Genmar’s Jacobs says he has answer to floorplan woes

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Genmar Holdings chairman Irwin Jacobs believes he has the answer to the industry’s “disastrous” floorplan and retail financing problems.

In a letter sent out to the industry earlier this week, Jacobs called for all boat manufacturers, dealers and vendors to lobby the federal government to include the boating industry in the financing program offered to General Motors Acceptance Corp.

“If the U.S. Government required GMAC to include the boating industry’s needs for both wholesale dealer floorplan financing and retail financing, I believe the recreational boating industry would see an immediate end to the continuing downturn,” Jacobs wrote.

He said it would only take a small fraction of the money the government gave to GMAC to support the boating industry.

For the initiative to work, however, he said every marine company, from all sectors of the industry, must speak up and write to their local, state and congressional representatives.

“No one seems to be telling our life-threatening story to the Obama Administration, and if nothing is done very soon to correct the floorplan and retail financing problem for our industry, I predict it is only a short matter of time before what I call the boating industry’s life-threatening tsunami could put its final blow on the entire industry for decades ahead,” Jacobs wrote.

Click here for the full text of the letter.

Comments

24 comments on “Genmar’s Jacobs says he has answer to floorplan woes

  1. acquire

    As usual, Irv is right. We are a little industry that has not gotten our lobbying act together and don’t have enough Union workers to have sway with the political regime driving the bus right now. Sure, the bus is careening down an embankment to financial armegeddon, but why let the car guys get all the FREE handouts? The boat biz has been hammered harder than a Saab in a Chrysler store and yet we are not getting any of the FREE stuff. Write your various elected officials and include checks so that they know we are serious… if we send enough money they will get us a ticket on the Fed gravy train. May be coach, but at least we get a seat. As it stands now even GE is getting money from the feds (via FDIC debt issuance guarantees) but us little boat guys are getting nothing. Time to bow up and donate and buy a little influence. Instead of blowing XX million on the cute little go boating advertising programs, we should have just sent the money to the politicians like the UAW did… would have been alot more effective!

  2. pilothouseking

    The American public has long been wanting to hang politicians from street posts for giving tax money away to already super rich guys. At the very least the public can have a little tiny bit of sympathy for car builders and workers, as everybody drives a car and can at least relate to a personal need for a car. That- they can SORTA, almost, maybe grundingly agree to, but put forth that request in regard to little boats? Not a chance in hell.
    Try it for YACHT builders- out of the mouth of a Armani suit wearing silver haired millionaire yacht builder and the public WILL go all “French Revolution” on politicians and they know it!   It’s bad enough that Chrysler has thrown thousands of  local workers out on the street  all across America so an Italian company can reap the billions of dollars we’ve already gave Chrysler -and you now want help for us in the yacht business?  HAH! 
      May as well be Rolex asking for help from a blind one armed man! Harley Davidson wanting relief from the legless!  Not going to happen, and you might just get hurt for even asking! I mean talk about audacity! I would buy a ticket to see THAT “march on Washington’!
     

  3. Nolongerafreenation

    You know, it’s saddening when you see things like this.  Here’s Irv moaning about lenders and floor plan and another saying we should be buying influence in Washington.  Forget it.  Washington isn’t going to listen.  Our industry doesn’t have any union labor that can scratch it’s back and this administration is out to destroy wealth.  Let’s face it–the target of the Obama administration is our collective client list.  It’s not going to cater to an industry that services the “fat cats”.  That’s just the cold, hard truth.
    Should we start discussing manufacturer’s dealer requirements?  Dealers loaded up on boats that they can’t sell sure doesn’t help anyone.  Is there some blame there?  The premise of Irv isn’t that there aren’t buyers or that the government is not creating an environment where demand for marine product goods and services increase, but rather that a manufacturer can’t push more boats down into the floor plan of the dealers … hey, it’s out of the yard… right?  Not the yard’s problem anymore eh?  Nice.
    Economically, this administration is doing everything contrary to every book on economic policy ever written outside of the Soviet Union and Cuba.  It’s not out to create a market where business operations thrive but rather it’s out to punish success and take over business operations it can use to further it’s own agenda.  GM and GMAC are part of that plan as is Citibank.  With Citibank and GMAC, it can funnel monies to whomever it wishes under various ospices.
    The problem here is larger than our boating industry.

  4. jd

    I don’t know if Irwin is right or not.  I DO know that if we don’t do something quick, the boating industry is going to continue suffering and many more of us won’t be around to do anything. I don’t see anyone else coming up with anything better.  I think that we need a GMAC and a FMC for our business….Brunswick needs their own financing (GMAC) and Genmar needs theirs (FMC).  I know there are independent builders out there that need to be included somehow, maybe as a group(Chrysler Credit).  That way we can manage our own wholesale and retail financing needs…..I’m sure that it would not be that simple and I certainly am not smart enough to figure it out…..but I bet someone out there is!

  5. The Circle

    Asking this government for bailout?  Are you serious?  If small electric-powered boats that no one wants are your vision of the future, then give Obama a call.  As painful as it may be, the marine industry like the auto industry was due for a shake up.

  6. David Black

     I agree. Even in this horrible economy there are still people with good credit looking to buy new boats. If a 750 FICO score can buy you a car why can’t it buy you a boat. It does a dealer no good to borrow the money to buy boats if retail customers can not borrow the money to buy boats! This means factories stay idled, dealer lots get empty and the whole industry suffers all because of the lack of funding. We are not asking banks to make subprime loans or asking to make loans to consumers with bad credit just do what they have always done and thats make loans to consumers with good credit!

  7. Mike Munsch

    I wonder why “Irv” should get any press on his opinions regarding the boat business! Did anyone forget that Genmar filed Chapter 11 Bankruptcy last week? I did not forget and I am sure that companies, there employees or the employees families  that got shafted when Genmar decided they did not want to pay their bills anymore did not either.
    I also wonder how a Four Winns dealer will secure Floorplan Assistance when the company the dealer purchases boats from is not liable for repurchase under Chapter 11 Bankruptcy? How was “Irv” helping dealers attain Floorplan? So now “Irv” wants a handout? He is ovoidiing paying his bills by using the Bankrupcy laws and wants the tax payer to further assist his company? He should be in politics!

  8. Ron Hirshberg

    Sounds like a very good idea but might be perceived as helping the well to do or Rich.  Hopefully something happens to free up floor plan and retail financing.
     
    Ron

  9. BILL McCRACKEN

    Are you really sure you want the government to get involved. As a former GM and Chrysler dealer, now a Genmar dealer, I can not believe the government has forced GM and Chrysler to destroy the auto dealers and their dealership families. Say what you want, there is no way it cost GM or Chrysler more to allow a dealership to stay open, then to shut it off. We paid for everything, kept the customers somewhat happy, or at least their cars running, and paid for everything we got from the factory.
    Watch what happens when the government has to pay unemployment to all the former dealership employees, of which the owner is not intittled to collect, plus the related business employees in the towns. Also, who is going to fix the product and supply parts. We will be forced to by foreign. I’d rather walk, or buy a horse.
    Why not just let the dealers meet the competition, or close thru attrision.
    Oldsmobile had the greatest organization, who really cared for their people. Once the college kids came in, and started to “run” the show, and sublet everything, we saw the oldest name in US car history end. No personal caring or compassion.
    Genmar, with the likes of the Glastron people, can pull their dealers thru these times. They care and have compassion. Forget the government Mr. Jacobs. We can do it without them.

  10. NVWSSV

    This is an open letter to Mr. Jacobs. Your asking for history to repeat its self. GMAC back in the boat busniess? Sorry , but they have been in the marine business before( 1986-1991) and  to be honest they had did  such a pitiful job they ran themselves out of the business. The marine industry needs to come to terms with its problems, reinvent its self and stop making the same mistakes that got us here. GMAC nor anyother financial source would be able to correct the industries problems. Making available more money to put more boats (which aren’t selling) on floorplan lines may be good for the manufacturer in the short run but the kiss of death for the dealer and the dealer network.GE Marine has done a remarkable job by just staying in the busniess, and not trying to be cute but they really just can’t get out, and at the first opportuinty that they cut their losses they’ll be gone. This is one industry that seems to so many parts that fight against its self. Do I have the answers? No! But to think that GMAC could be of any help with their past record is grasping for straws. They where a large part of the problem in the past and would offer no real lasting solutions. We in this industry need to stop looking for the next village idiot financial source that will cure its problems for the short term and start working on building good boats being sold by strong dealers to quaified buyers.

  11. Phil Friedman

    Jacobs is no babe in the woods. Our economy is credit based. The fact is we (the tax-paying public) have already pumped billions into the banks and other financial institutions with at least one of the objectives being to prop up both floorplan and retail lending. Unfortunately, the institutions receiving those billions have simply, for the most part, held on to those dollars in a bad faith attempt to improve their balance sheets and paper over the billions of dollars in reckless and bad mortgages and other loans that they’ve made in the past 10 years. Could it be that the strategy of the institutions involved is continuing to choke off credit (and the economy) with the objective of wringing still more billions out of us? Jacobs is right on the money: it’s time we started dictating the terms of the recovery; and in the marine industry that means the creation of new floorplanning and retail lending facilities.6  

  12. BROBINSON

    The problems encountered at our dealership have been the lack of retail lending to qualified buyers.  We have had  great traffic at this dealership, but could not get 700 beacon customers bought by the banks.
    The floorplan problem has been created by way too many dealers holding way too much product.  Manufacturers wanted to grow at any cost, getting dealers to hold too much product, or they just opened their product to more and more dealers, regardless of their qualifications! 
    As an industry, we have created a lot of our problems.  I hope this downturn can be a lesson to us all, that supply and demand are not some fairy tale principle, but an absolute business principle!
    Lets let this thing run its course, and may the strong survive.

  13. anthony cavallo

    First of All I have Been in the Boat Sales & Service Business since 1963
    In The Good Old Days, You Recieved the Boat You Put Insurance on the Boat, You Sell The Boat You Paid the Manufactor, you Recieved another Boat, And So On.
    Keep The People that Realy Don’t Care about Boats Out of the System.
    How Many Boats Are Still In The Inventory Of the Manufactors Holding area How Much do they pay for storage of the finished Prod.,
    Let the Manufactor Give their Dealers The Boats On Consigment, Get The Boats Out Of There Hands and Into the Dealers hands So People Can see The Baots they want to Buy , If We Are Going to survive then lets survive.
    If The Manufactor Is Going to Call their Dealers Partners, Then Step Up Partner, Lets Survive together,
    With Out  US You Will Not Survive  “Partner”
    Thank You   Anthony

  14. checks&balances

    If you listen to the feds on the monetary side they say lend lend, but the on the regulatory side they say you cant lend to them or on this. Untill both sides are on the same page nothing will work in the credit market.
    Also in order to be heard like all the rest of the give me groups in DC. the whole marine industry needs to lobby together as one voice. This economy hurts all.

  15. chris Lyons

    I read every individual post and everyone has some great points. It is still important that we as an industry needs to act even if it is a shot in the dark. Send out those letters and emails but please do not waste your money on trying to buy a politician.
    Why are we still looking outside the industry for help? Are we so helpless that we can’t come together and start our own credit union. Most of the industry said that a credit union would help our industry with retail and floorplan financing but know wants to put a small amount of money into the effort. The facts are if we as industry truely wanted change and solve our problems then we would pool our efforts to make it happen.
    It is very simple. Our own credit union would only need 1,000 members to re-direct there day to day banking to a Marine Industry Federal Credit Union in the beginning. The myth that our credit union would need millions of dollars of capital is false. We could have our own CU if each of you put as little as $100 into the effort.
    I don’t believe in hiding behind a post. So if you want to make something happen that will help change our industry today and for those that follow us then email me or even call me.
    Chris Lyons, yachtmoneyman@yahoo.com or 949-278-6620
     

  16. Curtis

    We the dealers and manufactures have got to figure out how we are going to make boating fun and affordable again. The government is not going to bail us out and we should not expect them to. Yes times are tough but we must figure a way through this or boating will not exist.
    It makes me wonder if Erwin has taken a cut in pay like many of us have to keep our dealerships alive.
    We do however need a better way to handle floor plans. I know, the dealers should just do consignment from the manufactures. That way the manufacture would take some interest in the dealers to help move product. The dealers could take less of a margin to keep boats afforadable and still be profitable without being bent over on interest.
    Have a nice day

  17. PH

    Perhaps all of the manufacturers can learn a lesson on this.  We don’t need more lines of boats.  Why so many?   The car business has 20+ brands and every home in amerca averages 2 cars?  What makes us think that we can support so many brands?  We’ve watered down the industry so nobody can make any money and I really have a hard time feeling sorry for the companies who just keep on pushing out more brands and models expecting the supply to never run out.  I’m looking forward to the cleansing of the industry and hopefully we’ll be a little wiser about adopting every guy who builds a boat in his garage to become a brand and then get adopted by a larger company.  Also, lets hope the manufacturers and dealers pull it together and find comon ways of working like the auto side does.  The fact that most boat builders can’t give a part number to an item for re-ordering is crazy, inefficient, and costly and loses the customers confidence in the process.  It’s a painful way to figure out we need to do things different and smarter, but I worry we may not even get that out of this.

  18. Ron Knapik

    Opinions are like drain plugs, everybody has one.  So here’s mine.  I agree with anthony cavallo.  The boats are not doing any good siting in builders inventory.
    They need to get them out where they will do the most good.  Research can guide these manufactures the best place, and best dealers to put these boat on consignment.
    A 34 ft would not work for me in my market, but a 19, I would push the heck out of it.  Builders know where and who would be the best and they need to get those boats out in the market. 

  19. Tom Fischer

    I keep reading all these Trade Only articles and threads addressing the new boat floorplan issues.
    I know I am in a minority, but my story about GE deserves telling. This isn’t just about me!
    Mostly because I performed a service to the industry as a wholesaler. I made it possible for new boat dealers to take trades they would have otherwise had to pass on, losing a new boat sale. I purchased their trades with GE floorplan money!
    I have been a pre-owned boat dealer since 1989. It took me 17 years to get GE to give me a used boat floorplan. I had to become a new boat dealer for 4 years and prove my credit worthiness and good business practices before they would give me the used boat credit line. I never desired to be a new boat dealer, however I felt the end justified the means.
    After 2 successful years using my GE pre-owned only floorplan I was put on a pedestal by my GE representative and his managers as a star in a successful used boat pilot program. Boating Industry Magazine interviewed my wife with the President of Grady White as well as other prominent women in the industry. I had never been out of trust, never late on a curtailment and had been voted a Top 100 dealer 2 years in a row as well as being NMMA 5 Star certified. I was on track to be a 5M in gross sales dealer selling used boats, even in a down economy.
    Then for no reason, after a great ongoing relationship, in November ’08  the landscape started to change. Attitudes at GE changed, book outs were scrutinized more closely, advances were delayed and then reduced.
    Then after 4 months of downright deceptive business practices, unclear answers to questions, mixed signals of assurances that we would still have floorplan, they terminated my floorplan citing a change in their business plan. Their final explanation was they were no longer going to participate in pre-owned only floorplan programs.
    I literally had the rug pulled out from under me for no reason. Well, I am a fighter, blessed by being associated with business consultants and associates who wanted me to survive. I refused to let GE put me out of business. I increased my service business and started yacht brokerage.
    Well, I feel like I am starting over, with the exception of a great reputation from 20 years of hard work on my side. I will survive, however I will never forget what GE did to us.
    None of these programs discussed here will help me. However, I can help new boat dealers by buying their trades if I had my floorplan back. I hope somebody at GE  is reading this. You really fumbled this one.
     

  20. Arch

    WHAT ARE YOU PEOPLE TALKING ABOUT?  It’s absolutely bogus and misleading to imply there is no financing out there.  BB&T, US BANK, BOW, BOA, and direct lenders like SUNTRUST, CGI are absolutely loaning money.  Sure the bar is higher, but don’t exaggerate the problem by implying that people with a 750 can’t get approved.  9 out of 10 with a 750 can.  Sure, there are some that can’t because they can’t afford it.  750 only means you pay your bills, it doesn’t mean you can afford more debt, or that you are low risk in the future if your debt, income, job situation had changed recently.   Do you not understand that the people who don’t qualify for financing right now don’t qualify for a reason?  You think these banks want to lose money and market share?  The banks need to hedge against their rising defaults by buying ultra clean deals.  It’s business 101.  They are smart enough to know this recession is far from over and that losses are going to continue rising for at least the next year or so.  They have no choice but to be more cautious.  If you want any of these lenders to stick around, you need to get your head out of the sand and realize that they know what they are doing.   
    Anyone encouraging the gov’t to get involved is off their rocker, including Irwin Jacobs.   
     

  21. Larry Holcombe

    Gentlemen:
    Based on some of the responses that I am reading here it appears that it is hard for you to believe that Irwin could have any good answer.  He may or may not have the answer, BUT it has started the debate that can lead to an answer that will actually help this industry.  We can argue about our current political climate until there is no boating industry left or we can lay our politics to the side and work together to come up with the solutions to help us.  Some of us have taken the heads in the sand approach while others have had their heads shoved into the ground by the current financial climate.  Either way, it is high time that we start working together.  
    Personally, I love this business.  Yes, it can be challenging.  But who wants some boring job that they hate going to everyday?  We get to help people have fun on the water.  Every one of you knows that a good day on the water brings our families together.  
    Maybe it’s time for each of us to take a day off and get on the water.  Let’s focus our actions and work together to come up with the solutions that will not only help us through this current down trend, but make this a stronger industry in the future.
    There are plenty of good individuals in this business who not only have the smarts to come up with the answers but also have the connections to do so if we all work together.

  22. Tom Bell ExcelCredit

    There are several reasons for the peril in the credit markets. However, in my view, there is one obvious solution to the problem that has continuously been overlooked by the regulators and politicians.
    We have a lack of confidence in the credit markets; this has sucked out private capital from the securitization of loan portfolios. This Private Capital supply of money is far greater than all the money the government can throw at the problem. Private capital, when working properly, has the finance companies competing with the banks for the business. This, then, drives down rates and loosens credit.
    SOLUTION: Remember at the beginning of this panic when everyone was afraid their bank was going to fail? In order to prevent a run on the banks, the FDIC stepped in and raised the deposit guarantee from $100k to $250k. With this guarantee the first dollar is not spent until you have a failure, unlike the billions already given to banks and others. This is a Government Insured Backing, and you left your money in the bank because your worries had been addressed.
    What happened was a run on the credit markets. (A run was what the FDIC prevented from happening on the banks.) Lack of confidence in the credit markets has approximately 10 trillion dollars of private capital sitting on the sidelines. Because securitization is the backbone of the credit markets; the government needs to step in and temporarily give a partial guarantee – perhaps 18 months to 2 years on investors’ deposits — to restore investor confidence. The credit markets would then return with a vengeance and be healed. This should have happened long before the handing out of billions of dollars to the banks and auto industry. But this can still work.
    When private money gets off the sidelines, and there is plenty of it, we will all be better for it. This is what has put the squeeze on GE, Textron and many others. They simply cannot find a buyer for their paper in the capital markets.
    I cannot stress enough the importance of credit markets to all facets of ours and other industries, starting with credit to suppliers, to manufactures, to dealers and finally to the customers.
    While asking GMAC to step in and assist may give some temporary relief, this is neither a long term nor a short term solution. As one other person pointed out earlier, GMAC did not do so well with the marine industry the last time they were in it. This is because they are more interested in their core business — trying to keep the auto industry afloat.
    Addressing the marine industry alone will not solve the problems in the broader credit market. While asking for a government bailout of the marine industry may provide some temporary relief, the real solution is to strengthen credit markets and improve the health of the overall economy. Without a robust economy, there will be no market for boats and no future for our industry.
     

  23. James Sireci

    I don’t have the time or desire to read all this but here’s my opinion:  Why don’t Brunswick and Irwin and Steve Potts and Hutch and Vic Roof and all the other boat company owners who have became millionaires in the good old days open their wallets and provide the floorplanning money?
    I came to the conclusion a long time ago that I work in an industry that aside from our commercial sales, builds products that nobody really needs.  You can live your life without a boat.  If your home is further than you can ride a bike in a reasonable amount of time and there is no public transportation, you cannot live without a car.

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