Capacity of bigger Brunswick Corp. boat models has been constrained as the company is in ramp-up mode for its new large models, such as the Sea Ray 650.
“The biggest issue we have around the boat business in the second half is not demand. It’s our ability to get products out in the field,”Brunswick CEO Dusty McCoy told analysts during a conference call Thursday to discuss second-quarter earnings. “We have significant ramp-ups to do.”
Market analysts peppered McCoy with questions about meeting demand during Thursday’s call, which came on the heels of a MarineMax call that addressed the lag time between the sale and delivery of some new Sea Ray products.
“We’re going to be careful getting this new product into the marketplace, especially with big Sea Ray product, which sounds like it was referenced on the MarineMax call,”McCoy said. “We waited a while to get great big new SR product into the marketplace. We knew we were going to be losing share as we went through a careful planning, development process. Now we need to make sure that when we get it into the field, it’s really good, high-quality product with no issues. As we look into the future years of this brand, this is one of the big foundations for future growth. If we ever err, it will be on being slower, making sure it’s right, rather than pushing it out trying to get revenue.”
Ramp-up on two new 58s that are coming down the pipe will also feel slow, McCoy cautioned.
“I can understand where the dealer network says, ‘I’ve got a red-hot boat. I can sell more. Give me more,’”McCoy said. “Our answer always is, ‘We’ll get there, but we’ve got to get the model integrated and get it right.’”
New-model introductions are complex and take time to get to full run rates, McCoy said.
“We’ve got to coordinate the supply chain and train ourselves as we move that product from development over to the plant floor and get trained on actually how to build it,”he said. “That’s a fairly complicated dance with hundreds of people involved.”
It takes a certain amount of time and boats built to get from the start to the run rate, he said. “Once we’re at a run rate, we can complete [orders] very easily, but as we go through the learning process, we can’t do it much faster.”
McCoy reiterated the company’s plans to make acquisitions in the P&A part of the marine business with cash flow in part generated from the sale of the bowling franchise and the anticipated sale of the bowling parts business.
Worldwide sales were another topic among analysts, as Canada took a dramatic hit because of poor weather and a less favorable exchange rate.
“Things are getting back to normal, but this late in the year we will have a hard time getting back to where we were hoping,” McCoy said.