Q&A with Tom Broy, president of Independent Boat Builders Inc.

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Tom Broy is the president of Independent Boat Builders Inc., a Benton, Ill.-based purchasing cooperative formed in 1989 by a group of independently owned recreational boat manufacturers.

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Broy, 47, has been with IBBI since 1993, starting as contract manager. He was promoted to general manager in 1998 and president in 1999. Prior to joining IBBI (www.iboatbuilders.com), Broy was at PepsiCo for five years, working in logistics, as an inventory control manager, production coordinator, fleet manager, vending department manager and in purchasing. Before joining PepsiCo, he worked in his family's business, Broy Construction.

Broy graduated from Southern Illinois University in 1989 with bachelor's degrees in management and electronics. A resident of West Frankfort, Ill., he and his wife, Julie, have been married for nearly 23 years. They have two children, T.J., 12, and Tyson, 10. In his free time, Broy enjoys coaching his sons' sports teams, boating, fishing and golf.

Q: Can you explain what IBBI is and how it started?

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A: IBBI stands for Independent Boat Builders Inc., and we are a corporation that is wholly owned by 21 independent boat companies. Each company owns an equal share. IBBI is also legally a cooperative that is operated on a not-for-profit basis. We have three employees. Our controller, Jodi Sanders, has been with IBBI since 2000 and Kelly Baker, our administrative assistant, started in December 2010.

Our goal is to pool the cooperative purchasing power of the group and secure material supply contracts that are more advantageous than any member could secure on their own with their independent volume. The IBBI office reports to the board of directors. The seven board members are elected by the rest of the members of IBBI. The seven board members then elect a chairman, as well as serve on several committees.

IBBI was incorporated in 1989. I have been told that the idea of forming buying groups in the marine industry was actually the idea of the engine companies. In the 1980s, the engine companies raised the volume level necessary to receive the best price on engines. That made it almost impossible for any independent to get the best price. This severely disadvantaged the independents over the captive boat manufacturers that are owned by the engine companies.

Several key independents met and acted on a suggestion from the engine companies that they look into forming corporations or buying groups that would allow independent builders to pool their volumes under one umbrella and, therefore, receive better discounts for engines. Their meeting led to the formation of IBBI.

We have 21 members. We do not have any set timetable for adding members. IBBI's members are Bennington Marine/Pontoon Boat LLC, Bertram Yachts, Bryant Boats, Campion Marine, Chris-Craft Boats, Contender Boats, Crownline Boats/Leisure, Cruisers Yachts/Rampage (division of KCS International), EdgeWater Power Boats, Kal Kustom Enterprises, Key West Boats, Malibu Boats, Maverick Boat Co., Parker Marine Enterprises, Premier Marine, Project Boat Holdings, Regulator Marine, Scout Boats, Sea Hunt, Skier's Choice and Smoker Craft.

Q: How does a company become a member of IBBI? Are there certain criteria that must be met?

A: We get inquiries from boatbuilders regularly. We do have set criteria for membership. While very important, it's not all about volume or how many boats a builder may build. Our members share a lot with each other, so everyone has to get along and be friendly competitors. We regularly have tours of each other's facilities; we share best practices as well. In fact, we just had a conference call to discuss a certain topic in the industry. You have to be willing to be part of the group and share your experiences with other members. The focus has to be all about making the overall group better.

The process for membership is fairly rigorous. Like I said, it's not all just about the volume a builder might bring to the group; we have a pretty long list that we are looking for in any boatbuilder. Just a few examples are the builder would have to be a good fit with our existing members, they have to have a good track record of paying their bills on time and they have to demonstrate their willingness to support the IBBI supplier base.

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Some other examples of questions we ask when considering a new member might be what types of boats do they build, how do they treat their dealer organization or are they just good overall corporate citizens in the industry?

Q: IBBI has been around for more than 20 years. Has it lived up to the purpose for which it was founded?

A: I think we have more than exceeded the expectations of the founding members and our current members. Our original goal was to set up supply contracts for engines. Now we have suppliers for everything from resin, steering systems, hose clamps, carpet and everything in between. I don't think our founding members would have ever envisioned some of the projects we tackle today. But we know that we can't rest on the past. We have to constantly look for ways to further our goals and objectives every day.

As an example, I don't think our founding members ever thought we would be providing retail sales data to the members or shipping contracts with UPS or combining members' delivery of products by utilizing [third-party logistics]. I don't think they would have ever envisioned us holding a group meeting with the EPA to discuss regulations.

I don't want to give it away, but we are working on a pilot program that could be very beneficial to members. If this particular idea works, it could translate into really big savings. We continue to look for ways to utilize the group's resources to make our members and the group stronger.

Q: If all of the builders that are part of IBBI were combined, it would be the largest producer of boats in the country, according to data from Statistical Surveys. Do you think this comes as a surprise to most in the industry?

A: That is an amazing fact, isn't it? Yes, I think it is a surprise to many people in the industry. In 1998, when the board promoted me to president, I thought, as did a couple of our board members, that we were too focused on the sterndrive market and we developed a plan to diversify our membership. We added builders to cover most market segments. While we still have a strong presence in sterndrives, we also have a strong presence in the saltwater fish-boat market, as well as ski boats, pontoons and bass boats. This diverse membership allows us to weather the downturns like we have just been through.

We have worked hard to establish our reputation in the industry and our member list shows that our hard work has paid off. Potential members can see our track record and speak to the other satisfied members. We have a lot to offer the independent boatbuilder and that has helped us attract new members, as well as the industry's best suppliers.

Q: How has working as a group helped members during the prolonged downturn?

A: Our goal every day is to save the builders money, so that alone was a big plus. We have shared lean manufacturing principles and organized seminars. We split tankers of resin among plants in close proximity to each other. We helped members get rid of excess inventory. We transferred engine inventory. All of these items free up cash. And now that the economy is picking up again, just by having our supply contracts in place through the downturn has helped our members know they can get the products and services they need.

Another way IBBI is helping members through the downturn is by our recently formed supplier tech team. When we select a supplier, not everything boils down to the lowest price. We also look at the financial stability of the company, the quality of the product and the strength of its technical support team. Our suppliers have very experienced, well-trained technical personnel and we've put together a group of them to help our members build a better product at a lower cost, if possible. We are very excited about the possibilities for improvement.

Q: You have a list of "sponsored suppliers." How do companies become sponsored suppliers and how does this help them and member builders?

A: We have a pretty exhausting process to become an IBBI supplier. Typically, the IBBI office orchestrates the bid process. We invite the suppliers to participate and many times we will test the different products to make sure they pass industry standards. We provide the necessary volumes to allow the suppliers to prepare their quote and many other steps in between. Then we invite the suppliers to our annual purchasing meeting to make formal presentations before our membership. The members decide who they want the suppliers of choice to be.

We don't do every product like that. The board of directors gives us the flexibility to sign up any supplier for any product we think might be good for the group. We will bounce this idea off several members and do our research first, but if we think a supplier or service will add value to our organization, we can put a deal together. This gives us the flexibility to act quickly to any given situation.

I think our group offers a lot of benefits to the suppliers in our industry. Our member roster lists some of the finest brands in the industry and our suppliers can depend on their financial stability. We work diligently with the suppliers and members to make our contracts successful.

Q: How does buying an IBBI-built boat benefit the consumer?

A: The goal of the IBBI group is to set up supply contracts that will allow our members to buy the best raw materials at the best possible price. IBBI members don't have to sacrifice quality to compete in the marketplace. That being said, consumers who buy an IBBI member's boat receive a great boat that is built with some of the best products in the industry.

As you know, the marine industry is very competitive. I am sure our members are able to pass some of their savings on to the consumer in the purchase price of the boat. However, I would imagine some of it goes back in the general business fund to help improve their plant and facilities, hire more people, buy better equipment and just make the overall business stronger.

Q: Do member companies have any overlap with dealer networks and are there ever any issues in this area?

A: I am sure our members do have that overlap and I am sure they share dealers in many instances. Because we are a purchasing cooperative, it is illegal for IBBI to ever discuss selling practices, so we make sure to steer clear of those discussions.

Q: Are partnerships like IBBI the future of the marine industry?

A: If we have anything to do with it, yes, absolutely. As long as buying groups continue to add value, we will be in business. The day we no longer add value, we will no longer be in business. We see many opportunities for our group and we look forward to exploring new ways of bringing value to our members. While there are certainly many challenges, I can say without a doubt that I love what I do.

This article originally appeared in the March 2011 issue.

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