Jacobs: We got fat, but we won’t againPosted on
Genmar founder looks to the future while shouldering the blame for a ‘bloated’ corporate structure
Irwin Jacobs says he’s learned a lot from the bankruptcy liquidation of the boating empire he spent years building.
“I’m never going to allow a corporate structure to ever get in the way of making our business a success,” says the Genmar founder. “I allowed this thing to get out of hand, with too many brands competing against one another, allowing too big of a corporate structure – bloated corporate structure – that really didn’t bring much value at all to our businesses and just created more confusion and cost.”
Jacobs says it took a “tsunami” to wake him up to the problems in his own company. “I complained openly many times about Brunswick,” he says – something for which he says he has since apologized to Brunswick CEO Dustan McCoy.
“I should have looked in the mirror myself before I started talking about [McCoy’s Brunswick]. We were nowhere near the size of what his [company] was from a corporate structure, but on a relative basis we were every bit as bad as anything I was saying to them. A pox on my own, so to speak. I was calling the kettle black.”
Now, nearly a year after filing for bankruptcy protection with Genmar, Jacobs’ new company with partner John Paul DeJoria – J&D Acquisitions – owns six of the former Genmar brands.
“I assure you I’ll never allow our companies to ever become overleveraged again as we did in the Genmar situation,” Jacobs wrote in a letter to dealers and others. “I’m excited to tell you that we’re not only back in the boat business, but that we’re positioned better today both financially and organizationally than at any other time, even prior to the industry’s recent downturn.”
Up and running
J&D Acquisitions now owns the Larson, FinCraft, Seaswirl, Triumph, Marquis and Carver brands. The latter two – Carver and Marquis – are built in Pulaski, Wis.; Larson, Seaswirl and FinCraft are manufactured in Little Falls, Minn.
Jacobs says plans are in place to move Triumph production from Durham, N.C., to the Little Falls facility. The move, he says, will put Triumph close to where J&D hopes to do much of its future business with that brand, including programs set up between Triumph and fishing camps in Canada.
The other lines, Jacobs says, are up and running and doing well. In his letter, he notes that Al Kuebelbeck is president of the Little Falls-produced brands, and Bob VanGrunsven is president of the Marquis and Carver yacht companies.
There are about 190 people now working at the Little Falls factory and about 150 in Pulaski. Jacobs expects both facilities will be hiring more people as business improves.
Dealers, he says, are coming on board and putting in orders.
“We’ve been signing on new dealers at a rate that we haven’t seen in quite some time,” he says. “Apparently there are many dealers that have been on the sidelines watching and waiting to see how everything was going to play out in relationship to Genmar’s situation.”
There are an estimated 135 Larson dealers, 54 Seaswirl dealers, 61 FinCraft dealers, 45 Triumph dealers and 30 Marquis/Carver dealers. Jacobs says his lines have a backlog of 800 boats.
“Eight hundred boats may not seem large based on what it used to be, but today it’s a lot of boats,” he says. “If we could get the necessary parts and materials … we would be putting out 100 boats a week. Not just Larson. That’s the three brands – Larson, Seaswirl and FinCraft – and that’s with what we have on hand right now. We’ve got a good eight to nine weeks of backlog at 100 boats a week of those three brands, and that’s with no additional orders.”
These aren’t the same numbers Genmar used to put out, he says, “but the fact is I think we’re in as good, if not better, shape than anybody I’ve heard of out there. I don’t mean that in a bragging way. I’m very thankful for it, that people are coming back very quickly.”
In some cases, the number of models each company offers has been reduced. “We are not going to be all things to all people in every company we have,” Jacobs says. “We’re going to maintain where we need to be.”
In his letter to dealers, Jacobs wrote about the challenge of getting all the necessary supplies, parts and materials needed to build boats. He is short on engines, certain windshields and some other items, but he expects this situation to work itself out shortly. He estimates 70 percent of Genmar’s former vendors are “back on terms with us.”
“There’s no shortage of people who want to do business today,” he says. “There’s not enough business to go around.”
The Little Falls factory, Jacobs points out, is the only factory producing VEC-manufactured boats. He believes the closed-molding manufacturing pro-cess, designed to reduce production time and pollution, will give him a competitive advantage that has never fully been utilized.
Once Glastron production is moved out of Little Falls later this spring, Larson, FinCraft and some Seaswirl models will be the only VEC-manufactured boats in the industry. “We’ve never been able to exploit VEC the way I had hoped to when I first started this 10 years ago,” he says.
Jacobs says he was “very careful” about not over-promoting the VEC technology used for producing Genmar’s Larson and Glastron lines. “We always had competing products in our other companies. … I couldn’t sit there and badmouth another product of ours,” he says.
“We’re going to exploit VEC now like we never have before because we’ll have the only VEC boats in the world, and there’s nothing that competes with us in our own company,” he says.
Jacobs says he plans to heavily advertise and market VEC-manufactured boats in the coming months. To date, more than 85,000 VEC boats have been built and shipped, he says.
New sales model
Jacobs says he’s also working on new ways to help his dealers make money without the burden of expensive floorplan financing. He plans to open four yacht centers, including one in Europe, that will house a complete lineup of Carver and Marquis models.
“This will be where our dealers will be able to fly down, and these products will be there for all of [them] to see,” Jacobs says. “We don’t want our dealers speculating. We don’t want programs incentivizing them to buy more yachts and then end up with floorplan problems.”
The centers will be in three U.S. locations, as well as one in Monaco. The U.S. showrooms are planned for Lake Lanier, near Atlanta under the Singleton Marine Group dealership, and in South Florida, one with Legendary Marine and the other with Yacht Blue.
“We’ll be putting these in four locations where we have what we consider Class A on-the-water marinas with very high-quality service level dealers,” says Jacobs, estimating there are currently 30 Carver/Marquis dealers in the United States.
Dealers around the country will be able to bring customers to a yacht center, and a captain and crew will be on hand for sea trials. Consumers will be able to try out any of the models. And since 80 to 90 percent of Marquis and Carver owners have custom work done on their boats, this will give them the opportunity to design the yacht they want.
“What we want to do is build our business around retail business, and the dealer will have an opportunity to make money without having to worry about the end of the year, where they’ve got to discount the boat and curtailments and everything,” Jacobs says. “We’re putting up about $15 million to do this. That’s the investment for us, at least at this early time, and we’re happy to do it because at least it will control the inventory down to a level that really is more on our side. We can control these boats, so to speak, and they won’t get on the Internet and be competing against each other.”
This model wouldn’t work for all of Jacobs’ boat lines, such as Larson, but for larger boats it’s ideal. “The whole world has changed so dramatically that we’ve got to come up with a way to support our dealers where they can truly make some serious money in the business,” Jacobs says. “We do not want them to take on risk today; we want them to take on the risk of making sure they service the product, not stock the product.”
As for what the future holds, Jacobs says don’t expect him to keep adding boat lines. “I would never say never about anything, but I have no intentions of buying any other boat companies that would be any overlay to the boat companies we have,” he says.
“I think things clearly have bottomed out. We are seeing it a whole lot better for us than we have for the last year, that’s for sure. We see people coming back to us now who either left us or who were on the sidelines. A lot of people are buying boats out there.”
This article originally appeared in the May 2010 issue.