remained loyal to the builders
    over the years and we are having a very hard time accepting not having a motor choice. I believe that the salvation of the marine industry lies with the smaller dealers who can provide the neccessary personal service that is required to keep people interested in boating. We are also located at a tourism destination and see many units for service that we did not sell. Most of the issues that we deal wtih come from the big, high volume dealers. These manufacturers that are taking there business to the these type of operations are what is killing the boating lifestyle. Where do the large boat builders think that the counsumer will obtain service if they starve all the small to moderate sized dealers out? And what happens when one of the big guys fails and is a major portion of a manufacturers business? Corporate operation of these boat companies seems only based on short term goals woth no long term planning. When our boat manufacturer was part of Genmar we felt some of that corporate greed. In retrospect it was a pleasure working with Genmar. When we weathered the OMC bankruptcy we swore we would never been a single line dealer again. It appears that Brunswick really wants dealers to become just that. From boats and motors to accessories they have it all. After watching how our boat line has changed under Brunswick and looking back to what they have done to others in the past (some of which are independent again and making good progress) I would encourage all of the small to moderate sized operations like ours to align themsleves with an independent builder and help them grow thier business. We can spend all the money we want on grow boating and dealer certification but if we don’t have consumers and we don’t take care of them everybody is going golfing instead of fishing and tubing. Thanks.

  14. Jason Cole

    Jacobs, what an ego maniac. He was not bashing Brunswick when Genmar was drowning in debt, and Brunswick bailed him out to the tune of about 270 million bucks for Lund, Crestliner, Lowe, and Hatteras. Anyone remember when Genmar was a publicly held company, called Minstar, Miramar Marine, or what ever the spin of the day was? He ran it into the ground and then took it back private. I would much rather have stock in Brunswick than any of Jacob’s former publicly traded companies. And by the way Irwin, you are one of Brunswicks largest customers. Why don’t you put your money where your mouth is, and just say no to Brunswick engines. See if you can get by without the 65% of Mercs. that leave on Ranger transoms. If you expect dealers to alter their business for your gain, you should do the same.

    Then he complains about the new Tracker/Gander Mountain deal, when in reality he is miffed that they are cutting Genmar out of Gander Mountain stores, since Genmar was already doing business with Gander Mountain, and Cabels. One thing Jacobs is at Genmar, “The director of hypocrisy”.

  15. Irwin Jacobs

    In Response to Jason Cole:

    February 5, 2007

    Generally I wouldn’t even consider responding to such ridiculous, inaccurate statements; however, in the case of what Jason Cole posted on January 31, 2007, I felt compelled to respond to his inaccurate, false and misleading statements for several reasons: 1) I believe Jason Cole has a personal agenda that has nothing to do with the facts and subjects that he posted on January 31, 2007; 2) his inaccuracies are so blatantly wrong, false and misleading that I didn’t want anyone who may have read what he said, to even remotely believe and/or consider his statements to be true because his facts and statements are absolutely and completely wrong. The following is my response to Jason Cole:
    ­ First of all, there has never been a time over the past 20 years that I haven’t been negatively vocal about my opinions as to how Brunswick conducts their business in the marine industry (boats and engines). For an example, Genmar sued Brunswick approximately 14 years ago contending that they violated the U.S. anti-trust laws.
    ­ Brunswick ultimately settled the case with Genmar without a single deposition being taken for approximately $25,000,000. After Genmar’s case was settled and publicly announced with Brunswick, several of the other independent boat builders also filed anti-trust lawsuits against Brunswick and in several of those cases Brunswick also settled with a group of the independent boat manufacturers for over $35,000,000 in cash. Does anyone believe that a company(s) that sues Brunswick would ever receive cash settlements for over $60,000,000 and think the company (i.e. Brunswick) didn’t believe they were guilty of the claims filed against them?
    ­ It should be further noted that if anyone was interested in looking into the constant stream and volume of lawsuits for many years that have continually been filed against Brunswick and its various companies and divisions all you have to do is to look up Brunswick’s litigation (through LexisNexis®.) It will keep you busy reading for probably longer than you will have the patience for. Jason Cole’s reference to Genmar’s drowning in debt and Brunswick’s bailing Genmar out is as ridiculous as anything I have ever heard. Genmar has been a privately-held company for over 17 years. Throughout that time I, as well as several of our other major shareholders, invested over $200,000,000 in cash in Genmar when it needed additional capital to grow our businesses and make the acquisitions like the bankruptcy of OMC. All I have ever seen at Brunswick from their management and Board of Directors is their issuing each other stock options and when they exercise the stock options, for most of them if not for all of them, they sell the stock options the same day they exercise them and take the profits with absolutely no risk to themselves. These are several of the same individuals that have continuously touted Wall Street and their investors with how great the future is going to be for the Brunswick shareholders but at the same time, for the most part, they are unloading their Brunswick shares the same day they exercise their stock options. Brunswick and its management are a great example of the saying “other people’s money” at risk rather than their own (typical of many of today’s publicly-held corporate America’s CEOs and management.)
    ­ Jason Cole obviously cannot count very well even though all of the information on the companies which Brunswick purchased and paid for from Genmar was public information. Because, even his arithmetic in totaling the money that Brunswick paid Genmar for Hatteras, Lund, Crestliner and Lowe boat companies over the past several years was wrong. Brunswick paid Genmar over $310,000,000 in cash not $270,000,000 as he stated. I do not know exactly what Jason Cole does for a living, but I can assume he’d have no doubt been pleased to take Brunswick’s money if he had the chance to do so, no different than Genmar did. Further, it should be noted that every boat company that Brunswick has purchased from Genmar, as well as all the other boat companies Brunswick purchased during their buying binge over the past several years, for the most part have and continue to substantially deteriorate in both sales and profits as well as most of them have lost considerable market share in their respective segments of the boat market.
    ­ Jason Cole stated that Genmar is one of Brunswick’s largest engine customers. At one time, Genmar’s boat companies in stern-drive engines above used over 85% Mercury stern-drive engines; however, today Genmar’s boat companies use substantially more Volvo Penta stern-drive engines then Mercury engines and I mean substantially more like in excess of 70% of Genmar’s stern-drives are now purchased from Volvo Penta. In outboard engines, at one time, Genmar’s boat companies purchased in excess of 85% of our outboard engines from the Mercury outboard engine company. In fact, the Ranger Boat company at one time purchased in excess of 95% of their outboard engine requirements from Mercury outboard engine company.
    ­ For the past 13 years, however, Genmar has purchased by a great margin substantially more outboard engines from Yamaha and Evinrude than from Mercury. Mercury’s big fanfare and coming out party over their Verado four-stroke engines have proven to be the equivalent of a firecracker that didn’t go off. In other words, it is a “dud.” By the way, Ranger doesn’t purchase anywhere near 65% of their outboard engine requirements from Mercury, that Jason Cole stated they did in his January 31, 2007 statement. In fact, Ranger’s purchases of Mercury outboard engines are substantially less than 65% of its outboard engine requirements. Further, on several occasions, I have publicly stated that although I would prefer Genmar did not offer and/or sell a single Mercury/Brunswick product, I don’t want our boat dealers to lose a single boat sale based on the customer and/or the Genmar dealer preferences (such as what Brunswick’s boat companies have done by offering only Mercury engine products with their boats).
    ­ I don’t know where Jason Cole got his information about me complaining about the recently-announced Tracker/Gander Mountain deal. The fact is to-date I haven’t said anything about it as yet. However, I will now comment on it and tell you that Gander Mountain’s success or lack thereof over the past approximately two years in selling boats at Gander Mountain Stores has been nothing short of a major disappointment to both Genmar and Gander Mountain.
    ­ Gander Mountain was by no means the example of what I would put in the category of a successful boat dealer and I won’t be surprised if the Gander Mountain/Tracker Boat relationship isn’t also a short-lived one.
    ­ Finally, I would like to respond to Jason Cole’s statement about how he would much rather have stock in Brunswick than in a Jacobs’ formerly publicly-traded company. If Jason Cole did or does own stock in Brunswick over the past 18 months, his stock holdings in Brunswick would be down from a high of approximately $49.00 per share to the recent price of approximately $33.00 per share. That is a 33 1/3% stock drop in the price of Brunswick shares.
    ­ On the other hand, when I took over the boat companies back in the 80’s, our boat companies publicly-traded as Minstar. The stock price at the time I took the boat companies over was $.50 per share and the total sales back then were $11,000,000. I took the Genmar Boat Companies private in 1989 at the equivalent price (after stock splits) of $65.00 per share or 125 times people’s original investment of $.50 per share at the time I took control of the company. It also should be noted that today Genmar’s sales are in excess of $1 Billion and it is profitable and it has no short-term bank debt. In fact, we ended our 2006 fiscal year with approximately $30 Million in cash and no short-term debt on our balance sheet.
    Jason Cole, I don’t know who you are or what you do but I wouldn’t be surprised if you were either an employee or a relative to someone at Brunswick. In any case, as even you can see by what I have written, you don‘t have any of your so-called facts right in your January 31, 2007 statement. But maybe you were really never interested in telling the true and real facts. If you want to discuss the Genmar/Brunswick situation any further with me directly, you can reach me directly through my e-mail address which is: ilj@jacobs-mgmt.com.
    Irwin L. Jacobs

  16. rich

    “Verado four-stroke engines have proven to be the equivalent of a firecracker that didn’t go off. In other words, it is a “dud.” “…I happen to like the engine-on my Hydrasport no less….

  17. Bill Blackman

    I do not disagree with much of what Mr. Jacobs says, but do not understand what his agenda is in criticizing Brunswick all the time. He always makes it sound like he is there for the good of the industry, but he is the one who sold Lund, Crestliner and Lowe, leaving Ranger as the only fish boat brand in his stable. With skyrocketing fiberglass prices, Jacobs may wish he had some aluminum back in the mix. The only loyalties he has are his wallet and his ego.

    He is right, OMC went down the tubes following the verticle integration ladder like Brunswick is attempting. I think he is mistaken about the VORADO though.

  18. mike evans

    If you really listen to what Mr.Jacobs is saying, he is tryin to give the consumer the ability to chose what product they want not what is forced on them.I am a independent and proud of it.I go head to head with mercury and yamaha eveyday thanks to independent boat manufactors like Mr Jacobs, and companys like premier pontoons, Honda marine that dont force products down your throat we are able to survive in this shark infested waters we sale in today. thanks for the Mr. Jacobs of the world that keep people like Brunswick in tack.

  19. Tony Bento

    I would like to offer my personal comments regarding Mr. Irwin Jacobs. I am a 26 year veteran of the boating industry. I began selling Hatteras Yachts in 1981. The very best thing that ever happened to Hatteras was when Mr. Jacobs purchased the company in 1986. He not only put his heart and soul into the company, he also made sure they had enough funding to expand and build new products. When the ill-fated luxery tax was imposed, it was Mr. Jacobs who offered to pay the tax for the customers to keep Hatteras alive.
    Irwin Jacobs cares a great deal about his boat companies and their dealers. Others should take his lead.

  20. David Wollard

    Jacobs comments were dead-on. Brunswick was exposed under Buckley and McCoy has a huge task ahead of him…….

    The boat business is just that. We are not the automotive industry. Fact is, every attempt by those who come into the marine industry to introduce automotive structure has failed for more than 80 years. Maybe investors buy that crap, but those of us who are industry lifer’s know better! let’s start to embrace who we are. Not create something we are not. Maybe, just maybe we will actually produce a better product and provide better customer service.

  21. former aquasport sales person


    Get off the Brunswick kick. Concentrate on quality and marketing your own boats and stop squandering dollars on foolish ideas. (VEC, Sam’s Club, Genmar only Boat shows, the demise of Aquasport)

    You are loosing credability with dealers as well ass customers. Pulling out of Florida is a mistake as was the idea of selling the Scarab name to Austrailians. Stick to the knitting.

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