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Q&A with Mercury’s new president

I was able to catch up earlier this week by email with John Pfeifer, the new president of Mercury Marine. Pfeifer, 48, replaces Mark Schwabero, who was recently promoted to the newly created position of president and chief operating officer of Brunswick Corp.

Pfeifer joined Mercury Marine in 2006 as president of the Brunswick Asia Pacific Group and two years later was made president of Brunswick Marine in EMEA (Europe, the Middle East and Africa). He was promoted in 2012 to vice president of global operations for Mercury Marine.

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Schwabero, in a statement, said Pfeifer’s “rich global experience and insight” made him well qualified to lead Mercury Marine. And Brunswick CEO Dusty McCoy said Pfeifer has been an “integral member of Mercury’s leadership team.”

Pfeifer earned bachelor’s degrees in economics and Japanese language and culture at the University of Michigan.

Here is our interview.

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Talk a little about your background with Mercury Marine and how that helps prepare you in your new role as president of the company. I know you were vice president of global operations for Mercury Marine, and before that you ran operations in Europe, the Middle East and Africa.

I was living and working in Hong Kong in 2006 when I joined Mercury and initially was responsible for the Asia Pacific group of businesses (Asia and Australia). In 2008 I moved to Belgium and assumed responsibility of our EMEA businesses while continuing to oversee the Asia Pacific group. The Europe market decline was as dramatic as the U.S.’s during the global financial crisis, and we had to completely restructure the way we serve the market to ensure continued long-term growth of the company. Several markets across the Asia Pacific region also went through declines during the downturn, including Australia and New Zealand. Those deep recessions are trying times and you really learn a lot about the core strengths of a company and what needs to be accomplished to protect and enhance core competency.

In 2012 I returned to the U.S. to manage our global operations group. While Wisconsin is our largest manufacturing base, Mercury also has operations in other states and in other countries. One core focus recently has been, and continues to be, to expand our manufacturing capability and capacity, mostly at our Fond du Lac, Wis., campus. This enables Mercury to better produce our newest engine products, particularly larger FourStroke outboard engines, as well as MerCruiser products. It also helps position Mercury to manufacture a future portfolio of products with the highest level of quality.

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Can you comment broadly on the current state of the recreational marine market internationally? Where are you seeing signs of improvement and, more specifically, in what boat and engine categories?

Actually, the most improved market segments recently have been U.S. segments, namely pontoon boats, aluminum boats and outboard fiberglass boat categories. Fiberglass sterndrive categories in the U.S. are still very weak. Globally, Europe is stable but not growing much. Australia and New Zealand are similar — stable but slow growth this year. Brazil and Russia are in somewhat of a downturn, while Asia continues to grow. That might not sound great, but we remain very optimistic about global, including U.S., market growth over the 3- to 5-year planning horizon in recreational and commercial segments.

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Big picture: How does a company the size of Mercury continue to improve and streamline its engine and drive manufacturing processes? In that context, can you address the investment the company is making in people and manufacturing technology to accomplish those goals?

Today’s manufacturing environment is very different from the manufacturing environment of 10 years ago. We possess higher manufacturing technology in the form of data-management system process controls, CNC controls, in-line X-ray capability, CMM capability and more. This is critical because our product has evolved greatly over the past decade. Consumers are demanding higher quality, and our product today is more sophisticated, so a higher degree of manufacturing capability is required. For example, we overhauled our MerCruiser manufacturing process controls when we moved production from Oklahoma to Wisconsin. We designed data-management controls with which the operator interfaces to ensure the right process occurs on a complex product each and every time.

Additionally, we are a Lean Six Sigma company. We use the tools of Lean every day to eliminate waste, and use the statistical tools of Six Sigma to improve our processes. This is a never-ending effort to constantly improve everything we do.

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The decline of the sterndrive market since the recession is hardly news. What steps will Mercury Marine undertake to revitalize that segment? In what size and product categories do you see sterndrive propulsion gaining or at least maintaining ground? Will the trend toward outboard power in small boats 20 feet and under likely continue? And is there anything coming from Mercury in the smaller size range that might offset that?

The sterndrive segment was undoubtedly the hardest hit, and while it remains unstable, it is no longer declining at the pace of recent years. But it’s clear that, as an industry, we need to continue to strengthen this segment through programs such as the National Marine Manufacturers Association’s Grow Boating. We need to look carefully at the cost of boating and not drive away consumers by adding high-cost features they may not fully value. There’s a value equation in a consumer’s mind that has be to constantly considered: Benefit minus cost (dollars and effort) equals the value.

In general, we see larger sterndrive power continuing to be critically important. That’s also true for diesel segments, especially globally. We see the lower-horsepower segment (3-liter) continuing to migrate to outboards due to big advances in outboard performance. In general, better products will help revitalize the overall segment — products that perform exceptionally well in terms of traditional marine power performance characteristics, but also products that are more intuitively designed (easy to use).

We are committed to sterndrive gas and diesel propulsion technology, which is why we’re investing in new purpose-built marine engine platforms to deliver quality, value and performance. We can make boating better by:

• placing the consumer at the center of all our activities and creating opportunities to engage them throughout the entire process

• building in total-system reliability that can be counted on every day for every use because it’s been tested to every extreme

• going above and beyond to make every consumer feel appreciated and taken care of

• developing easy-to-use intuitive systems with an enhanced user experience and specific consumer needs in mind

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How difficult was it to move the sterndrive engineering and manufacturing work that was done in Stillwater into the expanded Fond du Lac plant? What were some of the challenges?

Any manufacturing footprint move presents challenges, especially one as large, complex and rich in history as Mercury’s sterndrive footprint. We operated very successfully in Stillwater, Okla., for more than 40 years. The move was indeed a challenge, but our sterndrive operation is now running extremely well in Fond du Lac. In fact, as noted earlier, we’ve modernized the line with data-management systems that interface with the operator to provide process controls along a very complex product line. The end result is consistent high-level out-of box quality.

Additionally, we continue to operate a design center in Stillwater to maintain our deep bench of talent as we continue to develop products that we believe will keep MerCruiser the industry leader.

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Marine engines — outboards, gas inboards and diesels — have become increasingly sophisticated and efficient. Discuss the role of engineering and innovation in developing propulsion for the future, especially in the outdoor category.

Engineering is Mercury’s core strength. We are a product company, and we pride ourselves on having a core competence in engineering that provides a competitive advantage. We strive to listen to consumers and what they really want. The true challenge is not just listening to the overt voice of the customer, but also understanding latent needs and wants of boaters. Voice-of-customer research forms the basis of our engineering efforts. Sometimes that results in a very sophisticated product, such as our joystick products, which actually make boating easier and more enjoyable. But sometimes it also results in a comparatively simple product, such as our 150 FourStroke outboard. The result is a seemingly simple product produced by a very talented group of people listening to consumers, using sophisticated processes and methods and bringing to market a product that meets those needs.

Over our 75 years, Mercury has developed and in many cases led the industry in innovation. We continue to invest with talent, capacity and technology to grow and better meet customer needs in the future.

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