Sluggish sales of larger fiberglass sterndrive and inboard boats is prompting Brunswick Corp. to lay off 90 workers and furlough 130 more at its Palm Coast production facility during the third quarter.
The company said during a phone call that those declines were partly offset by strong international sales, and that it remained on track with its expectations due to positive market conditions and pending new-model introductions.
The layoffs and furloughs “were to align our production levels with market demand in the 40- to 49-foot segment of our business, while continuing to maintain our production capabilities in stronger segments of the business,” Brunswick Corp. spokesman Daniel Kubera told Trade Only Today.
“Consistent with our values, we take good care of our people and will continue to develop our employees and support those impacted by these adjustments,” Kubera said in an email. “For example, we will be conducting an outplacement fair to help the individuals affected by the reduction to transition to other employment. As for those on furlough, the company is offering a number of measures to help soften the impact upon those individuals.”
The company’s plan includes additional second half declines in large fiberglass sterndrive inboard boats, which Brunswick Corp. CEO Mark Schwabero said were “more significant” in the third quarter; those sales declined 16 percent in the second quarter.
“This is in response to the retail demand which has continued to decline and lag our expectation,” Schwabero said on a call to discuss second-quarter earnings with investors and analysts on Thursday.
Second quarter sterndrive engine sales declined as the demand environment continues to be affected by the shift to outboards and unfavorable global retail demand trends, Schwabero said.
“Our share of the sterndrive engine market remains strong and as some of that market transitions to outboard propulsions we believe that our outboard engine portfolio and distribution service channels are well-positioned to capitalize on this transition,” he said.
“We have taken actions to adjust our workforce including recently announced reductions in force and furloughs through a portion of the third quarter,” Schwabero said.
Pontoon sales also declined due to supply-chain constraints and model complexity, “both of which are being addressed and are expected to improve in the second half” of the fiscal year, Schwabero said.
“We have suppliers that quite frankly are not able to keep up with our demand,” Schwabero said. “Those suppliers have impacted our production schedule.”
Challenging weather in the Midwest and Northeast also impacted sales, the company said.
Stronger-than-expected international sales, however, helped to offset those declines, Schwabero said.
The company is not changing its strategy in the engine segment following Volvo Penta’s acquisition of outboard builder Seven Marine, Schwabero said.
“We have not felt the need based upon that activity to change anything within our strategy,” Schwabero said. “Basically, they're taking an automotive engine in a horizontal position, and making a high horsepower outboard out of it, which is a very, very small niche.”
“Given the relative size and scope of Seven Marine, in terms of even customers that goes to and serves, I don't see that it's really threatening or changing our position to-date,” he said.