Brunswick Boat Group announced Tuesday that it will stop building and selling Bayliner cruisers in the United States so the brand can focus on its core bowrider and deckboat models, as well as new categories, such as the jetboat segment.
As a result, Brunswick said it will stop production at its plant near Knoxville, Tenn., where 225 full-time workers are employed, by the end of 2012 and make its Brazil operations the center for its Bayliner cruiser business. It will suspend the brand’s cruiser sales and production outside of South America.
Bayliner produces a line of six cruiser models from 24 to 33 feet.
“We will continue to maintain our leadership position in the North American cruiser segment with our Sea Ray brand," Andrew E. Graves, president of Brunswick Boat Group, said in a statement.
Over the next several months, Bayliner will introduce a new line of bowriders, a new series of deckboats and will launch “Element,” the company’s break into “affordable boating,” Graves said.
Bayliner will also enter the jetboat segment in 2013 with a new series.
“We believe this effort will solidify our position in the market and offer dealers and boaters a wide variety of choices and models,” Graves said.
The world’s largest boatbuilder cited changing global trends and fluctuating needs of boat buyers for the move.
"Our current plan reflects a change in focus for Bayliner's global product portfolio to emphasize and expand its leadership across a broader set of recreational dayboat craft types," Graves explained.
"Additionally, Bayliner will make its Brazil operations the center for its cruiser business but will suspend the brand's cruiser sales and production outside of South America,” he said.
"This strategic repositioning of Bayliner further reduces the need to maintain the Brunswick Boat Group's current cruiser production capacity in the U.S., particularly in view of current market weakness for cruisers. 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," Graves said.
The company estimates that these actions will save $10 million to $12 million a year once implemented.
"The complexion of the global marine marketplace continues to evolve and so does Brunswick," said chairman and CEO Dustan E. McCoy in a statement. "Our continuing challenge is to adapt our brands, models and technologies to best appeal to today's boating consumers, as well as the shifting global marine marketplace.
"Though the U.S. marine marketplace has improved recently, the recovery has been uneven across the various market segments," he added. "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. The actions announced today 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, Brunswick also 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 these brands will be recognized in the third quarter.
Brunswick's estimate of total restructuring and impairment charges in the third quarter will be in the range of $25 million to $32 million, pretax. These charges primarily include non-cash asset write-downs but also include charges for severance, facility closing and other costs. Further, the company anticipates that additional charges pertaining to these actions will be recognized in future periods.
— Reagan Haynes