Broadening Powerful Shoulders

Groupe Beneteau maintains sailboat dominance while adding powerboats in the U.S. market.
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French-designed NC 795 and NC 895 cruisers are being built at the Beneteau facility in Michigan.

French-designed NC 795 and NC 895 cruisers are being built at the Beneteau facility in Michigan.

Groupe Beneteau’s push in the U.S. market is more than four decades in the making, but it has a newer focus on powerboat brands, along with the sailboats Americans already know. “All of our brands are growing market share,” says Groupe Beneteau Americas CEO George Armendariz. “Growth for most of the brands is at a pace greater than the industry growth, so that’s good news.”

The company has been selling sailboats in the United States since 1976, when it established its U.S. headquarters in Annapolis, Md. In 1986, it began building sailboats in Marion, S.C., for the American market. Jeanneau sailboats followed when Jeanneau America was created in 1996.

The group, which had gained a majority of the sailboat market here, opened a powerboat division at its Annapolis headquarters in 2011 and began to market its Beneteau and Prestige powerboat brands to Americans. It added four more brands when it acquired Cadillac, Mich.-based Four Winns, Glastron, Scarab and Wellcraft in 2014, and later began selling Jeanneau powerboats in this country.

Shift to Outboards

Like most builders, Groupe Beneteau has reacted to market trends by offering outboard boats across several brands. “For the American brands, particularly Four Winns, Glastron and Wellcraft, relevant models are being designed from inception to accommodate sterndrive or outboard power, right up to 35 feet,” Armendariz says.

Outboard volume sales have surpassed sterndrive sales, and sales of the outboard models have doubled year-over-year for the past two years, says Jeanneau North America marketing director Margriet Mitchell.

“Jeanneau launched a line of outboards in this market two years ago, and Beneteau recently announced the launch of a series of outboard models as well,” Armendariz says. “They are in the same segment, and to that end, one could say they compete with one another, but it’s a diversified and rapidly growing segment. We have two distinct distribution channels. It’s going to be no greater or lesser competition than what our domestic dealers have with other brands.”

Armendariz says the trend toward outboard power will continue. “Both Mercury and Yamaha have some great product coming out, and I think consumers are reacting positively to that,” he says.

The outboard-powered Jeanneau and Beneteau models initially will be built in Poland and exported, but some production eventually will shift to Michigan.

Four Winns continues to design new models in both outboard and sterndrive configurations.

Four Winns continues to design new models in both outboard and sterndrive configurations.

Increasing U.S. Capacity

Two Jeanneau models, the NC 895 and NC 795, are being produced at the Michigan plant. “The easiest part is replicating molds and having them shipped,” Armendariz says. “Then a bill of materials needs to be produced, and there are manufacturing processes that may differ and need to be integrated into the plant.”

The company has reopened its sportboat plant there. It had been idle for a decade and resumed production Sept. 5. “We reached a point where we needed the capacity not only for added volume, but also for improved efficiency in the Cadillac operation,” Armendariz says. “We had four brands — 65 models with close to 120 or 130 configurations — all flowing through one plant. Now we’re able to separate out the smaller brands, roughly 22 feet and below, for all four brands.”

The company invested millions to rehab the facility and has added about 100 workers during the past 18 months. “Recruiting is a continuous challenge,” Armendariz says. “We continue recruiting even though we’re not looking to increase workforce in the coming six months. Just maintaining a continuous workforce requires continuous recruitment.”

The group has integrated a training and orientation program called Groupe Beneteau Boatbuilding University. It’s a six-week structured program that is required for every employee, from the factory floor to executives. “The idea was to address the high rate of turnover in employees with under 12 months of tenure with us,” Armendariz says.

Some molds of the Wellcraft brand will be transferred to Groupe Beneteau’s facility in Poland.

Some molds of the Wellcraft brand will be transferred to Groupe Beneteau’s facility in Poland.

Meeting demand

With limited ability to hire workers, and with U.S. demand outstripping supply, Groupe Beneteau has been working to keep up. “Our biggest challenge has been our own supply chain,” Armendariz says. “Whether it’s engines or towers or other components, we’ve had interruptions that have been pretty chronic. But for the most part, we’ve been able to meet the demand pretty much on time.”

Part of the problem is that relatively small companies serve the industry, Armendariz says. “The demand that most of us have is straining capacities,” he says.

The company has avoided some of the quality issues that dealers of other brands have reported, Armendariz says. “We have what I’ll refer to as a mini-plant embedded in the product development and engineering building,” he says. “That produces the first prototype and sometimes the second or third model to validate everything and create the build book before it gets transferred to operations.”

Merry Fisher becomes NC

As the company ramped up marketing powerboats in the United States, changes have been made in everything from features to branding. In the summer of 2016, Jeanneau changed the name of its Merry Fisher powerboat line for the U.S. market. “It was a decision made in collaboration with our North American dealer network,” says marketing director Mitchell. “We agreed we needed names that would resonate and connect better with North American buyers. Our Jeanneau inboard powerboat lines have names that are well received, so it was logical to apply these same names to our outboard lines — Leader and NC [New Concept].”

Dealers and clients have responded favorably to the shift, Mitchell says. “Some other international dealers in Australia and England have acknowledged this change and are now having fun referring to it in social media,” she says.

The Sea Ray Effect

The discontinuation of Sea Ray’s yacht and sport yacht lines left a void in the marketplace, Armendariz says, and Groupe Beneteau is one of the companies looking to fill it. “There are a lot more players out there today than there were a few years ago, so we’ve got a lot more competition,” he says, adding that dealer recruitment is key. “Every 40-foot and above manufacturer sees it and is creating their distribution.”

Prestige’s most recent dealer addition is Detroit-based Colony Marine, which is Sea Ray’s oldest dealer. “I think we all have to be on our game to make conquests in dealer development strategies,” Armendariz says. “Dealers have choices, and they have more choices than they have had in past.”

Glastron models smaller than 22 feet will now be built in the Cadillac sportboat plant.

Glastron models smaller than 22 feet will now be built in the Cadillac sportboat plant.

Tariffs

While Groupe Beneteau remains focused on increasing market share, the trade war has created additional challenges, as with all OEMs. “We have experienced an increase in cost of materials, as the entire industry has, and we’re all wrestling to deal with that,” Armendariz says. “In terms of lost volume, some has come to fruition, but we also put mitigating steps in place to increase volume in other places. I don’t want to get too much into that, but we’re looking at non-tariffed markets, channel management and dealer development.”

Canada remains a significant market for the group, particularly for the four Michigan-based brands, despite retaliatory tariffs the country imposed on U.S.-built boats. “The Canadian tariff is 10 percent, so it’s bit more manageable than others,” he says.

Material cost increases range from 3 to 20 percent. “That’s bad enough, but the thing that’s different this year is these increases are coming out of cycle,” Armendariz says. “Many companies have practices of increasing costs only once a year, or semiannually. We’re seeing, for the first time in a long time, out-of-cycle price changes.”

The volatility makes planning a challenge, he says. “We try to be as nimble as we can, but our industry doesn’t have a lot of price elasticity,” Armendariz says. “It makes it very challenging.”

The company could look at moving production elsewhere, but that is a medium-term solution. “Tariff or no tariff, we’re continuously evaluating manufacturing production worldwide,” Armendariz says, citing the decision to build some of the Jeanneau product in Michigan. “It’s a subject that’s always on the table. Tariffs might influence which brands and where, but it’s not going to solve the problem immediately.”

The company had started moving production of Beneteau’s 40-foot Gran Turismo from its shuttered Brazil plant to South Carolina but suspended the transition in response to market conditions. “We didn’t have the demand for that model that justified producing it in the U.S.,” Armendariz says. “We have plenty of availability from Europe. We just didn’t need the extra units made in the Marion plant. That was the driver more than anything. And sailboat production is so robust, we’re dedicating all our Marion operations to sailboats.”

Scarab has become the world’s second-largest jetboat brand.

Scarab has become the world’s second-largest jetboat brand.

The Sailboat Division

Sailboats are a small (and shrinking) segment, but Jeanneau and Beneteau are the dominant players. “While the segment isn’t growing, just serving our existing share and preserving our existing share implies a demand that requires all the resources of the Marion plant,” Armendariz says. “The segment we measure is 30 feet and above, and that segment is stable. It has been stable for the last couple years.”

Beneteau launched five models at the Newport (R.I.) International Boat Show in September, including the Figaro Beneteau 3, which won a Newport for New Products Award in the category best new sailboat under 35 feet. This summer, Beneteau announced the acquisitions of two sailboat builders: Slovenian Seascape, which produces boats from 14 to 17 feet, and Polish Delphia, which builds motoryachts as well as sailboats.

Two of the five Beneteau models that debuted in Newport — the 18-foot and 24-foot First sailboats — were a result of the Seascape acquisition, Armendariz says. The hulls were painted an eye-catching red and black, which gave attendees a glimpse into the builder’s more youth-focused strategy for entry-level sailboats.

This article originally appeared in the November 2018 issue.

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