Chris-Craft is beginning construction on a new multimillion dollar manufacturing complex that will add 80,000 square feet of additional capacity at its Sarasota, Fla., campus.
“This is an exciting time for the Chris-Craft team in Florida as we look to build on the success of their brand in the marketplace and launching several new products into the market in the years to come,” said Mike Happe, CEO of parent company Winnebago, who spoke to analysts during a conference call Thursday to discuss third quarter earnings.
Chris-Craft has “ways to grow on the market from a product expansion standpoint that are not public yet, and those are certainly underpinning some of the projected volume that you'll see running through those facilities,” said Happe.
The Chris-Craft capacity increase is “a much bigger percentage of their business” than a second expansion announced for the Grand Design RV facility, said Happe.
“It's a major move for the Chris-Craft business,” Happe said.
Winnebago also announced on Thursday key leadership updates and the formation of a new advanced technology group. Under the leadership of Ashis Bhattacharya, specialty vehicles and advanced technology vice president of business development, the unit will work closely with each of the company’s business units to identify, develop, and commercialize emerging technologies as applied to and within future products.
Integration often correlates with lower maintenance requirements on products, which Happe pointed out that millennials crave.
“This phenomenon of making sure that they're getting almost a maintenance-free experience and that they can experience the product potentially before they buy it, are things that we're tracking,” said Happe during the call.
Advanced technology director Jamie Sorenson will report to Bhattacharya and lead the group on a day-to-day basis.
The initial areas of focus within the advanced technology group will be the increasing electrification and connectivity of the organization’s products, delivering value via data acquisition from customer use of products, and improving the user interface experience for our end customers.
Happe also spoke to fluctuating market indicators and bad weather across much of the country.
“Stock market volatility and political uncertainty are certainly weighing on consumers, combined with the potential impact of price increases and rate increases related to some of the new tariffs and policies,” said Happe. “And while we will not use weather as an overt singular excuse, it is no secret that the spring conditions of 2019 to kick off our selling season, especially in the northern half of the country, were some of the most challenging in recent memory.”
However, a potential easing of rate hikes and prospects of wage growth as employment levels continue to drop to historic lows provide tailwinds to some of the negative indicators, said Happe.
“While we are still seeing consumer confidence at stable levels, our RV and boating customers continue to exercise increased discipline as they invest their valuable discretionary resources on large ticket items,” said Happe. “More and more consumers in 2019 are focused on value and products that also leverage the latest technology to ensure a seamless outdoor experience with their family and friends.”
Tariffs have already had an impact on RV sales year-to-date, said Happe.
“While there have been a lot of comments generally about inflation not being an issue in the broader U.S. economy yet, I personally am not sure that that's the case in the RV industry,” said Happe.
The company is looking at manufacturing alternatives, but for some components, that’s difficult to do, said Happe.
“As an overall manufacturer, we don't own plants in China. We do not own plants in Mexico, so we don't have the ability, in many cases, to kind of up and move those ourselves,” he said.
As for the Chris-Craft brand, most customers are paying cash. “And, the dealer improvements that we’re making in terms of working with our current dealers, and upgrading our dealers in certain markets, is still resulting in a robust business there,” added Happe.
Happe said in February that Winnebago would invest in Chris-Craft, which it acquired a year ago, to accelerate the boatbuilder’s growth. The expansion will add up to 250 workers over the next five years to its current employee base of 340.