Bayliner cruisers are Brazil-boundPosted on Written by Reagan Haynes
Brunswick will build and sell the boats only in South America, with changes planned for the U.S. lineup
Brunswick Boat Groups Bayliner Boats is halting production and sales of cruisers in the United States while ramping up production of that segment at its newly built plant in Brazil.
Brazil and its expanding boat market offer us attractive opportunities for growth, Brunswick Corp. spokesman Daniel Kubera says. Additionally, Bayliner is establishing a strong presence [there] for its models in several categories, including cruisers.
The move came as Statistical Surveys Inc., a Michigan company that tracks U.S. boat sales, released data that show August sales of fiberglass cruisers in the 31- to 40-foot category plummeted 28.8 percent year over year and were 6.7 percent lower for the year to date.
Brunswick says Bayliner will instead pursue new boating categories in the United States and Europe. The brand plans to enter the jetboat market in 2013 and in the next few months will launch a line called Element that Brunswick touts as Bayliners newest concept in affordable boating. Bayliner also plans to launch a new line of bowriders and a new series of deckboats in the coming months.
By the end of this year, Bayliner cruisers will be produced only in Brunswicks Brazil plant and exclusively sold in that region. As a result, Brunswick says it will stop production at its plant near Knoxville, Tenn., where 225 full-time workers are employed, by the end the year. It will suspend the brands cruiser sales and production outside South America.
The Knoxville plant at which Bayliner and Sea Ray cruisers have been built will be closed within the next month and a half, before 2013, leaving the fate of the 225 employees uncertain. Will all those people lose a job? We dont know at this point, Kubera says. Some of the production is going to go down the road to Vonore, Tenn., and Palm Coast, Fla., so theres a possibility that some would have the opportunity to transfer to one of the other facilities if they were so inclined.
Production of two Sea Ray models, the 330 Sundancer and 370 Sundancer, which was being done at the Knoxville plant, will be transferred to Palm Coast, Kubera says. Four additional Sea Ray models 240, 260, 280 and 310 Sundancers that were also being produced in Knoxville will now be built in Vonore, Kubera says.
We will continue to maintain our leadership position in the North American cruiser segment with our Sea Ray brand, Andrew E. Graves, president of the Brunswick Boat Group, says in a statement.
During the next several months Bayliner will introduce a new line of bowriders, a new series of deckboats and launch Element, Graves says. We believe this effort will solidify our position in the market and offer dealers and boaters a wide variety of choices and models, he says.
The worlds largest boatbuilder cited changing global trends and the fluctuating needs of boat buyers for the move. Our current plan reflects a change in focus for Bayliners global product portfolio to emphasize and expand its leadership across a broader set of recreational dayboat craft types, Graves says. Additionally, Bayliner will make its Brazil operations the center for its cruiser business.
This strategic repositioning of Bayliner further reduces the need to maintain the Brunswick Boat Groups current cruiser production capacity in the U.S., particularly in view of current market weakness for cruisers, Graves says. As a result we will consolidate our U.S. cruiser production for Sea Ray into our Palm Coast, Fla., and Vonore, Tenn., facilities while producing Bayliner cruisers in Brazil. This will be more efficient and still allow us to retain capacity equal to three times our current worldwide cruiser demand, enabling us to adequately increase production when the market improves.
The company estimates that the changes will save $10 million to $12 million a year. The complexion of the global marine marketplace continues to evolve, and so does Brunswick, chairman and CEO Dustan E. McCoy says in a statement. Our continuing challenge is to adapt our brands, models and technologies to best appeal to todays boating consumers as well as the shifting global marine marketplace.
Weak cruiser market
Though the U.S. marine marketplace has improved recently, the recovery has been uneven across the various market segments, McCoy says. While sales of smaller boats, such as popular fishing boats and pontoons, have improved, demand for cruisers and larger boats remains weak. We believe this is due to a number of factors, including continuing economic uncertainty, as well as a cautious and evolving consumer. [These] actions are a necessary step in enabling us to reach our near-term operational and financial objectives while positioning the company to exploit future market growth in the fiberglass boat segment.
Separately, the company concluded that a portion of its long-lived assets pertaining to certain boat brands, including Hatteras, Cabo and its European and Asia-Pacific boat brands, have been impaired and that impairment charges related to the brands will be recognized in the third quarter. Brunswicks estimate of total restructuring and impairment charges in the third quarter is $25 million to $32 million before taxes. The charges primarily include non-cash asset writedowns but also include charges for severance, facility closing and other costs. The company says it anticipates that additional charges pertaining to these actions will be recognized in future periods.
During the week when it announced the Bayliner changes, Brunswick Boat Group and the Sea Ray Group reported organizational changes in an effort to focus the companys message across brands.
Brad Anderson is now directing of marketing and planning for the Sea Ray, Meridian, Bayliner and Trophy brands, according to an email dealers received in early October. Gary Zimmer assumed the interim role of vice president of operations for the Recreational Boat Group, a move that now has been made permanent, according to an internal memo obtained by Soundings Trade Only. Sea Ray vice president of marketing Rob Noyes and Sea Ray vice president of sales Dwight Cobble are no longer with the company.
This article originally appeared in the November 2012 issue.