Brunswick Corp. is increasing capacity to meet demand for its Sea Ray L-Class yachts by reinstating operations at the Sykes Creek plant in Merritt Island, Fla. Operations there were suspended last March.
“We're sold out, as we keep saying, in certain of these new products, the larger products … for about a year,” Brunswick CEO Dustan E. McCoy told investors and analysts during a conference call to discuss earnings on Thursday.
Reinstating operations at the plant will allow the builder to increase output of L-Class yachts, as well as remove inefficiencies and costs that are being incurred through the “enormous demand,” McCoy said.
“We're also doing this … in all of our other businesses,” McCoy said. “We opened a significant capacity expansion at Boston Whaler. We need to do that for both big product but also for demand for existing product.
“It's true in all our businesses, including Mercury and our aluminum-boat businesses,” he added. “So what we're doing is, as we're working hard to meet demand, we are going through inefficiencies and having additional cost as we expand capacity, bring new product in line and open new plants.”
The company had said upon suspending operations at the plant that their ability to produce could meet demand for more than twice the 2012 yacht market.
“Throughput is generally on our expectations,” McCoy said. “Cost is a fair bit above our expectations. And I think what we didn't take into account well enough … was the model mix that we began to put through that facility and the complexity that it brought. And as a result, we have a real need for Sykes Creek. And I think if we're also honest with ourselves, we didn't quite anticipate the demand being at the level it is. So it's a great problem to have, but it's something we've got to deal with here in the first half.”
Even after bringing the new facility online, the backlog on the L65 is expected to last until 2016. “We’d like to reduce the backlog,” McCoy said.
He said the company will be announcing further investments and potential acquisitions it will make in 2016 at its investors meeting later this year, but added that “we think growth opportunities exist around engines and P&A.”