Intrepid Powerboats has changed hands several times in the last 30 years, but there have been some constants. One of those is Ken Clinton, who spent 23 years working his way up from the line to president of the company, which has a year-long, $43 million backlog.
The Connecticut native, who has been Intrepid’s president for five years, decided on a visit to Florida as a young man that he could no longer bear the snowy winters and transplanted himself. He had been working as an outside machinist for General Dynamics, building submarines. He landed his first boatbuilding job with Triumph after telling his interviewer: ���Well, I built submarines, so if I do everything in reverse it’ll float instead of sink.” That quip — still indicative of his laid-back, yet energetic personality — launched his boatbuilding career.
He wound up at Intrepid after it moved operations to the former Viking and Gulfstar plant in St. Petersburg, Fla., earning $7 an hour on the line in station one. He prepped hulls, did plumbing, then prepped, set and blasted liners. From there he became the lead person at station one, and then line supervisor, before becoming assembly manager. Every few years brought another promotion, ultimately leading him to the president’s office.
Soundings Trade Only sat down with Clinton to learn more about the company, which seems to consistently produce some of the most coveted boats in the market for celebrity buyers such as Yankees third baseman Alex Rodriguez and singer Gloria Estefan.
Q: How does knowing the ins and outs of manufacturing help you run the company?
A: It helps me in two major ways. One, it helps me run the facility really well, and everybody out there knows that I know it very well. I can go take a tool out of somebody’s hand at any time and say, “No, not like that, like this,” and they really respect that. They respect the fact that I’m a boatbuilder, unlike a lot of companies that might have people running them who have never held a screw gun in their life. I’ve had gelcoat in my hair and resin running down my arms and 5200 (a 3M marine adhesive) underneath my fingernails. I know what it’s like to build boats, so when I ask somebody out there to do something, they know it’s nothing I haven’t done myself.
On the other side, it helps me with my customers. We have a much different relationship with our customers because I don’t have a dealership network. We deal directly with our end user. Everyone wants to come and sit down with me and go through their boat and figure out what to accomplish with their boat and how they want it built.
They’re able to sit down with someone who understands and can look them in the eye and say “Yes, I can do that,” or, “No, I can’t do that.” I don’t have to say “Well, let me check with my engineering staff and see if we can make it work.” I know if we can do something or not. It really makes them very comfortable, going into the relationship, knowing that they’re talking to a boatbuilder, not just an executive at a boatbuilding company.
Q: I want to get back to that distribution model, but I’m curious about talking to your customers on that level. Intrepid is associated with quality, and I wonder if there are times you have to tell your customers, “Well, if we did that, we would be sacrificing the Intrepid brand.”
A: Usually what sets that tone, or how we end up in a conversation like that is [to focus on] resale. Unless it’s a safety issue, like if people want me to do dive doors on both sides of the boat, and I just won’t penetrate both sides of the boat because I’m not comfortable with it.
But if it’s something just a little off the wall that I’m a little concerned about … I’ll say, “Look, it’s not that I can’t do it and that I won’t do it, but you have to understand that one of the biggest advantages to having an Intrepid … is the resale value.”
Because I have a $43 million backlog and a year-long waiting period, the resale value on my product is through the roof. And that’s why when people say, “I can’t believe I’ve got to wait a year. You know how many customers you must be losing? Why don’t you build another building so you can build more boats?” I say, “You hate me now because you have to wait, but you’re going to love me when you go to sell that boat.”
So when I get a customer that’s doing something a little off the wall, I say, “The problem is, when you go and sell this thing, you’re going to have to find somebody who wants what you wanted, which makes your audience much smaller.” I get some guys who say “I don’t care. I want what I want” and other guys who say, “Wow, I never really thought of that.”
So we mention that when someone wants something a little far left from what we do. And let me tell you, I’ve done some stuff that’s pretty far left, and they loved it. I’ve even had other manufacturers tell customers there’s no way they can do a project like that and that they need to go see somebody like Intrepid.
Q: You have such a unique place in the marketplace. How does the fact that you do some of these far-out things play into that?
A: I enjoy it because I have customers that want to meet me and talk to me about their design. I’ve had more helm seats drawn on cocktail napkins than you can shake a stick at. Or someone will say, “I’m a diver, and nobody makes good combinations for a diver. It’s a mess,” and they’ll draw you a little chicken scratch drawing of a dream they have. There’s nothing more fulfilling than them coming back a year later, and you watch them look at this helm seat you’ve designed based on his cocktail-napkin drawing, and watch their eyes light up and say, “That’s it. That’s exactly what I had in my head.” And the best part is “Oh, wow, you took it a step further. I didn’t think of that. This is fantastic.” You always want to not only give a customer what they’re looking for — there’s nothing better than putting a little twist on it and surprise them with something they weren’t expecting, just to put it over the top.
Q: Intrepid seems to capture a high-end clientele. Does that year-long wait add to the allure?
A: I look at it from a business standpoint. Most of my buyers are repeat buyers. I’d say 65 percent of my customer base is people coming back for their second, third, fourth, 10th Intrepid. Now if I were to get greedy and decided I was going to punch out a bunch more boats by building another facility and I screwed up the resale value of 65 percent of my buying base, where does that put me and the condition of my company? The reason why they’re able to come back is because they don’t lose when they do that changeover to get their next boat. Most people will pick up their boat and give the deposit for the next boat so they’re in line. They do that knowing when they go to sell their boat, they won’t get hurt. So that backlog is very important. And believe me, there are times you say, “Man, if only we could build up production.” But that’s not what’s important. What’s important is that relationship and that trust. They trust we will take care of them.
We take care of service and warranty after the sale to such an extent. I hear stories from customers who come looking to buy their first Intrepid about bad experiences with brand XYZ, people denying warranty claims and service, especially during the last few years when it’s been hard, because, let’s face it, a lot of those companies weren’t doing very well. There’s no profit in warranty and service. When you’re fixing somebody’s boat for free, that comes right off the top, so there were a lot of denials from manufacturers out there.
If anything, I felt the opposite. This is the time you need to spend more money. You make sure you do everything humanly possible to make sure that customer’s happy.
I fix things that aren’t under warranty for free. I had a guy run into his piling and break the boat and ask me to send a couple of lengths of it and say to send an invoice. When he calls to say, “Ken, I never did get that invoice,” I’ll say, “You’re not gonna. Stop running into stuff, will you?” I know he doesn’t expect me to do that, but we all make mistakes, so I just told him — stop running into stuff. Those investments we make with the customers are worth more than any magazine ad or commercial because it’s that word of mouth.
Q: That sounds like quite an investment.
A: The reason I’m able to do stuff like that is because I don’t have a dealership network and because I don’t have to leave 25 percent in the deal so a dealer can make his money. I can use all that money on more man-hours, better materials and in the service after the sale. It’s something that affords me to not only spoil our customers, but to buy the best resins, to buy the best fabrics, to do all these molds and split tooling that gives me all these crazy style lines and toe kicks that you can’t pull out of a one-piece mold. You have to have five- and six-piece molds just to get a style line in the side of a console. Most companies will pull a console out, buff the sides of it and send it to the assembly building. I pull a console out and send it over to the final finish department, where three guys spend three days just getting all the seams out of it.
I’ll interview somebody applying for a job as an engineer and give them a tour of the facility. They’ll see all my split tooling that we do to create all these crazy-shaped fiberglass parts and say, “Wow, I’m going to save you hundreds of thousands of dollars. If you get rid of this one style line, that could be a one-piece mold. All these little things you can just pull out will save you so much in labor and materials because you’re not going to have to refinish all these parts.” And I say, “Yeah, so I can build parts like the company you used to work at and have it not be an Intrepid?”
That is what makes us different. I’m willing to spend twice as much to do a console to be able to incorporate a recessed switch panel or a silly little style line. That’s important. Our customers pick up on that. They appreciate all those little differences.
Q: That would have to figure into the price, wouldn’t it?
A: It’s funny because we had customers come up to us at the Lauderdale show who were telling us we have this reputation for being a high-priced product, but when they really went out there, getting quotes from different manufacturers, they said we are right in the mix. In a lot of cases [Boston] Whalers were much more expensive than we were, and that surprised a lot of people.
I don’t have all that overhead. I don’t have a dealership network. We own the property we’re on. We can take the dollars that we do make and use them much better than most. And especially with a year backlog, we can even buy better than everyone else because we know what we’re doing and what models we have coming. We can forecast with the vendors we buy from. Many of them tell us it’s such a pleasure to do business with us because we know exactly what we need. We can say, “OK, Yamaha and Mercury, here’s how many engines we’ll need next year, and Nexeo, here’s how much resin we need.”
Q: I know there are plenty of dealers who would like to get their hands on your boats, and we always hear that selling direct doesn’t work because it doesn’t provide enough service or the support boaters need or because not everyone wants to go to Florida to buy a boat. Why does this work for you, and would it work for everyone?
A: The first thing I say to manufacturers when I hear that is, “You’re right. It doesn’t work. Don’t do it (laughing).Stay away from this business model. It’s just the worst thing in the world.”
Our vice president of customer service, Joe Brenna — who’s great, he’s been with me 10 years — has developed a network of marinas not only throughout the country, but throughout the world, that we already have relationships with. So when we hear that question, we ask customers what marina they are accustomed to doing business with. Either we are already affiliated with them or we’ll reach out to them and create a relationship with them.
We’ll call that marina and say, “We’re Intrepid Powerboats. We have a new customer who says he’s done business with you in the past. It’s important that you take care of him. We will pay you immediately for anything; we only ask that you get approval for any work that’s done.”
The first time somebody needs something done, we make sure we pay that marina instantly. If I get an invoice today, that check goes out tomorrow, even if they give me 60 days. They realize that when they work on an Intrepid and they take care of it immediately, it gets paid immediately. That kind of pushes the service of our customers and our product to the front of the line.
We hear horror stories of manufacturers that deny claims or think it was too much and will only pay a portion. We don’t do that. We don’t play that game. By taking care of the marina you’re, in turn, taking care of your customer.
Q: Don’t marinas price-gouge from time to time?
A: They try. The nice part is, we’re all boatbuilders, so we’re not shy about saying, “C’mon, dude, really? We built it, so we know what it takes to fix it, and if you want we can send a driver up with a pickup truck and fix it. Or you can still make your margin, but be realistic about it.” And in some cases I’ve sent a driver up to get a boat and we’ll bring it here. We won’t blink.
I’ll do the same in [areas of the world where technicians] might not know what to do with the systems. If I’ve got a customer that gets a little frustrated with that, I’ll fly someone down there. It’s that kind of service that puts you over the top. And customers, in a lot of cases, have had a taste of that kind of service or lack of service from other manufacturers, so when they get it from us they appreciate it.
Q: It seems that level of service is important to keeping the high-end clientele, since they are used to receiving that type of service in other areas.
A: You’re absolutely right. They are accustomed to that. I build boats for Julio Iglesias and Gloria Estefan, and A-Rod, and Larry Silverstein, who owns the World Trade Center property. The list goes on and on, and these are people who can, for the most part, buy whatever they want. Their decision-making is more of knowing who’s going to take care of them and give them the best product. And, fortunately we have that reputation.
Q: How important is it to maintain a level of discretion for some of your clients? Is that a challenge, given the amount of collaboration that goes into the building process at Intrepid?
A: We work with captains all the time. Probably 10 to 15 percent of our boats are tenders. Even if they’re not, a lot of the communication with the high-profile people will come through the captain.
A lot of them, believe it or not, still want to talk to me. Maybe it’s because of the title and they want to talk to the top guy. And I think they want to talk to me, in most cases, because I’m a boatbuilder. I’ve been called everything from the Jesse James of fiberglass to the guy who’s worked his way up from the bottom to the top.
The nice part is that I enjoy it. It’s great to be able to get to know your end user. Most manufacturers don’t know who their boats go to, whereas I know my customer’s name, I know his wife’s name, I know their kids’ names, they’ve been to the factory, so it’s refreshing. I had a guy call me who said, “You built a 356 for me 12 years ago. You probably don’t remember it,” and I said, “You’re the guy I did that crazy 40-foot ham radio antenna for on the port side, right?” You know all these people and you become friends.
People come to the boat show to meet with us, and it’s not just me, it’s Mark Beaver, the COO, it’s Joe Brenna, it’s our sales staff. Even if they’re not coming to buy a boat, they want to tell us about their fishing trip and their kids graduating college. It’s really cool to have that kind of relationship with your customers. I come up with a new model and it’s nothing but a drawing, and they get a whisper of it and I have people sending me deposits. They haven’t even seen it. They’ll call and say, “I heard you’re coming out with a new cuddy. Can I get on the list?” And I’ll say, “Don’t you want to know how big it is?” “Oh, yeah, yeah, how big is it?” And I’ll tell them it’s a 327 Cuddy and they’ll say, “That’s awesome. Get me on the list.” I’ll ask if they want to know what I’m putting in it, and they’ll say, “Oh, yeah. Can you tell me?”
They just trust us that much because they know we’re not going to put something out there that’s not the best. They know their money is safe with us and their investment is safe with us. In my opinion … you don’t get that with a dealership network. You don’t have that intimacy of building something for someone and looking in their eyes and holding that cocktail napkin with a chicken-scratch drawing on it and being able to create that dream.
I know what that feels like because — my poor wife — I’ll sit up straight at 3 in the morning and go, “I know what I’m going to do with the next model. I’m going to move the head out of the cabin and I’m going to put it in the console.” And she says, “OK. Leave yourself a voicemail so you remember.”
When people take delivery of their Intrepid, they’ll show up with their family, and often a few friends. They’ll walk on the boat and say, “I had them put this here, and I had them make this 2 inches taller because I thought it was too low.” They are describing it like they designed it, they engineered it. It makes it theirs. It’s not going to a dealership and picking out the red one or the blue one. We ask them how they use the boat. Do you sleep on it? Do you dive on it, or fish? We dial it in for them, and it’s a blast. It’s really a good gig.
Without trying to sound cocky, it goes back to creativity. We’re always trying to figure out what the next trick is. We do these round robins, and someone will say they want to do something, and another guy will say, “Yeah, and then we can do this!” and we all just build on all these ideas. It’s this passionate exchange of creativity that works really well because there’s no egos in the room. If you can check your ego at the door and realize that you don’t know everything and you can listen, the sky’s the limit.
I would say 50 percent of the ideas for our new designs are directly from our customers. They can contact me direct and tell me everything they love about the boat and everything they don’t love about the boat. Those are all the comments I take to my team when I design my next boat. Here’s what people liked about the 32, and here are the things they said if they did the 32 over, this is what they’d do different. We’ll take all that and put it into the next design, and then we’ll add and build on that base. I guess other manufacturers get feedback through warranty claims with the dealer someplace to figure out if something’s wrong.
It’s not so much hearing about what’s wrong with our products; it’s what they wish we’d done. Like the 327 Cuddy we did [most recently], I’d had a couple of women come up to me and say they had a 323 and they loved it, but if they changed anything it would be to move the head because if someone is lying down you have to kick them out to use the bathroom. It’s a smaller cuddy and the head is in that cabin space. You would push a button and the head would rotate out of the wall, and then you push a button and it rotates back in.
I heard that a few times, and we were starting the 327, which was going to be the replacement for the 323 Cuddy, and I suggested splitting the fuel and taking what we do with the center consoles, having a head in the console, and get that smelly unit out of the cabin they lie in. We did that based on those comments, and the first one I sold was to Mr. and Mrs. Hallandale. They were on the boat and I told them where the bathroom used to be, and she said, “That’s the only reason we’re standing on this boat because the head’s not in the cuddy cabin.” And that’s when you go, “Yes!” It’s a great feeling.
Q: How many boats do you guys build a year?
A: This year I’ll probably build around 150. That’s everything from 24 feet to 47-foot sport yachts.
Q: And can you give me a ballpark on resale value?
A: The biggest thing we see with customers that do aftermarket electronics after [buying the boat], and this depends on how long they wait to sell the boat, but if they do it in a year or two, the only thing they usually lose is what they spent on electronics. The nice part is, when you lock in a contract with me and give me a deposit I lock you into my production schedule.
Regardless of my resin prices, my gelcoat prices, regardless of what increases happen that next year, it doesn’t affect you. You locked in there. There will be price increases, whether it’s one or two throughout that next year, depending on increases we see from our vendors. Then say you keep the boat a year, and there are increases that year. There will be somebody out there shopping for a new boat. Because you locked your contract in a year ago and there were a couple of price increases, and then you kept your boat a year, and there were a few price increases … the new boat is more expensive than the boat you bought, which helps offset half the depreciation.
Once people get that theory down and see how that works, that’s why they always give a deposit when they take delivery. They’ve gotten the routine down so they can roll the boat, roll the boat. For the amount of depreciation and the resale value, they can always be in a new boat, all the time. That’s what I have to protect by not being greedy and focus more on quality than quantity.
Q: This downturn has been hard for everyone, but one of the things I’ve noticed at shows since then is that either crickets are chirping in a manufacturer’s booth or it’s buzzing. How do you get the buzz?
A: During tough times one of the hardest things for manufacturers to do is spend more money on R&D and tooling. When their sales are cut in half, and they had a dealership network, they had product all over the world at dealerships going out of business that were sending boats back. Taking those losses, how are they supposed to come out with something new?
When you talk about crickets chirping in booths, you have to build something for people to come see. A lot of times when I walk around, I’m seeing the same thing I saw last year and the year before that, and in some cases the same thing I saw the year before that. Our theory is totally the opposite. When I do a budget, and I just did one, I assign literally millions of dollars to capital expenditures to create new product.
When you look at our production schedule, I’m always building a new boat. Sometimes I’ll be building two at the same time, but usually one. During the budget presentation, when you looked at all the newest models, they were all the top sellers. If you were to look at all my chronological data of when I first came out with these models, and some are back from 2002, the sales numbers go down the older the model is.
When you come out with something new, sales just go crazy. That’s why we’re always coming up not only with new boats, but new helm seats and arches and towers. That’s what people want. If you own a 370 Cuddy and you come to see the new 375 Walkaround that I just came out to replace that with, not only does it give you everything the 370 did, but it has a bigger head and a separate shower and a bigger cabin, and we put a windscreen in the front. It’s all these things that make people think they’ve gotta get rid of the 370 and get a new one.
If you change the white vinyl to a tan vinyl and put a backrest on the fore seating and call it an LX model, and you’re going to be satisfied with that as a manufacturer, you’re going to lose. You have to stay cutting-edge. You have to lead. You have to be first out of the box with something. People ask me if we get frustrated that so many people copy what we do. First of all, I take it as a compliment. But I also put the back pressure on the people here so that, by the time they copy the last thing we did, it doesn’t matter because that’s old, anyway. Now we do it this way.
That’s the back pressure we create with ourselves because if you ever get satisfied or you ever think nobody can pass you because you’re the best, you’re going to get passed. That is a philosophy that we hold very dear around here. The word I use most is evolution. We can never be stagnant. We have to evolve, and we preach that on a daily basis.
I think a lot of people don’t want to spend the money to take that chance. In some cases, people spend the money, but I think they miss the mark. And some manufacturers do a very good job. We’re by far not the only game in town. But I think some of it goes back to that customer disconnect. In some cases, manufacturers have to take a guess at what customers really want, whereas we don’t have to guess.
Q: We’re seeing share growth for some and loss for others. Is there a more discerning post-recession buyer?
A: There is, but I think it is for those that aren’t willing or able to evolve. If you want market share, you’ve got to give customers the reason to join your group. I hate to make it sound simple, but it kind of is. You have to give them customer service they expect — actually that they don’t expect — that they can’t even believe you did what you did for them. And you have to build a safe boat, so if they get caught in the Bahamas in weather or 8-footers, they feel safe. It’s all those factors that separate us.
My profit margins aren’t what people think. I mean, I drive a Ford pickup truck. I’m not riding around in a Lamborghini because we take that profit margin, even that margin that’s extra because we don’t have to leave room for the dealer, and we put it in the boat. We change our laminate schedules on a regular basis. We’re now going to chrome the 3/16 stainless steel fasteners, which are already the best stainless you can get, to ensure they don’t rust. That’s double the price of what we’re doing now because you can always do better. It’s that reputation that puts us in a less dire situation.
People will say the downturn didn’t really affect us because at the height of the recession, the lowest backlog I saw was $29 million. And I say, “You wanna bet? I used to have a $100 million backlog. And some models you had to wait three years to get, so don’t tell me I wasn’t affected by the downturn.” But thank God I kept that backlog that I held so dearly. That’s why when the bottom dropped out, we still had 250 employees.
People who got burned by the downturn and by forcing dealers to take inventory were saying they aren’t going to do that again. But then we’ll hear the economy’s getting better, and they’re starting to force some inventory on dealers. There are other manufacturers trying to do the same thing as us, and it can be done.
What we’re doing is not splitting the atom, but it’s how you do it. You can’t just flip a switch and activate a brand-new business plan because you don’t have that relationship with any of your customers right now. You have to start from scratch. You have to start with that first boat and that first customer. For a manufacturer that’s used to pumping out boats and sending them to dealers, to switch that business model and basically stop production, it’s a big step. You need to start from scratch.
This article originally appeared in the January 2014 issue.