Industry reacts to Genmar bankruptcy

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Industry leaders say they were taken by surprise with Genmar’s announcement that it had filed for Chapter 11 reorganization.

“Genmar has always been recognized as one of the largest, best-managed and best-funded companies in our industry, so it underscores the very challenging times that we, as an industry, are going through,” Yamaha Marine Group president Phil Dyskow told Soundings Trade Only this morning.

Dyskow characterized Genmar as a “large and important” customer of Yamaha, but added that Yamaha is not owed any money by the boatbuilder.

“We are not a creditor of Genmar,” he said.

Dyskow said he was surprised by the announcement, and the first concern was for colleagues at Genmar.

“We have many friends and associates within Genmar, so our first concern was for all those people within the organization. … We wanted to give them our very best wishes during this challenging time,” he said.

Ed Lofgren, a longtime Genmar dealer and chairman of the Marine Retailers Association of America, said he, too, was surprised by the news.

“I didn’t see it coming, honestly. I had heard and read Irwin’s remarks in the past, and there didn’t seem to be any indication that there were difficulties,” said Lofgren, who sells Four Winns and Seaswirl boats.

As a dealer, Lofgren said he’s taking a wait-and-see attitude with regard to what this will mean for him and the more than 1,000 other Genmar dealers worldwide. He added that he hadn’t heard from any concerned customers.

“I think if people were on the verge of buying 10 Seaswirls from us, I would hear from one or two of them, and that’s not the case,” he said.

The filing, he said, will definitely have a ripple effect through the industry, and it could push more businesses into bankruptcy.

“I am thinking this could be real tragic, and although I think we’ve hit a certain bottom, I think we’re bouncing along the bottom and who knows how long it’s going to take until we see an uptick,” Lofgren said.

However, he added, he’s confident Jacobs will be back.

“I think Irwin loves this business. … I think that he will be back, and I predict a leaner, meaner, stronger Genmar,” he said. “I want to be a Genmar dealer, I really do.”

Others in the industry, including Brunswick Corp., agreed that Genmar’s actions reflect the difficulties facing the entire industry.

Brunswick is the largest boatbuilder in the country and Genmar’s largest competitor.

“For the past few years, we in the marine industry have seen market demand diminish as the economy has weakened and tighter credit has had an impact on both consumer demand, as well as dealers’ access to wholesale financing to place new boats on their showroom floors,” Brunswick said in a statement.

“We have said before that we expect that this situation will likely lead to a negative impact on builders and dealers,” the company added.

In its soon-to-be-released 2008 statistical abstract, the National Marine Manufacturers Association notes that sales of new boats dropped an estimated 24 percent last year. It estimates that new boat unit sales on a 12-month rolling basis, from May 2008 through May 2009, are down about 35 percent.

The NMMA wasn’t able to comment specifically on Genmar, and president Thom Dammrich is out of the country and unavailable for comment. However, the statistics provide a look at what is happening across the industry, according to the NMMA.

— Beth Rosenberg

b.rosenberg@tradeonlytoday.com

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Comments

13 comments on “Industry reacts to Genmar bankruptcy

  1. Boat Dude

    Does this allow Genmar to be excused from a lot of debt?  What about all the small suppliers who are owed money by Genmar?  What happens to them?  Does Genmar come back in a few months with a leaner balance sheet, forgiven debt, a lower cost structure and now be very competitive against all the other smaller indepedent boat brands?  Will this now force more boat companies into bankruptcy because his labor cost, debt load and cost of capital will be less than everyone else?  Will these smaller OEM’s have the ability to re-organize?  A lot of unanswered questions.  No one said business was fair.  Not a pretty picture for a wonderful industry.

  2. Airman

    Yes Boat Dude, Genmar will be excused from a lot of debt as the small guy will be forced to gift to the rich guy.  Yes this is a very difficult time for all of us but you would think that the rich guy would know how to solve his problems without demanding a donation from his suppliers.  Yamaha must have Genmar on COD to not be owed any debt or do they have a special contract with them?  I believe whatever arrangement that they have should be investigated and Yamaha should get in line with the rest of us.

  3. Erwin Fan

    Old Erwin does it again!  First OMC then this.  Why does he always emerge smelling like a rose?

  4. boatdealer

    Ok lets be fair here. I know that the prospect of suppliers and other small businesses taking a discount on receivables is unpalatable and in many cases downright scary. But you need to look at this from a broader perspective. Irwin has dumped 40 million of his own money into this business and would not be in this position if the banks hadn’t forced him. I have been a Genmar dealer and can tell you that they have a history of being fair and keeping their commitments. If anyone is getting a donation here it is the banks once again. They took the TARP money and now they swept Genmar’s account and the accounts of small business in the process. You all need to hope that Genmar comes through this and is able to continue supporting this industry because the alternative is really scary where will all you vendors be without the builders? This is a time for us all to come together in the marine industry we all live in glass houses right now, stop throwing stones and start coming up with solutions!!!! Genmar is fighting to better this industry and make it sustainable your memories are short you all had nothing to say when the Genmar checks were rolling in and you were counting your  greenbacks. Get back to work making this industry better or go home and give up!

  5. Spinnaker

    Genmar’s bankruptcy is a rather large memorial to the failings of the boating industry as a whole to heed the warning signs so many people saw for more than two years even before the economic crisis started.  The industry had the time to tack their sales to ride out this economic storm, and while some made minor adjustments, no one seems to have took the threat seriously enough to take the bold actions needed to stay afloat. 
    Will the industry use Genmar’s troubles as another lesson in why they need to develop leaner operations and models that target younger entry level boaters as carmakers have done with similarly designed and priced low-end cars?
    Will the industry finally wake up and realize it’s Eisenhower-era business and marketing model is as dangerously outdated as GM’s? 
    When will the industry realize that they should have been targeting their boat sales to minorities and groups outside of the picture perfect early middle aged white husband, wife, and two kids that you see in every advertising campaign?
    This target group was already in debt beyond their assets and yearly incomes.  Not only could they not afford boating, they are being evicted from their homes at mind-numbing rates.
    This nation is becoming diverse at an astounding pace — if the industry fails to recognize that and embrace it, it will not survive.  Grow Boating and Discover Boating could serve as a collective tool to reach out to new markets, if the industry and its leaders could summon the collective courage — and VISION — to break outside of comfort zones and that have painted the industry into a corner (and sorry folks, patting yourselves on the back for convincing “the wife” to buy a boat is not strethcing your marketing to where the money is — it is as short sighted as trying to sell “Leave it to Beaver” for prime time TV in the 21st Century).
    New innovative products, modern and efficient operations, and new markets are opportunities of amazing potential —  if the industry has the courage and the vision to not let the hard-learned lessons from this crisis go to waste.  If we have learned anything, it is that business as usual will no longer work.

  6. Merctech

    In reading the past few articles, here, I find this to be the most interesting point or question to bring up:  Jacobs says something to the effect of- If you asked a month ago about bankruptcy the answer was we’re good.  Who in his right mind has a meeting with some executives at the end of week and decides 4-5 days later, let’s go to bankruptcy court.  I mean think about it, most businesses, people etc- people avoid going there- it seems like he woke on Monday and said let’s do this…………

  7. joe pozo

    Jacobs needs to take a leadership role and communicate with the dealer base– how do we handle wty going forward? What assurance do we have as dealers will be paid for wty? Are we dealers going to be paid for the 10’s of thousands dollars owed for past wty and rebates?Can we sell existing inventory Genmar product with wty or no wty- If no wty – will be same as used boats.
    Without wty- all the field inventory will be depreciated and command the same price as used boats. The competition woll destroy the genmar brand.
    Jacobs – without your dealers you are dead– we need to hear from you!!

  8. AnonymousBob

    Airman: What kind of thought process is that – stating the Yamaha and Genmar relationship should be investigated??!! An odd statement, IMO.
    Spinnaker:  Excellent post! I fully agree that the marine industry should be (and should have been) marketing to non-whites exactly because of what you stated: population growth and demographic trends. Whites are on path to become a minority population over the next couple decades so it only makes sense to market to growing segments of the US population.
    Genmar’s bankruptcy filing is sure to be the first of many we will see over the next few months as the industry begins a thorough cleaning process. An unfortunate, but necessary process. Let’s keep our fingers crossed!!

  9. yachtguy

    To Merctech, more likely he woke Monday and the banks had put him in an impossible situation that forced this.

  10. fisher

    Most likely dealers aren’t told anything yet because Irwin has not been to the filing court yet. He doesn’t know yet what he can and can’t do. They have a plan that they have to put through to the judge and then they will rule on whether to accept the plan and then Genmar can start acting. Until then he can’t tell you anything until he knows something.
    This is speculation on my part based on my dealings with bankruptcy. I would image the first calls are going to be to the dealer network when Irwin knows what he can and can’t do under the bankruptcy filing. He’s said all along that handling warranties and customers is his top priority but he’s not in control of this situation. the bankruptcy courts are.

  11. "Ol" Dog

    If anyone in this industry really believes Mr. Jacobs didn’t see or know his companies were headed for bankruptcy must be sleeping under the same rock as his accountants and executive management team. Okay that was a little harsh, he was really in denial.
    The bottom line is this industry has been mismanaged by greed and the thought there would always be a pot of gold at the end of the rainbow. I say “Whiskey Tango Foxtrot”!
    Until manufacturers and boat dealers get on the same business page this industry will never fully recover to its former glory days. Middleclass Americans who have been the backbone of purchasing recreational products are now relegated down the status chart to lower middleclass. The industry has priced itself out of reach for this income group.
    It will be impetrative for manufacturers to reinvent a new business model that is directed to equal pricing for all. Incentives to dealers should be paid when the unit is sold at retail. Move the model year introductions back, bring back IMTEC, and stop signing up dealers who don’t have a snowballs chance in hell of becoming a viable and reputable dealer. The days of a one car garage dealer who can fog a mirror, write a check for 3 boats and has a shade tree for service must come to an end.
    Excuse me while I take my medication.

  12. Jeff

    Give the guy a break.  He and a lot of others like him have done a lot to grow the industry.  With GM and Chrysler in bankruptcy (and people actually NEED cars & trucks) we can expect a lot of boat & RV builders to file bankruptcy and many will survive – many won’t.  The banks don’t want to be involved in this business anymore, they have enough risk problems of their own. I think Irwins Jacob’s Genmar will survive and I would not have a problem buying their boats.

  13. Sue Ellen

    Regarding IsaacWalton’s post, I agree completely. That letter would have been perfectly justified if Genmar was not now in the same position Brunswick predicted. I was disappointed that the statement was issued…and I have to wonder then, how efficiently Genmar is really run…

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