Aftermarket points the way to profitsPosted on Written by David Shaw
Taylor Made Products saw stronger-than-expected demand and a 15 percent sales increase last year
If a boost in the sales of a leading international supplier of aftermarket products is any indication, cash registers at chandleries and boat dealerships began to ring again in 2010.
Taylor Made Products, one of eight divisions that comprise the Taylor Made Group of Gloversville, N.Y., reported a sales increase of 15 percent last year, compared with 2009, according to David Karpinski, the division’s vice president. Distributors and retailers needed to restock depleted inventory and consumer demand for aftermarket products was stronger than expected, he says.
“We saw the rebound in sales start in the first months of 2010,” Karpinski says. “The out-the-door sales of our products to consumers were up between 5 and 10 percent during the calendar year over those in 2009. These sales arose from boaters coming into stores and dealerships and through online and catalog sales.”
So consumers were back, though in a modest way. They opened their wallets for such items as fenders, dock products, flags and pennants, and boat covers and Biminis – the core categories of aftermarket products that Taylor Made produces. Accessories that support these categories include fender hangers, flagpoles and sockets, cover support poles and tie-downs. Taylor Made stocks more than 4,000 aftermarket products, and it makes to order roughly 30,000 variations of boat covers and Biminis in sundry sizes, styles and color combinations.
Karpinski says he expects to see consumer demand increase by another 5 to 10 percent this year, which translates to continued growth for Taylor Made. Sales in 2010 got an extra push when inventories that dwindled in 2009 had to be replenished as consumer demand picked up.
“The inventory pipeline has normalized and is back on an even keel,” Karpinski says. “The growth in sales in 2011 will be coming from where it always did before the downturn – from consumer demand for our products.”
Dealing with the downturn
Like most marine industry businesses, Taylor Made Products saw a decline in sales starting in the last quarter of 2008, when the global economy had a financial meltdown, although the company continued to remain profitable. “The suddenness of the downturn left our customers with a glut of inventory in the field. It was obvious in January 2009 that they would not need to order as many of our products,” Karpinski says.
Sales dropped by 10 to 15 percent in 2009, forcing Taylor Made to cut costs and implement new business processes. “We saw in the aftermarket segment a fairly consistent drop-off in sales, regardless of the geographical location,” says Andy Jobbins, president of Taylor Made Group. “The downturn impacted the aftermarket segment on a global basis. Likewise, the recovery has been consistent globally.”
Taylor Made Products employs about 200, and management decided it had to reduce labor costs by about 20 percent. It availed itself of the New York Department of Labor’s Shared Work Program, which provides employers with an alternative to permanent layoffs.
Employers can reduce payroll by cutting employee hours, and the workers can collect partial unemployment insurance to help make up the difference. They also get to keep their health, retirement, vacation pay and other benefits. New York is one of 17 states with a shared-work program.
“The program allowed us to keep our trained and dedicated employees, and as soon as demand for our products increased we could bring them back to full-time employment,” Karpinski says. “We were running at the staffing levels we had prior to the downturn in the last quarter of 2008 by the first quarter of 2010.”
Taylor Made’s boat cover and Bimini production represents a significant portion of its business. Previously, customers placed orders and the products were typically drop-shipped in about 48 hours. To optimize the service, Taylor Made cut the delivery time in half. Customers could order any custom or semicustom boat cover or Bimini and have it delivered in 24 hours anywhere in North America.
Implementing the faster turnaround required big changes. “In the midst of the downturn, we completely revamped our business processes, including order entry, manufacturing and shipping, to allow for the 24-hour delivery,” Karpinski says. “The response to a demand for faster service accounted for a significant part of the rebound in sales.”
In addition to making aftermarket products, the Taylor Made Group serves marine and industrial OEM market segments. Jobbins says the downturn affected those more severely. In a sense, Taylor Made Products was a port in the storm. Its sales declined but not by much compared with OEM segments because they weren’t directly linked to boatbuilding.
“In the United States, boatbuilders were producing roughly 300,000 boats per year before the downturn, and that number dropped below 100,000 in 2009, which represents basically a near total collapse in boat manufacturing,” says Dennis Flint, CEO of Taylor Made Group. “The aftermarket business, however, serves roughly 16 million boats in the U.S. In a recession, people tend to keep their boats, and that helps support the aftermarket business, making it less cyclical than OEM and OEM industrial segments of the market.”
Focus on innovation
Innovation and product development are key throughout the Taylor Made Group, Flint says. Last September, Taylor Made Products announced a manufacturing agreement with W.L. Gore & Associates – manufacturer of the Gore-Tex brand – to use high-strength Tenara thread to stitch the seams of its boat covers and Biminis. The Gore Tenara sewing thread won’t break down from exposure to ultraviolet rays, cleaning agents and salt water as polyester or cotton thread does.
“Using Tenara thread in our boat covers and Bimini tops is an example of how we’re working to improve existing products through innovation,” Flint says. “Acrylic fabrics last a long time, but [frequently] it’s the thread that fails. Using Tenara thread will keep that from happening.”
In 1971, Taylor Made began offering vinyl fenders guaranteed for life. Now it has expanded the concept to include seams sewn with Tenara. “We’re offering a lifetime guarantee on the seams,” Flint says. “If the seams fail before the fabric, we’ll repair the boat cover or Bimini top at no charge.”
Even with the worldwide decline in boatbuilding since late 2008, the Taylor Made Group continued to invest in OEM processes and capabilities. It recently purchased a sag-bend furnace and a chemical toughening plant in the United Kingdom that will enable the company to make “very large, tough pieces of glass to satisfy the superyacht market” – boats more than 120 feet in length, according to Jobbins.
“We’re always pushing new product development,” he says. “That’s even more important during difficult economic times like these.”
A privately held, family-owned company, the Taylor Made Group began in upstate New York in 1908 when Nelson A. Taylor went into the business of making canvas horse cart and automobile tops, awnings and tents. The company started making boat covers in 1945 and has become a leading supplier in aftermarket and OEM marine markets.
This article originally appeared in the March 2011 issue.