The downturn in the marine industry continues as two more companies react to the changing marketplace.
MasterCraft Boat Co., of Vonore, Tenn., laid off a third of its work force last week, reducing its number of employees to 200. This compares to about 570 employees a year ago, which was a record year for MasterCraft in terms of revenue and unit sales, according to president and CEO John Dorton.
He says the layoffs were necessary because of the soft market and difficulties in wholesale credit.
“The problem is a softening in retail demand,” he told Soundings Trade Only. “The amount of dated product in the field has caused concerns with wholesale credit providers.”
During the last year, four wholesale credit providers have exited marine lending, leaving only GE Financial Services. Dorton characterizes the reduced floorplan providers as an “atomic bomb” that has hit the marine industry. If GE leaves, that would be like a “nuclear bomb,” he says.
“The industry and OEMs in particular are very appreciative of GE’s continued support,” says Dorton.
Still, the limited floorplan financing that’s available has forced MasterCraft and other boatbuilders to change business models. Floorplan credit allows manufacturers to build boats in advance and ship them to dealers. But with dealers placing fewer orders, boatbuilders must change to just-in-time manufacturing and delivery.
“Now they’re nearly all custom orders,” he says.
Dorton notes that while retail demand is off 25 percent, the wholesale business is down 50 percent. He says MasterCraft is working aggressively to reduce aging inventory in the field and find additional floorplan lenders for its dealers.
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Crownline Boats, which shut down production in December, is holding off on resuming production for another three months.
The company originally planned to reopen this week but has decided to postpone production until June 1, according to a report in TheSouthern.com.
Officials from Crownline could not be reached this morning for comment.