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Q&A with Bill Yeargin, Correct Craft president and CEO - Trade Only Today

Q&A with Bill Yeargin, Correct Craft president and CEO

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Bill Yeargin, 48, is president and CEO of Correct Craft, an 84-year-old Orlando, Fla.-based boatbuilding company with nearly 500 employees.

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Before joining Correct Craft, he was a member of the executive team at Rybovich, and before that worked for the international accounting firm of Coopers & Lybrand, doing audits and consulting.

Yeargin is heavily involved in the marine industry, and has served on the boards of the Association of Marina Industries, American Boat & Yacht Council, Marine Industries Association of Palm Beach County, the International Marina Institute, the Water Sports Industry Association and the McFatter Marine Technical School, among others.

His accomplishments have earned him the international marina industry's "Stroud Award," the "President's Award" from the American Boat Builders and Repairers Association and the Association of Marina Industries' "Advocate of the Year" award.

Yeargin is a frequent speaker at management conferences and other events, and has authored two books, "Yeargin on Management," and "What Would Dad Say?" He has written management and leadership columns for numerous publications, and is a former columnist for Soundings Trade Only.

He has a bachelor's degree in accounting from Florida Atlantic University and a master's in business administration from Nova Southeastern University. He is a certified public accountant, has completed Lean Six Sigma programs through Villanova University and is Myers Briggs Type Indicator-certified.

In addition to his industry involvement, Yeargin has served on the boards of Palm Beach Atlantic University, Hospice of Palm Beach County, the Overall Economic Development Committee of Palm Beach County, Grace Fellowship Church and Berean Christian School.

Yeargin is a Florida native. He and his wife, Leigh, have two daughters, Erin, 18, and Amanda, 17.

Q: Can you talk about how Correct Craft is doing in this economy, including steps you've taken to reduce costs?

A: Generally, we, like everybody else, would like a better boating market and would like to be selling more boats. However, I can tell you we've been picking up market share several quarters in a row. There are several reasons for that; we made some pretty significant changes in our product development over the last couple of years. We've been reinventing our marketing for changes we see happening in the boating industry.

Now, it's a bigger piece of a smaller pie. I think we're doing a good job of seeing this - what we're going through - as a big opportunity. This industry is going to be a lot different a few years from now, I believe. We're trying to take the time now to make the changes we need to position Correct Craft for the future.

For instance, we slowed down our production in order to stretch out our production schedule and expand our backlog. But instead of sending employees home, we implemented an extensive training program. So on days we might have shut down the plant and sent employees home - and to my knowledge every other company in our industry, on days they shut down production, send [the employees] home - what we do is we hold an eight-hour training class. We've done a number of these training classes and they've gone

really well. It's very expensive to do that, of course, but we see this as an opportunity to invest in our employees and

really invest in our product development

We have had staff reductions, yes. We had a couple of them starting last summer.

At Correct Craft we're fortunate. We have the flexibility and also the financial stability to be able to weather the storm.

We, like everybody else, have cut costs. We, like everybody else, are trying to balance our production to the marketplace, but we're also seeing that it is an opportunity to invest in our employees and produce development and make some marketing changes and position us for the future.

Q: Can you talk about the company's philosophy to "build the best, world-class towboats and build them to the glory of God." Are those hard words to live by in these times?

A: No, I don't think they're hard words to live by at all.

In terms of building the best, we do that. We've won seven J.D. Power awards in a row. Every year it's been offered for our segment of the industry, we've won it. You look at J.D. Power scores, our problems per 100 are well below the industry [average], well below our segment, well below our direct competitors. So, in terms of building the best boats, we do that.

In terms of building to the glory of God, faith is an important part of our culture. It's not something that's forced on our employees at all, but it is an important part of our culture. For instance, we do a lot of community service projects in the Orlando/Central Florida area. We take groups of employees, usually on their own time, and they volunteer an evening or a weekend. There's a group here called "Give Kids the World," where terminally ill kids come to Central Florida and stay. These are kids that have a few months to live, and their last dream is to go to Disney World or Sea World and we go and we serve there. They have a big cafeteria where all the kids and their parents can come in and eat, and I go with them and I put on an apron, and, literally, I'm bussing tables, and some of our employees are serving salad or cleaning in the back or sweeping floors. We did a project with Habitat for Humanity, and we've done other projects. A couple of weeks ago we went to a homeless shelter.

So we really want to serve. I've been at Correct Craft for two years, and since I've been here I started a summer mission trip. Two years ago, we went down to Mexico and we built a house for a homeless family and this year we actually did two trips. We went to Mexico and built a house for a homeless family and then we went to Nicaragua and served for a few days in a home for unwed and homeless teenage mothers.

We want to have a real attitude of service. We do have a weekly Bible study at our company; in fact we have two of them, one in Spanish and one in English. It's voluntary, and there's no pressure. There's no benefit to going, other than going. It doesn't help you in your career at Correct Craft, other than help you as an individual. There's no pressure; it's 100 percent voluntary.

Our faith culture is a really important part of what we do. We have employees that don't participate at all, but I think even [they] appreciate the environment. I've had employees tell me they appreciate being in an environment where they're not hearing people using the "F" word or cursing.

It's a culture, and it's a hard-working and demanding culture. We hold people accountable; they don't get off easy because of it. At the same time, it's a culture that's very service-oriented and family-oriented.

Q: How are your dealers doing? How has the credit crunch affected them on the wholesale and retail sides?

A: We've been very, very blessed. We've not had, at this point, any major dealers go out. All of our competitors have, and we have not. A couple of our biggest competitors, when things started slowing down, really started getting pretty forceful with their dealers to take inventory. We took the approach that we wanted our dealers to come out on the other end of this with us. We backed off and we just made the decision that we were going to take a long-term perspective and we were not, in an effort to improve our short-term financials, going to try to jam boats down our dealers' throats. So we started backing off. We're in great shape with field inventory overall.

Our dealers ... need boats on hand in order to be able to sell, but at the same time they're not choking on them. At this point [the end of February], we've not had any significant dealers go out. Right now, the dealers are getting into their selling season, so the ones that have been able to hold on through the winter are looking forward to the spring.

The credit crunch is unprecedented. I think that's the only word I can use to describe what we're seeing in the credit markets on both the retail and the wholesale sides. Textron pulling out of the market obviously was a blow to the boating industry. We're all hoping that GE is staying in the market. It has impacted the dealers on both being able to get boats and being able to sell boats.

People kid around from time to time - the auto industry's getting their bailout, when are we are getting our bailout? The thing I think what would really help our industry the most is figuring out the whole credit issue and how we can get credit flowing easily again on both the wholesale and retail sides.

Q: Some manufacturers have expressed concern that repossessed boats are flooding the market and hurting dealers. What do you think and have you experienced this?

A: We do hear about more and more repossessions on the retail side. At this point, it has not impacted us significantly. It may have impacted some of our dealers in the used-boat business, because they may be competing against banks. On the new-boat business, we have not seen an impact.

On the wholesale side, the repossessed boats [from] dealers who have gone out of business has definitely impacted us. A couple of our biggest competitors have had major dealers go out of business, and those boats have to go somewhere. We've seen some pretty significant discounting in the marketplace. That has impacted us.

Despite that, we've been able to pick up market share because people look at Correct Craft and they see stability. We haven't gone through some of the rapid, private equity ownership changes that some of our competitors have, so people look at us and they see stability. We have low debt, so we're financially stable. We've got an 80-year heritage. So even in the face of some of that discounting, Correct Craft still looks attractive to people because of our stability.

Q: How has the boat show season been for you so far, including the recent Miami International Boat Show?

A: It's exceeded our expectations. That does not mean it's the heyday it was three or four years ago. But I think we, and everyone, were pretty nervous going into January, just given what had happened from September right through the end of the year.

Boat show attendance overall has been lower; however, we've been having customers come in, we've been having good customers, we've been getting good leads. We've been selling boats, so we've been happy with that.

We had a couple of things going for us in the Miami show because we introduced a couple of new things. So we were in pretty good shape [there]. Miami's not a show where we take orders, per se. We're getting leads and showing our new products, but we're not necessarily sitting there with an order pad. We introduced our new Coastal Edition boat, and we also introduced what we call the Nautique LINC system, which is by far the most advanced digital helm in the towboat industry (see story on Page 20). We had a lot of traffic and a lot of real positive comments, and so Miami was very encouraging for us.

Q: You often speak at conferences and other events. How can you keep people motivated in these times?

A: The best thing I can recommend is focus on what you can control. Sometimes people get so tied up worrying about things they can't control that they just lose sight of where they really ought to be focusing their attention. We're focusing on product development and we're focusing on employee development. We are, of course, focusing on cost cutting. Instead of getting all caught up in the drama of what's going on around us, we're just trying to keep our heads down and focus on good customer service, trying to support our dealers.

And this is actually equally important, focus on what you can control, but also, as a paradigm, see this as an opportunity. I think companies that are smart will make five, six years' worth of changes in one year. Sometimes when it's slower, it's easier to do that. There's huge transition going on around us, and it's easier to make those changes that maybe we were thinking we were going to make over the next few years. Just go ahead and make the positive changes so when things turn around we [can] be in a much better position. We want to come out of this much stronger, healthier, leaner, smarter, well-positioned to compete when the economy turns around.

Q: When do you think we will see the economy improve?

A: Wouldn't that be nice to know?

I don't think it's going to be immediate. I do think this is - I don't know if I'd use the word long-term, but certainly a mid-term issue. I think we could be talking years before it gets back to where it was three or four years ago. But the other side of it is there's going to be less competition at the dealership level, there's going to be less competition at the manufacturer level.

I don't know how it's all going to fall out. The strong are going to survive. The people who see this as an opportunity to focus on things they can control; they're going to survive and they're going to come out even better. So even if we do have a smaller market for a few years, there's going to be less competition, there's going to be more opportunity for the people that are smart and try to do the right things right now.

Q: We hear a lot about a pent-up demand for boats. Do you agree with this notion?

A: I can't speak for others in the industry, but I can tell you that one way we measure this is [through] our Web site's "boatbuilder." The number of people who go on the boatbuilder and build their dream Nautique is actually up. I'm talking about tens and tens of thousands of people going on and averaging several minutes [each]. That tells me there are still a lot of people out there dreaming about buying a Nautique. Maybe they've got the money, maybe they're waiting to see how this settles out, but I believe there's pent-up demand.

The real key to starting the turnaround is consumer confidence. Consumer confidence is at historically low levels. People are afraid, not so much that we're at the bottom. I think people are afraid that we're not at the bottom, and so once people realize this is as bad as it's going to get, things are going to start getting better ... people that are waiting to see where this all ends up will be interested in buying a boat.

Q: What do you think the boating industry will look like when we pull out of this recession?

A: I think it's going to be smaller. I think it's going to be more nimble. I think the companies that survive are going to be the ones that are doing the right things right now. I think it's going to be a much stronger industry, actually - survival of the fittest. The smarter companies are forcing years of change into a very short period, so those of us that survive are going to benefit from that.

I think it's going to be a smaller market for a while. I can't predict the number of years, but I wouldn't expect any time soon to get back up to where we were a few years ago.

This article originally appeared in the April 2009 issue.

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