Genmar making tin boats again

[blueroof]

Thought this might be interesting for some of you...

Genmar getting back into aluminum boats

Thursday, 25 September 2008 10:12

Genmar is planning to re-enter the aluminum boat market, with plans to have the as-yet-unnamed company up and running in a new factory during the first quarter of 2010.

“After carefully assessing and evaluating the aluminum boat market over the past several months, we’ve concluded there is a major need, along with great opportunities, in the aluminum boat segment of the fishing and recreational boat market,” Genmar chairman Irwin Jacobs said in a letter sent yesterday to dealers.

Genmar previously manufactured Lund, Crestliner and Lowe aluminum boats.

Jacobs said he believes today’s aluminum boats are overpriced, with some even retailing for higher than equally equipped fiberglass fishing boats of identical size.

“It is Genmar’s intention to substantially decrease the wholesale and retail prices in all of the aluminum boat segments of the market,” Jacobs said.

“I believe the only way that Genmar can once gain become the industry in aluminum boats is for us to basically change the entire way aluminum boats are presently priced, manufactured and marketed to dealers and to the retail-boat buying consumers,” he added.

The name of the new company will be announced late next year or early in 2010, though a location for the new boat factory should be announced in 2009.

Genmar plans to initially offer dealerships to existing Genmar dealers and to past dealers of Genmar’s former aluminum boat lines.

“With the above proposed commitment from Genmar, it is obvious that we are very optimistic about the future of the boating industry and believe that the recreational boating market will once again be re-emerging bigger and better than ever,” Jacobs concluded.

Genmar’s current boat lines include: Four Winns, Carver Yachts, Ranger Boats, Wellcraft and Larson, among others.

[marine_man]

Wow.. very interesting for sure!

marine_man

[MWellner]

Too bad Brunswick brought Lund and they couldn't do this using the Lund brand. While I'd buy another Lund, but why would I buy a Merc when I associate Brunswick with cheap products and poor quality?

[Chode2235]

Genmar owns Ranger, Champion etc? And Brunswich owns Lund, Crestliner, Merc? Just trying to keep it all straight.

I would love to see prices driven down, but I dont want a 'cheap' boat.

[blueroof]

Or a Chinese hull shipped over and assembled.

[bassNspear]

It will be interesting to see what they are going to build. Its always nice to hear there going to build something that is less expensive, just dont cut to many corners.

[marine_man]

And if it ends up being pretty good a little competition can't hurt.

marine_man

[fasternu]

maybe it's just me, but I kind of noticed that the prices started going up in the market when everyone started consolidating. Another company can't hurt the prices.

[castmaster]

"but I kind of noticed that the prices started going up in the market when everyone started consolidating."

That and when the price of aluminum went through the roof.

[delcecchi]

Aluminum is about a buck a pound. So the aluminum in a proV is worth somewhat less than a thousand dollars. Pretty good markup eh?

[dkf]

Cost of aluminum materials depends on shape, demand, size, quanity, grade and etc. Scrap prices have little to do with it. Go price enough 5053 alum sheet, Ibeams, formed trim/rails, rivets and etc at a local supplier and see what the price tag comes to, will be wayyyy over $1k.

If the boat is a great quality and performing, Canadian or US built boat I think it will be a winner giving Genmars track record. If its made in China or similar places it has no place in my driveway. Outboard choice is very important to me, thats the reason why a Lund or Crestliner wouldn't be considered as a next boat for me.

[JohnMickish]

There is already enough cheap aluminum boats on the market. We don't buy them up here because well, they are cheap. Us in the upper midwest have really spoiled ourselves with the quality of boats that we have all grown up with. If you are looking for a Pro-V at a 40% savings you will be dissapointed. If your looking for a 18' boat for under $20 they are there now, they just aren't fancy.

[dkf]

The same Lund combo I bought new in 2001 would cost $7-10k more now than back then. Prices and materials didn't inflate that much and I think thats what Genmar is talking about. The same truck I bought new in 04' would only cost about $700 more now than in 04'.

[Queenswake]

This is great news after so many years of a big run up of prices. I think all manufacturers are going to have to start downsizing and making more stripped down models of boats with the tough economy ahead of us. With credit gone, people won't be able to finance as much as they did before. The consumers are largely to blame, however. We wanted all the new electronics, bigger motors, galvanized trailers. It's so much more than the actual hull that has driven up the price.

They are smart to diversify because much of the rest of their line are fiberglass pleasure boats and cruisers which are taking a bigger sales hit than fishing boats. And aluminum might even be in the future these boat types down the line so it's good to get a good aluminum line going. With people getting rid of their tow vehicles and downsizing to smaller vehicles, they won't be able to tow those heavy fiberglass boats.

[delcecchi]

I was looking at commodity aluminum prices, not fabricated. This was in reference to "the price of aluminum went through the roof". Lund prices seem to have gone through the roof. In my opinion that is driven by marketing and profit margin considerations more than materials and labor. The materials in a Lexus aren't much more than the materials in a Camry.

[JohnMickish]

The materials in a Lexus aren't much more than the materials in a Camry.

You are right there, but how you put things together makes a difference. For that matter, the material in a BMW and a Kia should cost pretty close to each other if you just count raw material. Engineering might play a "minor" part in the price here too. Like I stated earlier, there already are cheap boats on the market, it would be nice to have an inexpensive boat that's good. American made would be better yet.

[MWellner]

So is anybody actually importing alumimum hulls from China or overseas yet?

[JohnMickish]

I don't think so, yet, but I wouldn't put it out of the future. The one bright side of our exploding fuel prices is that it's now cheaper to make some stuff back here than to ship it across the ocean.

[MWellner]

I'm sure there would be a leak somewhere!

[note from admin: please read forum policy before posting again. thanks!]

[bassNspear]

Artical from Bassfan.com

Genmar chairman and CEO Irwin Jacobs circulated a letter to all Genmar dealers that announced the company will aggressively re-enter the aluminum market. That's significant news for a couple of reasons.

Remember that Genmar sold its aluminum boat brands – Lund, Lund Canada, Crestliner and Lowe – to Brunswick Corp. in March 2004. With the sale, the company effectively divested itself from the aluminum market. At the time, Jacobs noted: "Genmar's board of directors unanimously agreed it would be in the best interests of the company and its shareholders to put all of our efforts and resources towards the future development and expansion of Genmar's 13 remaining fiberglass boat companies."

Lund, Lowe and Crestliner are monster brands in the aluminum market, and it appears that Genmar means to go head-to-head with those same brands it sold off 4 years ago.

In the letter, Jacobs announced plans to start a new aluminum boat company. Production would take place at a new, not-yet-built factory. The brand name, and factory location, will not be announced until next year.

Some other highlights from the letter Jacobs penned:

"It is hard for me to believe that currently there are several aluminum fishing boats in the retail market at the same price, if not higher, than equally equipped fiberglass fishing boats of identical size; which I believe offer many more benefits than today's selection of aluminum boats ever could. I believe fiberglass fishing boats (i.e. Ranger, Stratos, Champion Boats, plus others) offer a better ride and a greater value than aluminum boats. In other words, I believe aluminum boats presently being offered both in today's market are, in many instances, overpriced compared to many of the fiberglass fishing boats."

"As we develop our new aluminum boat line, it is Genmar's intention to substantially decrease the wholesale and retail prices in all of the aluminum boat segments of the market. This includes reducing wholesale and retail prices from entry level aluminum boats to the higher end and everything in between. I believe the only way that Genmar can once again become the industry leader in aluminum boats is for us to basically change the entire way aluminum boats are presently priced, manufactured and marketed to dealers and to the retail boat buying consumers."

"The new Genmar aluminum boat factory will be the most modern, high-tech aluminum boat factory in the world."

"We won't be announcing the new name for the aluminum boat company until late 2009 or early 2010. It will be a completely new name and company. We hope to announce the location for the new aluminum boat factory sometime in the middle or third quarter in 2009."

"I want to assure you that when you see and hear about what Genmar's specific plans are for our new aluminum boat company, there won't be any doubt in anyone's mind (including our competitors) who is going to once again be the leader in the aluminum boat segment of the market. It will be Genmar's new aluminum boat company."

More details will be published as they unfold.

[JohnMickish]

I'll bet $20 that they won't be built by Americans.

[bassNspear]

I'll bet $20 that they won't be built by Americans.

why you say that

[JohnMickish]

Looking at it from a price point. If they are truely interested in competing head to head with the upper end aluminum and glass boats but beating the price by enough of a margin to make the difference, you have to cut cost somewhere. You have your choice of labor cost, material cost and shipping cost. We all know that off shore labor is cheaper and many manufacturers have shipped jobs overseas because of it (helping to put us in the financial situation we are in), and you have the material manufacturing cost that are high in the USA due to several laws the the EPA and others enforce (and should be enforced around the globe, but they are not). In LDC's (Lesser Developed Countries) and UDC's (Under Developed Countries) Where you have people willing to basically work for room and board, and are allowed to dump hazardous waste in rivers and such, and the power plants run with basically no polution control producing very cheap electricity. Remember the China air quality issues they had this summer? That is a great way to make a good product for much less than you could here. Another thing is that most of the UDC and LDC countries don't have copyrite laws so it's very easy to reverse engineer a product and start making a copy.

The rising cost of fuel for transporting the product is the only factor at this point that can be the trump card in the whole deal.

There are several automobiles made in countires other than Japan and the USA that are very good in quality and much cheaper that the domesticly made stuff. Not saying they are competition to BMW, but they are good. Apply the same techniques to boat manufacturing (maybe get partnered up with one) and you have a recipe that will be hard to beat, unless you prefer to buy American.

Genmar has alot of cash from the sale that it has at it's disposal, so anything is possible. They could choose to make it here and just take less of a profit margin to keep the cost down, but who does that??

Just my opinion and I could very well be wrong, and hope that I am.

[Chode2235]

I think the argument that he is making is that they can cut costs simply by decreasing the profit margin. He seems to be implying that the Brunswick lines have such substantial mark up on them, that one can come into the market, build a great boat and sell it for a respectable profit and still be dramatically under the costs of the other boats.

Interesting though, that the company can't seem to make up its mind on aluminum boats. Why sell the established mature companies and start another? Why the change of heart? Especially considering the tough time the boating industry is under right now...

[JohnMickish]

Good point. I don't know what kind of profit margin they run but I can't imagine it's enough to cut it and still make a big difference. If he seriously wants to compete with top of the line stuff (we are talking 50k+ here, which is what the top end Pro-Vs and 619-620-621 Rangers go for) beating someone by 1 or 2 percent isn't that much, and to swing someone away from one of the tried and true manufacturers is going to take much more than that.

What do you think its going to take to swing a guy away from a $50,000 boat to an upstart company? Fully knowing that these buyers are not new to the market, are more than likely not first time buyers and probably not median income and median education people. My next boat will be one of those upper end boats and to swing me I'd have to see something comparable for 30% less, and I'd have to figure that the resale of this upstart boat will just tank. With that said, I don't know if there is that much of a profit margin that they can cut?

Maybe I'm wrong but my interpretation of the original article is that this new company was going to go and compete with the top end glass and aluminum boats.