A View from Here

Bill's Sisson's weekly Trade Only blog

An open letter to manufacturers

As we endure the worst economic/market conditions in the boat industry since the early 90s, I would like to take this opportunity to comment on what I am observing from some of our manufacturer/ partners. 

I have been presented dealer contracts that are designed to give the dealer less rights and the manufacturers a guarantee of success at the dealer’s expense. The business world can and should be a mutually profitable two-way street. The bottom line is, if I can’t understand the language in a contract as a layman due to excessive “legalese,” I WONT SIGN IT!

If you feel our past relationship is worth throwing away because you want greater protection and a business advantage over your dealers, you can find another dealer to sell your products. Strong-arm tactics will not change anything in the real world, or help our industry.

It won’t change the economic conditions.
It won’t help you manufacture and sell more products.
You certainly will strain or end the relationships that you worked hard to create.
It will hurt the industry as a whole.

 If there were forward-thinking people instead of “marketing whizzes” that plagiarized their long-winded contracts from U.S. Marine, their focus would be on writing programs that help the dealers sell product through customer incentives that are real, not designed for the dealer to lend the manufacturer money while they build more boats to choke the pipeline with. There would be quality sales and service training for dealership staff members, building a better level of product and a focus on advertising them thoughtfully. In general, making an effort towards elevating the boat industry as a whole.

I cannot take advantage of any program I have seen this year while my lot is full of last year’s product. I am not alone.  Why would I buy more new product when dealers throughout the country have lots full of non-current inventory. I have watched deal after deal [and/or my profit] disappear this year due to customers finding the “desperate guy,” and buying out of territory to save money. 20 years ago it was not as easy for a customer to do; now it takes minutes to check an entire manufacturer’s dealer network.

What happens to our margins when we have too much inventory in the field? They suffer, dealers’ ethics and territories suffer, relationships suffer, and the most desperate dealer will sell the product. Will this elevate the standards of the boat industry as a whole? No. Will it reduce the level of customer service and hurt the industry in the long haul? Yes. Meanwhile the manufacturers try to remain bulletproof, and watch it happen. .

What will I do?

I will not purchase as much product. Listen manufacturers; if you continue to build product at the current “growth” rates in a shrinking market, you will do more long-term damage to the industry as you will be “forced” to open dealers on top of dealers [when we really need less but better quality dealers].

I will be forced to put more strain on my staff and, as a result, service levels and morale will suffer. Combine this with lower margins and you have a candidate for your worst case scenario, [No, I wont pay you a 20% restocking fee for a scenario you helped create] and again, damage the industry as a whole.

I will find manufacturers that understand these aforementioned concepts and are willing to work with dealers with sensitivity, mutual sacrifice and risk, and willingness to get through the current market conditions. 

The smart manufacturer will be there for me, and I will be there for them. And I will work harder than ever.

Marc Grove
President
Wefings Marine

Comments

7 comments on “An open letter to manufacturers

  1. Phil Keeter

    Marc has stated the facts in a very precise and accurate manner. It is very clear to him what a true dealer/manufacturer relation should be. I concur with his views wholeheartly.

    We must work together in order to survive. If dealers can’t maintain their margins, they can’t stay in business. It is not all about moving a huge number of the manufacturers product. It’s about servicing the consumer in a correct way so they will return and also tell others to buy.

    As Marc has stated, concerned mfgs seem to be and will, I hope,help dealers thru these downturns. Those you don’t will reap the rewards of losing good dealers!

  2. Jim

    Mr Keeter, where are you on all the other important issues on the rest of the blogs? Maybe you should have wrote the above blog. Maybe all the writers listed on the left column should be writing. Maybe….just maybe….someday you all will…..Your name and position need no introduction.

  3. Norm Schultz

    It’s that time of year! Dealers are, once again, headed for dealer meetings, but this trip is accompanied by deep concern about non-current inventories that can strangle them back home. Moreover, they’re about to face pressures to take on ’08′s in quantities that often can’t be justified as smart business decisions. In tough times, such as we face in the industry today, the issue of fair and reasonable dealer agreements is sure to spark again. It immediately calls up memories of David Slikkers’ (President of Tiara Yachts) now famous announcement: “It’s a new day,” referring to the bold and unprecedented recommendations made by the Special Industry Task Force he headed. That was back in early May, 2005. There was great anticipation that dealers and manufacturers would finally enjoy new, more balanced agreements for the ’06 model year. Ooops – since it was already so close to the ’06 model year, officially the NMMA Board, recognizing the short time and the complicated legal re-writing needed, urged all NMMA boat members to adopt the recommended provisions as soon as possible but no later than the ’07 model year. Good plan, everyone agreed! But here we are kicking off the ’08 model year, and while more than 60 major brands had agreed in ’05 to adopt the excellent recommendations of the Specal Task Force, the evidence that it has been accomplished appears weak. So the subject and the underlying anger of dealers who feel their manufacturer agreements fail to reflect a genuine “partnership” intent boils over again. It’s time all manufacturers stop the talk and start the walk! Indeed, some have taken at least some of the recommendations and done a pretty good job of offering them in their dealers agreements. But, according to the dealers, most have failed to live up to the hype and promise of May, 2005. Marc Grove and Phil Keeter are on-the-money when they champion that in hard times like these, a real partnership relationship between the manufacturer and his distribution channel, the dealer, must exist. And in my opinion, a “real” partnership should be evidenced by a dealer agreement that clearly adopts the excellent recommendations of the Special Task Force. The truth is we shouldn’t even be talking about this now – we should already be there!

  4. D Erickson

    I left the marine business seven years ago and sometimes check back looking for whats new. This issue is not new… In my opinon some mfgr’s don’t see it as a partnership with the dealer/distrubution. They see it as a preditory opportunity, sad thing is it’s still the same mfgr.

    Long live the bean counter. Dealers better watch their #^*@!

  5. D Patrick

    Last year I sold my dearlership, so I was fortunate. I love this industry and want to give something back. These are tough times though, and now more than ever cooperation is needed from the manufacturers. It should be no different than a custumer dearler relationship. The manufacturers that recognize the importance of dealer sucess will prosper even in these tough times. There are a few manufacturers that reconize this, but very, very few. Something must be done, I’m just not sure exactly what at this time. Anyone with any ideas, comments or suggestions, please respond.

  6. Noel Osborne

    In 1996 I co-chaired the Manufacturter/Dealer Task Force for the NMMA. Our conclusion as a committe made up of both manufacturers was that we need some sort of agreement that would recognize the needs of both parties. Lets see now, that was over 10 years ago. The rhetoric I am hearing now sounds very simialer to what I heard back then. Does that mean we have wasted 10 years without making any progress on this issue? Unfortunately the answer is YES. The industry can wake up and do the right thing now or it can languish in rhetoric for another 10 years and wonder why the industry is not growing.
    Marc Grove is a client of mine and I am intimately familiar with some of the reasons he is unhappy with some of suppliers. Their behavior makes it dififcult for a hard working business owner like Marc to see much os a future in the marine industry.
    This is not a criticisim of all manufacturers, just those who do not understand the necessity for a level playing field where everyone can profit from their hard work.

  7. Pete Peterson

    We are a small company in the shadow of the giants, but we realized five years ago, upon the failure of the former owner that we needed to do things differently than the rest of the industry. First year, we built half the boats we had in the past to clean out the channel. Then we set out to look for real partners who would participate in a new idea, protected territories selling dealer must service what he sells, pay shop rate for warranty, build quality boats that don’t need the dealer to finish the job, create reasonable goals with dealers only required to have 1/3 of annual commitment in stock or on order at any time. Quarterly rebates to help dealers move products and year end bonuses for dealers who hit their commitment, sent staff to sales and service training and acheived high CSI scores. In 2008 we delivered to our team of dealers a three year dealer agreement as proposed by the NMMA, but we had already laid the groundwork to make this happen. Today, we are profitable and have a 10 -12 week backlog of orders with new products coming that already have booked Spring production dates. This can happen, but the manufacturer has to treat the dealer as a partner and not a wide spot on the road with floor plan.

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