David Foulkes joined Mercury Marine in 2007 and was head of product development for a decade. In that time, he also held the position of chief technology officer for Brunswick Corp. on his way to being named chief executive officer in 2019.
Foulkes has overseen a massive transformation at Brunswick, embracing the ethos that the Mettawa, Ill.-based company is a leading-edge technology firm that goes well beyond boating. Case in point: Last year, the company chose to hold the world premiere of the Sea Ray SLX-R 400e, with its advanced lithium-ion battery pack, at CES rather than at a traditional boat show.
Under Foulkes’ leadership, Brunswick also has expanded its i-Jet Lab and partnership with Carnegie Robotics, acquired Navico, and expanded the Freedom Boat Club, putting the corporation in a strong position to define the connected future of boating.
Brunswick is coming off consecutive record quarters. How do you keep the momentum going?
We have a lot of tailwinds. If you look across our business, maybe you start with our marine engines division, Mercury Marine. Obviously we’ve been gaining market share — we’ve said [publicly] that we now have more than 45 percent market share in the U.S., and growing. We’ve been introducing new products like the [V-12 Mercury Verado] 600s. Nobody really has a product like that. We announced other products like electric outboards that we’ll be introducing over the next couple of years to extend the product line. So I think between new products, market share gains domestically and internationally, and being innovative in new products and technologies, we’ll keep it going really strongly.
Our parts and accessories and systems business is growing. We’ve had a couple of great years of boating participation [with] new people coming in, and boats now have a lot more content on them, so the aftermarket portion of that business is really strong. And we’re growing it inorganically as well. We [recently] announced the acquisition of Navico — that fits perfectly with our existing technology portfolio. So we’ll continue to grow organically [and] by acquisition, particularly in support of our ACES — autonomous, connected, electric and shared access — strategy.
We know in a lot of cases where we’ll be developing autonomy, where we already have great connectivity products and electrification. We already have Mastervolt, [our] lithium-ion advanced battery technology company. So we think there’s growth there.
Then in the Boat Group, the focus has really been growing our margins, and we’ve been expanding our operating margins really strongly. The other thing we announced is an expansion of product line [with Revo], entry-level boats designed to attract newer people into boating and obviously into our portfolio.
You may have also seen that we’re starting to replace gensets on bigger boats with lithium-ion, Fathom e-Power [via] our Advanced Systems Group, which is about 75 percent marine and 25 percent RV and specialty vehicle. The Fathom system basically works just as well in an RV as it does in a marine application. So across the board, [Advanced Systems Group president Brett Dibkey] has people working on the production line of the big RV manufacturers installing our battery systems in vehicles.
Can you expand a bit on the Navico acquisition and how it fits into Brunwick’s portfolio?
We signed a definitive agreement, but we won’t close until a couple of months’ time. We have to get through a lot of filings that you would do with any acquisition that size. We have synergies that we’re going to exploit on the revenue side and on the costs side, but if you think about where the market is right now, what you don’t want to do is screw up the business. So you want to take advantage of the market. We’ll prioritize the revenue synergies, and we’ll work our way through over several years to get some cost synergies.
But we just think it changes us more than most other acquisitions would do. It’s half a billion dollars of revenue, which is a lot. Margins are really good. But if you think of our ACES strategy, having radar technology, having sonar technology, having displays as an integral part of what we’re doing is going to be cool.
[Navico] is basically a software company. They deliver the software through hardware, but they have hundreds of software engineers. They have 80 people just doing digital cartography and [about] 2,000 people in the organization. We can deploy those around our organization. I think it just moves us more in the tech direction than most other acquisitions would have done. I think it’ll fit really nicely for us. It gives us another global dimension to the business.
How does Freedom Boat Club factor into Brunswick’s future growth?
Freedom is growing unbelievably: 67,000 members, 4,000 boats; we just passed, I think, 312 locations. We bought out the biggest boat club in Spain [Fanautic Club, acquired in July]. That shared-access model is really working for us. More women are coming into it. Other forms of diversity — ethnic, racial diversity — is finding that model attractive.
How has the Freedom program brought more diversity to boating?
I often think we don’t necessarily get a complete, clear picture of how many women are in boating through new-boat ownership, because we get the registration data, and often there’s the male partner on [it]. The man may be the one who signs, but really it’s a family decision.
In Freedom, we get much clearer data because women join directly. Thirty-five percent of the members are women, which is higher than typically you find in new-boat ownership, and we’re finding that model is just very attractive and it builds on itself. The more women that are in there, the more women that come on the boats with them, the more they become members.
We have four divisions. Two of the presidents are women. Two of the chief financial officers are women. Both of our chief marketing officers are women. The head of Sea Ray design is a woman. You cannot expect that you’re going to attract women into the industry if you don’t have women in leading roles in your company. They work out, instinctually and analytically, what are the things that are going to attract people into the market, whether it’s design or business model or some specific way of approaching the market. So that has been a very distinct direction that we’ve taken.
What excites you most about the industry right now?
We’re in a particular period that’s exciting for attracting younger people into the industry, and diversity. We’re beginning to be very clear about what the next phases of technology should be. I think we’re getting more adventurous than we ever were about exploring new business models and professionalizing them.
If you think about an industry that has been pretty fragmented, a thousand brands, a lot of different channeled markets, even in the new-boat market. If you look at the preowned boat market, it’s weakly fragmented. If you look, before we bought Freedom, at the club market, it was very fragmented. So there’s a tremendous opportunity to professionalize these various marketplaces and, in doing so, make them contemporary and make them attractive to a new generation of participants. And that could be by using apps, it could be by digital marketing, could be by the nature of the business model itself, but there’s a toolkit that we now have that is going to make marine a more attractive space to be.
And I think it’s pretty cool that [companies] like Winnebago and Polaris [are] buying boat companies. It’s not a surprise; they see that there’s potential there. You see a lot of people entering the marketplace, and you realize that marine is a space with a lot of potential.
What can the industry do to improve retention?
Communication is a big thing. Understanding the experience that people are having is critical. You may know we set up an online community called Ripl [established] by Lauren Beckstedt, our chief marketing officer of Boat Group and business acceleration. We interact with [this community] all the time. We encourage them to tell us what they like and what they don’t like, where the pain points are, what’s their relationship with the dealer, what do they like about the boats, and what they’d do differently. So I think we need to just keep listening and learning as we go forward.
Luckily, we have new tools to be able to do that. It used to be, you did a survey every year — that’s not very dynamic, right? Especially when things are changing so much. But if you can get out there and get responses in hours, it’s a super-cool thing to do.
The industry is riding high. What concerns you the most?
I think we just need to keep evolving as quickly as everybody else is being forced to evolve. I go to sleep every day thinking, What did I do today? What did we do today that is going to move the industry forward, or move the company forward? You need pace and you need momentum. You need new ideas. It’s not something that worries me; it’s something that excites me. If you stop, you die, right? We need to keep moving. “Get off the X,” is what people say.
Brunswick has been exceptional at executing ideas through innovation. Is that just the nature of the way the company is structured? What did you change as CEO?
I think we have a great team. One of the things as a CEO … your first job is to build a team. Make yourself redundant, right? That’s the aim. We built a team full of people in their early 40s or late 30s. They have tons of runway.
Part of the secret is [that] people are going to innovate. You want people innovating around things that are interesting to you, your industry and your company. We used to be a company that innovated a lot on the inside, but we’re not necessarily connected to early-stage companies or academia as much as we are now. So we leveraged all of their great ideas and, I don’t think we’re smarter than other people, but we do know how to organize, and I think you can leverage all those smart people. … We currently have 20 investments in early-stage companies in industries that we think are going to be relevant to us, or technologies relevant to us, or business models relevant to us. It could be around ACES. It could be around something else, but now we have [these] businesses interested in doing something innovative for us. And with i-Jet, instead of just having us, now we have 50 students interested in innovating for us, so the leverage just gets enormous.
Regarding strategic moves in the Boat Group, how long have you been working on the Revo project behind the scenes?
A couple of years, I would say. We needed to do some things with our existing portfolio. Whaler’s always been really strong, we’re bringing out the new Heyday wake boat, and the 370 Sundancer was a new look for Sea Ray, but we really liked the idea of just bringing more people in and maybe marrying that up with some of the electrification stuff that we’re doing.
Regarding electrification, will Revo boats be exclusively e-powered?
I think there’s an overlap, I would say that. I wouldn’t say it’s necessarily an exclusive marriage, but certainly there’s a clear overlap in the type of vessel the Revo will be and the usage of electric power.
Do you see Freedom as an incubator, as a place to build electric infrastructure for the next wave of boaters who want it?
Yes. I think the Revo boat line can work for Freedom, certainly. I think over time with Freedom we’ll evolve the portfolio boats that we put in there. You can see Heyday working really well with Freedom as well. You can see some specialization going on.
On the electrification question, where [it] has really penetrated, so far, is in centrally managed fleets. So we don’t have a lot of infrastructure for electrification right now — we certainly have none, at least in terms of high-speed charging and marinas, right? So how can you get over that? Get people who bring their boats back to the same place every night, and that’s the Freedom Boat Club. So we don’t need infrastructure everywhere. So you can think about that for electrification, which is really interesting: recharge the boats up overnight.
You can also think about it for things like carbon-neutral fuels. [They’re] still in their infancy, but they’re interesting. It’s probably going to be difficult to distribute them to every marina in the company, but you could distribute them to Freedom Boat Club marinas. So I think this whole idea of centralizing the infastructure and focusing it, then have boats go out and then come back the same day and get refueled, gassed, charged, whatever it is, is fundamentally going to be really helpful to us.
Anything on the advanced driver-assistance system that’s supposed to come down the pipeline this fall?
We’re still on track with that. The first system that we’ll bring out is more of a vision-assistance system. It will not be directly connected to the control system of the boat. It’s designed to help the operator understand the environment more. But we’re working right now on a system that is coupled to the control of the boat, and we don’t think it’s too far away. You may have seen that we recently signed a partnership with Carnegie Robotics. Carnegie’s a great company, headed by the former head of Uber’s self-driving activity.
Do you get out boating much?
I have a Boston Whaler 405 Conquest. I’m in Chicago. Our corporate headquarters is in the northern suburbs of Chicago; my boat is in a harbor in downtown Chicago.
I don’t know if you know Chicago, but the Navy Pier is one of the big tourist spots. And then Lake Michigan harbor is just below that. A lot of the restaurants in Chicago will have a frontage on the river, so you can pull up, dock and go to eat. Then we go out on Lake Michigan.
How important for you, personally, is that time on the water?
There’s clear science around what water does for people, and just being near the water, being on the water, it’s clearly helpful to your mental state, it’s helpful to clear your mind a lot. Certainly that’s part of it for me, but honestly, it’s very difficult to talk about the technology, to talk about business models, unless you live it to some extent yourself. I happen to live it in a very privileged way with a really nice Boston Whaler. But on the other hand, everything that’s on here is on my boat. So I know how to use it. I know what works really well for me, what’s really useful.
How old are your kids?
They’re 23 and 27, one of each. They’ll come down. They’ll bring their friends down. We’ll go out. We’ll come back and our slip is very close to the city, so we can sit on the back with a glass of wine after dark. Even if you don’t want to go out, just go and sit on the boat and you watch the world go by, which is a nice thing do to.
What’s your ideal day or weekend on the water?
First of all, we’ve got to have family and some friends out there. I think that’s a big deal. And then, I don’t know, make a plan, I guess. A bit of lake boating, maybe a bit of river boating. You get back, you’re a bit sweaty, you’re a bit tired, you’re dark, crack open a bottle of wine.
Any last thoughts about Brunwsick?
We’re attracting a lot of talent right now. We won a lot of awards recently. Forbes named us the best engineering and manufacturing company to work for in the U.S. To think of a marine company to be in that position, ahead of Google and Apple and everybody else, is pretty incredible. Second year in a row, we won Forbes’ best places to work for women. I think it’s a signal to people of the kind of culture that we have that attracts the best talent. We have people approaching us. We just hired two people from electric vehicle companies who decided that we were the better bet. That’s a cool thing.
We’re hiring perception engineers who did work on autonomy in automotive, who decided that we have a cooler opportunity. I think we can compete at least on level terms right now, in a way that maybe historically we haven’t been able to, which for me is very exciting.
This article was originally published in the October 2021 issue.