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Some builders unruffled by economy

Boatbuilding giant Genmar is weathering the downturn by cutting prices and marketing in Europe

Boatbuilding giant Genmar is weathering the downturn by cutting prices and marketing in Europe

Genmar Chairman Irwin Jacobs forecasts tough times for boatbuilders. There are too many builders, too many dealers — and too many boat shows. Many will fall by the wayside, predicts Jacobs, whose Minneapolis-based Genmar Holdings owns 13 boatbuilding companies — from fishing boats and deckboats to cruisers and motoryachts.

Boating isn’t attracting the numbers of entry-level boaters it did two decades ago, says Jacobs, who spoke at the Fort Lauderdale International Boat Show in October. A walk through any boat show reveals part of the problem. Boats are “bigger and bigger and bigger out there today,” he says. “They are more costly for people.

“As the boats get bigger and more expensive, that limits your customer base,” he added in a follow-up interview.

Rising oil prices also are a stumbling block for entry-level customers, and the market is in a down-cycle that Jacobs says he saw coming last January. All of that means fierce competition for boat-buying customers.

“You don’t have to be the biggest boat company to be a survivor,” he says. But you do have to be innovative in reaching, selling and holding on to customers. Survivors will offer new and higher-quality products, creative financing, unique services, more appealing showrooms, and better dealer support so they can give better service, he says.

Jacobs says Genmar’s pioneering work to promote freshwater fishing tournaments nationally has resulted in the creation of 242 events and helped catapult his Ranger line to the top of its class so that one of every two bass boats now sold is a Ranger. He continues to market boats through Sam’s Club, the national discount chain, and now offers the club’s 49 million members a 1-percent discount if they buy a Genmar boat. “We drive customers to our dealers,” he says.

Jacobs says he has been navigating through the downturn by cutting prices, which has liquidated his 2007 inventories (though it also has cut into profits), by pushing his larger yacht lines — the Marquis motoryachts, especially — and by aggressively marketing in Europe, where the price of the dollar is low and U.S. imports are relatively cheap. He also is trying to keep the entry-level market alive with starter boats: for example, Genmar’s Stratos offers a bass boat with trailer, outboard and electric motor for a modest $12,999.

Jacobs says he always aims to gain market share in tough times. “Last year we delivered more 50-foot boats [the Marquis] than any boat company in the world,” he says. Based on business today, he says he is expanding capacity at Larson, Ranger, Carver/Marquis, Stratos and Four Winns. Overseas, “I’m seeing numbers that I’ve never seen in my life,” he says.

Others, too, are finding in the downturn a silver lining in big-boat and European sales. The megayacht market remains strong worldwide, in Europe and Russia especially, says Michael Bremen, sales director for German builder Lurssen, which builds yachts to 500 feet.

Viking Yachts, of New Gretna, N.J., builder of sportfishing and cruising yachts from 45 to 82 feet, has been building at capacity — about 107 yachts in 2006-’07, says Patrick Healey, executive vice president. Healey attributes Viking’s success to its sales in Europe, Dubai, Japan, Australia and Venezuela. Two years ago he built one boat for Venezuela; last year he built 11. Five years ago his export market was five boats; last year it was 23, and in 2007-’08 it will be 30. “What we lost domestically, we picked up internationally,” he says.

Which only goes to prove Jacobs’ point. “These are my kind of times,” he says. “I look at it as an opportunity.”

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