BRP decision signals big shift in strategy

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The decision by Bombardier Recreational Products to exit the sportboat business and shut down its Illinois plant, eliminating 350 jobs, was the second major decision the company has made as it strategically addresses its marine products.

In May, the company announced that it will transfer the assembly line of its watercraft from Valcourt, Quebec, to a new plant to be built in Mexico.

BRP also will stop producing its own accessories and clothes and contract out the distribution of spare parts, according to The Globe and Mail in Toronto.

The company invented the snowmobile and made a killing with its Sea-Doo watercraft. It started producing sportboats 18 years ago. But sales of the jet-driven boats, often used to water-ski, have not bounced back after the recession as cautious American consumers continue to put off nonessential spending.

BRP tried to sell the plant in Benton, Ill., that it inherited through its 1995 acquisition of Celebrity, but it couldn’t find a buyer.

The sportboat business represents 3 percent of the company’s sales, BRP public affairs vice president Pierre Pichette told the paper.

The company stopped disclosing its revenue after the Bombardier unit was bought out in 2003 by a consortium led by U.S. private equity fund Bain Capital. Bain partnered with the family of Laurent Beaudoin, who transformed Bombardier into a transportation multinational, and the Caisse de dépôt et placement du Québec, Quebec’s biggest pension fund manager.

In a 2011 interview with the paper, BRP president and CEO Jose Boisjoli was hopeful that annual sales would recover all of the ground lost during the recession by 2013 and reach the $2.8 billion mark again. BRP’s revenue crashed 40 percent within six months of the Lehman Brothers collapse.

The difficult days clearly are not behind BRP, whose plans to return to the stock market after a five-year restructuring have been delayed. It is now pinning its future on the design of high-end power-sports vehicles such as the Spyder, a three-wheeled roadster it launched in 2007.

After the layoffs are taken into account, BRP employs 6,500 people, 3,000 based in Quebec, according to Pichette.

Click here for the full report.

Comments

12 comments on “BRP decision signals big shift in strategy

  1. Virgil

    While it is our livelihood there is no question that there are a glut of boat manufacturers, many undercapitalized, many with names from 20-30 years ago that should have died with their bankrupt owners. This is probably a good business decision for the struggling BRP.

  2. sailordan

    I’ts interesting how Bain Capital is once again involved in moving jobs to low cost labor areas. I wonder how much they made in the deal?

  3. American worker

    According to the article it says, “the Bombardier unit was bought out in 2003 by a consortium led by U.S. private equity fund Bain Capital.” This is exactly how Bain operates – screw the American worker by outsourcing his job wherever labor is cheapest, in this case Mexico.

    Watch out Evinrude outboard workers in Sturtevant, Wisc – Bain may very well do the same thing to you next. When will the public truly get how this company operates. They get richer and you lose everything.

  4. martyf32

    Closing the jet boat production is no doubt a good move.I bought my 2010 Evinrude motor because it was MADE IN THE USA. I take the action of moving their plant to mexico as a slap in the pace to loyal american customers.

  5. C Moore

    So the family felt Bain was the best partnering alternative along with Quebec’s biggest pension fund manager. So if Bain had said no thank you. Then the family would just close & liquidate the loosing operations in the marine segment? If you read, it says that the unit had been for sale for a long time- years. Who said Bain said to move to Mexico?
    Did you think that Mexico may have offered a new plant, etc, etc. where Ill. had nothing to offer. Where were the Seadoos made before they went to Benton? Why didn’t Bombardiare keep it it there?
    How does Bain get rich closing a busness unit that no one is interested in purchasing? They invested money, their money. They will loose that money.
    It’s the old adage Want to make a million in the marine business?? Start with 5 Million….

  6. DJINNC

    American manufacturing will always seek the lowest cost of production. When costs are high in the US guess what? Yes, other countries compete for the business. The only way to bring it back is through technology and/or quality. So if you are thinking American business is screwing the worker when it makes these decisions, well then, you really don’t understand manufacturing.

  7. larry

    What do you think Brp is doing they are moving to Mexico also… Everyone attacks Bain, did you know Brunswick makes boats sea ray and bayliner in Mexico also? If your a business man and you are trying to compete its impossible here in usa with all the issues etc.. Its all about smart invesing and return on invesment.. The Usa needs to do a lot more to be competitive.. Blame your Government..

  8. Wetankles

    Since the late 60s the mid-income population has been shrinking and the dual income family has become a requirement. This trend has continued with force in the last decade with an income ratio disparity that we have not seen since early last century – an now that disparity is even worse.
    Maga-Yachts and Row boats are the trend -with a disappearing midsection.
    Starting with the Reagan tax incentives for companies to move offshore we saw a herd of large companies leave – that meant it was impossible for mid-sized companies to compete – so they either went out of business or sold out to the larger companies.
    The boom-bust economies of the Reagan Administration and recently Bush Jr. make a tough seasonal business a death trap in the troughs.
    The US Government is not killing business – we are destroying our customer base and putting our economy on cank every few years with a hangover that destroys the boating businesses everytime.
    80% of the boat manufacturers in the US went out of business at the end of the Reagan Admin. and now 60% of the small boat businesses at the end of the Bush Jr. Admin.
    Give me steady growth everytime – I can deal with the government just fine.

  9. ferndoc

    Bain invests in companies that it thinks can become winners through such investment. If the current U.S. government regulations (about 200 new ones per week) render it impossible to make a company survive and prosper in the U.S., it just makes economic sense to move the manufacturing plant/s to other shores. Bain backs winners like its founder Mitt Romney, not losers like Osama Obama, and we should too!

  10. Tim

    Maybe it is a good business move for brp maybe quality will go up maybe it wont. All i know is i am a former employee of brp benton,and i know alot of people that worked there and took pride in the work they done,and worked there for a long time now what that was one of the best paying jobs around and whats left ??? OOOOHHH ya the coal mines well we wont have to worry about that much longer if obama stays in office ! All i know is constantly sending jobs too mexico is not going to make americans stronger and the dollar worth more ……….ah but who cares it will make a few of them rich…..It was a sad day for me when i lost my job and scary for america’s future and our children.

  11. Carol85719

    Ferndoc says Bain invests in winners and had to move the plant because of government regulation “about 200 new ones per week.” His post is pure BS. Bain dislikes paying a fair value for the hard work of an American worker. Bain’s business model is to go after a weak company, saddle that company with huge debt from fees paid to Bain for its Management services, then outsource the labor to a country (China or Mexico or whatever) so that instead of paying a worker a living wage in America, they can get the item produced at less than $1 an hour with no labor safety regulations in place. They will take the pension funds after they fire the American workers and pay no severance. In some cases, they will trick the American workers into training their replacement Chinese or Mexican workers prior to telling the American workers that they are fired. Mitt Romney calls this “harvesting” the company. Check out more Bain vulture capitalism at the Sensata plant in Illinois.

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