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Brunswick to sell Sea Ray brand

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    #16
    Originally posted by Rick_Kenyon View Post

    Lol, Donald would call that article “fake news”.
    You said it. But so would I.
    Mocoondo
    2002 Bayliner 195 Capri "Sport"
    Mercruiser 5.0L V8 / Alpha I Gen II
    MMSI: 338091755

    Comment


      #17
      Just out on TOT....

      Brunswick Corp. announced it would sell its Sea Ray brand, facilities and inventory Tuesday afternoon, shocking some analysts and members of the marine industry despite weakness in the larger inboard and sterndrive segment for several quarters.

      The company expects to take a loss on the sale, Brunswick CEO Mark Schwabero told analysts and investors during a conference call Tuesday evening.

      “It’s not just a question of Sea Ray not coming back,” he said. “Things around the cruiser business and runabout business — the entire industry has not come back to the levels anywhere near where they were at the prior peak.”

      The company has owned Sea Ray for more than three decades, having purchased it in 1986.

      “We understand that this decision will be difficult for certain stakeholders, but we want to be clear that we will continue to diligently manage Sea Ray through the sales process by executing its business and product plans to support and protect the interests of our employees, dealers, customers and shareholders,” Schwabero said.

      The sale signals both the company’s shift toward consumer trends, which continue to favor outboard power, and its strategy to decrease the most cyclical parts of the business.

      A much larger portion of the boat and engine business will now be tied to outboard propulsion, “which has proven to be more cycle-resistant than sterndrive and inboard boats and engines,” Schwabero said.

      The sale includes the company’s Sykes Creek and Palm Coast facilities in Florida, its manufacturing plant in Tellico, Tenn., and its Dandridge and Greeneville, Tenn., support facilities that are largely dedicated to, and are currently supporting, Sea Ray production, Brunswick spokesman Daniel Kubera told Trade Only Today.

      Sea Ray parts, development and engineering, as well as international operations, will also be sold, Kubera said, as well as the Meridien brand, which has been out of production for several years.

      “The specific impact on any plants and facilities will depend on the prospective buyer and an evaluation of their needs and capabilities,” Kubera said.

      “As far as the Brunswick Boat Group facility in Knoxville [Tenn.], we are evaluating the impact on the BBG support organization, consistent with the execution of our boat strategy,” Kubera said. “It is likely that there will be modifications to the size and structure of those support groups, but it is premature to speculate on the specific impact until we identify a prospective buyer and understand their needs.”

      Wall Street reacted favorably to the news, with Brunswick’s stock rising about 5 percent at one point this morning. The stock was at $56.50, up 52 cents a share, or 0.93 percent, shortly after noon on the New York Stock Exchange. The sale was announced at 3 p.m. Tuesday.

      Analysts also responded favorably to the strategy, albeit with a sense of shock and even disappointment despite having known the company has discussed a potential divestment of Sea Ray for years.

      Brunswick’s decision to jettison Sea Ray is “very much a surprise,” said SunTrust analyst Michael Swartz, “but recent softness in larger boats forced their hands.”

      Swartz, calling the move “a painful but necessary step for Brunswick," views the strategic action favorably as it improves Brunswick’s growth and margin profile overnight, enables it to reallocate resources toward higher-return areas and reduces cyclical risk to its business.

      Lazard will be managing the full sales process, which is in its early stages.

      “Brunswick welcomes inquiries from interested buyers and can put them in touch with the specific team at Lazard,” Kubera said.

      It is likely that the process will gain momentum early next year, with the sale expected to be completed in the first half of the year, he said.

      “We believe that the Sea Ray business, through its leading brand and exciting product line, offers attractive value-creation opportunities to a new owner,” Kubera said. “Sea Ray is an iconic brand that is rich with history, with a reputation for craftsmanship, quality and styling. Sea Ray’s manufacturing facilities are among the most advanced in the marine industry, with talented and dedicated workforces.”

      “In the meantime we will continue to diligently manage Sea Ray by executing its business and product plans to support our dealers and customers,” Kubera said. “It is business as usual.”

      Read more about the sale in the January issue of Soundings Trade Only.
      Mocoondo
      2002 Bayliner 195 Capri "Sport"
      Mercruiser 5.0L V8 / Alpha I Gen II
      MMSI: 338091755

      Comment


        #18
        I have commented as much as I can comment on this news. I have some rumor and hearsay from well placed people, but it's nothing I am going to comment on publicly.

        Matt Train
        BOC Site Team
        Chicagoland, IL

        Comment


          #19
          Originally posted by Mocoondo View Post
          $380K in revenues for 2017? Can anybody confirm that number? That seems so far off. If they are in that deep, then Sea Ray is done.
          Just one of SeaRay,s larger boats sells for that or more than that so no, that can't be right. Large companies generally report their numbers in thousands. I'm thinking that 380K really means 380,000,000.
          1998 3587 Bayliner, Port Orchard, WA

          Comment


          • Rick_Kenyon
            Rick_Kenyon commented
            Editing a comment
            I think 380K would equal 380,000, the “K” representing thousand. 380M would be 380,000,000, which makes more sense as a representation of their projected sales for this year. Regardless, it’s pretty clear that Brunswick sees the larger cruiser business going away. Face it, they’ve priced those boats way beyond the pocketbook of the average consumer, which is why you see so many center consoles and outboard power units around now.

          #20
          I think if you look at the numbers, sea ray has plummeted by almost 80% insales compared to when brunswick bought them out. Regardless of the dollar figure now as a large company that is what the decisions are based on. They forecast sales into the future and the trend since they bought out searay has been a steady downward spiral with no recovery in sight with the amount of competition in the yacht market. Best to cut the fat now and concentrate on your core brands...........they arent looking to just break even or have just marginal profits. It has to look good for investors/shareholders.

          if the ship is slowly sinking do you get off early or go down with the ship! Get the cash now before there is nothing left.
          Doug
          1995 496cu in. 2859 Bravo ll
          The Doghouse
          Prince George BC

          Comment


            #21
            I’m guessing that Brunswick will be out of manufacturing anything over 25 feet within 3 years or less, IMO. Buy that 25 footer, put a trailer under it and you are at $65,000 before you know it. 7 year financing on that rig will probably run $1200 a month or more. What family has an extra $1200 a month for toys? Cruisers have become so expensive and so non critical for survival of the average family, I don’t see any market for new units going forward. Plus if Brunswick sells off Sea Ray, there goes the dealer metwork and parts support. Not looking good IMO. I think they are smart to bail now before the entire line is worthless. They may have a real problem finding a buyer unless it gets sold overseas, maybe to China or the Saudis.
            1990 2755 - sold
            2005 275 current vessel

            Comment


              #22
              Originally posted by Download_Complete View Post

              This speaks to the income gap.

              Boat prices are outstripping inflation and thus people's ability to buy them.

              I am hearing rumors of other contributing factors with SR, however.

              For the record, I did confirm with someone inside SR that the news is real.
              You hit the nail on the head. Boat prices have far outstripped inflation. This began in the mid 90's and has continued since.
              Rick Grew

              1981 Carver 3007 Aft Cabin

              2004 Past Commodore
              West River Yacht & Cruising Club
              www.wrycc.com

              Comment


                #23
                Makes the existing cruisers more valuable IMO.
                Jeff & Tara
                (And Ginger too)
                Lake Havasu City, AZ
                sigpic
                2000 Bayliner 2858
                "GETAWAY"
                MMSI: 338094599
                In memory of Shadow, the best boat dog ever. Rest in peace, girl. July 2, 2010

                Comment


                • Rick_Kenyon
                  Rick_Kenyon commented
                  Editing a comment
                  Agreed. I think eventually used will be the only cruisers available in the market, unless you are in the $500,000 plus market.

                #24
                The fact is if you are not a sport celebrity with money to burn you are not going to buy a larger new boat. Brunswick realized this quite some time ago when they stopped production of all larger Bayliners not to mention cutting the cord on Maxum and Meridian. Unfortunately even concentrating just on SeaRay and trimming down, they once again realize the market cannot even sustain this type of boat any more. I have difficulty in seeing a potential buyer for SeaRay unless it is sold at a major loss and even then, how do you continue to operate when nobody is buying so to say.
                Cheers, Hans
                2007 Carver 41 CMY
                Twin Volvo D6-370
                Montreal, Canada
                Midnight Sun I Photos

                Comment


                  #25
                  Originally posted by MidnightSun View Post
                  The fact is if you are not a sport celebrity with money to burn you are not going to buy a larger new boat. Brunswick realized this quite some time ago when they stopped production of all larger Bayliners not to mention cutting the cord on Maxum and Meridian. Unfortunately even concentrating just on SeaRay and trimming down, they once again realize the market cannot even sustain this type of boat any more. I have difficulty in seeing a potential buyer for SeaRay unless it is sold at a major loss and even then, how do you continue to operate when nobody is buying so to say.
                  SR will be sold at a major loss to Brunswick. SR is probably at a fire sale price right now due, primarily, to whether or not there is any market available in the world for cruisers. The Chinese could take it on easily. They are not hampered by environmental concerns, high labor costs, or not having the capital to support the industry. Remember when GM was going to file for bankruptcy? They were profitable everywhere in the world except for North America. In that situation though, there was a strong world market for the automobile. The problem for any buyer, as you say, will be to manufacture a product which can appeal to the mass consumer market, or at least enough of the consumer market to sustain their operations and produce some profit. Since the cruiser niche still remains in the “toy” status, i’m not sure there is any world market left to sustain the industry, as you mention.
                  1990 2755 - sold
                  2005 275 current vessel

                  Comment


                    #26
                    This could end up being the reset button Sea Ray needs, assuming the new buyer is willing to retool the lineup, fix the quality problems, and offer better targeted boats at lower prices.
                    Matt Train
                    BOC Site Team
                    Chicagoland, IL

                    Comment


                      #27
                      Originally posted by MidnightSun View Post
                      I have difficulty in seeing a potential buyer for SeaRay unless it is sold at a major loss and even then, how do you continue to operate when nobody is buying so to say.
                      The market was never that great to begin with, but it hit the skids and never returned after the 2009/2010 recession. Many people left boating and never returned and new entrants to the hobby are few and far in between. I look back to the 90's and 00's as a time when our waterways were abundant with recreational boaters. Nowadays, I can take my boat out on a weekday and never see another boat all day long. It's almost eerie. Weekends are light to very occasionally moderate, at best. Facilities such as boat ramps that were once overflowing are now deserted and in disrepair. Practically everyone that I know with the exception of a few boating friends have sold their boats and left the hobby. I'm sure it will recover eventually, but not at all confident the recovery will happen soon enough or be effective enough to save the likes of Sea Ray and others who did not adapt to changing market conditions.

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                      Mocoondo
                      2002 Bayliner 195 Capri "Sport"
                      Mercruiser 5.0L V8 / Alpha I Gen II
                      MMSI: 338091755

                      Comment


                        #28
                        I agree with your assessment. There are a couple things putting a damper on the recreational boat business as I see it.

                        Boat cost. Who can afford to pay even the discounted prices for a new boat that the dealers are asking? Not most middle class Americans that I know. Price is forcing boating into an elitist market.

                        Fuel cost. When I first got into it, I could fuel up our old 2755 for around $150 (80 gal) now it costs me $150 for 40 gallons. When people have only been seeing a 2 or 3% annual pay increase for the past 10 years or more, kinda hard to justify paying double for gas now when your income is only perhaps 25% or so higher than 10 years ago, especially if you may need it for an upcoming bill or are living on a fixed income as many of our retired members are doing.

                        Until the American economic base changes and the social welfare system changes to stop rewarding people for having numerous children, housing costs, and food on a public assistance support base, and we obtain some major cost reductions in the other areas of the Federal budget, I see no realistic chance for middle class families to retain more of their earned income thereby giving them the opportunity to accumulate some disposable income and re-enter the “toy” market. Unless there is significant tax relief coming (and I don’t see the current legislation as accomplishing that end) families will not be better off and will not have any discretionary income to play with.

                        As such, I don’t see the new cruiser market ever returning to prominence. Used boats will command a premium in the future, similar to used cars in the current automobile market, and that’s because new ones are just too expensive.
                        1990 2755 - sold
                        2005 275 current vessel

                        Comment


                          #29
                          Originally posted by Rick_Kenyon View Post
                          I agree with your assessment. There are a couple things putting a damper on the recreational boat business as I see it.

                          Boat cost. Who can afford to pay even the discounted prices for a new boat that the dealers are asking? Not most middle class Americans that I know. Price is forcing boating into an elitist market.

                          Fuel cost. When I first got into it, I could fuel up our old 2755 for around $150 (80 gal) now it costs me $80 for 20 gallons. Hard to justify spending the $ for fuel if you may need it for an upcoming bill or are living on a fixed income as many of our retired members are doing.

                          Until the American economic base changes and the social welfare system changes to stop rewarding people for having numerous children, housing costs, and food on a public assistance support base, and we obtain some major cost reductions in the other areas of the Federal budget, I see no realistic chance for middle class families to retain more of their earned income thereby giving them the opportunity to accumulate some disposable income and re-enter the “toy” market. Unless there is significant tax relief coming (and I don’t see the current legislation as accomplishing that end) families will not be better off and will not have any discretionary income to play with.

                          As such, I don’t see the new cruiser market ever returning to prominence. Used boats will command a premium in the future, similar to used cars in the current automobile market, and that’s because new ones are just too expensive.
                          Let's keep politics out of this forum, respectfully.

                          The key problem here is "disposable income". And, specifically, disposable income in Generations X and younger. The buying power of those groups are significantly smaller than Boomers.

                          I realize we may be going down the politics road here anyway, but take a look at the trends. Bayliner got out of the cruiser market - literally one of the founding pillars of the brand. The Element series is practically printing money for them despite some quality issues. The VR boats are award winning innovators. Hell, even Sea Doo has a product that targets these people in the Spark and Spark Trixx, and now with the Yamaha EL series Waverunners.

                          In short, the trend is contraction - smaller, cheaper, simpler and easier to run.

                          In the meantime, how do you fix the disposable income part? I don't see tax reform even touching that. You need to raise salaries and incomes, and either provide debt relief for student loans, OR, wait till the loans work themselves out of the system - 10 or so years at least off. This is not an isolated problem....house sales have this same issue, and to a smaller extent, cars. When people live in cities and rent, there is less of a need for cars too.

                          The problem is not necessarily focusing on retaining earned income...it's RAISING that earned income. We talk about that, but nobody has made it a core issue.
                          Matt Train
                          BOC Site Team
                          Chicagoland, IL

                          Comment


                            #30
                            Well either way you slice it, retaining more earned income or increasing more earned income has to be the answer. How you do that is a matter of whether or not you think the government needs to do it, or you think the free market has to do it. I tend to favor the side of less government intervention, you do not. Either one of us might be correct. I only favor whatever approach brings back the standard of living that the middle class worker enjoyed in the 60’s and 70’s. Not sure that can ever come back. Retaining more income (albeit passive income) is now important to me as I have moved into the retired ranks. Since i’m no longer “earning “ income, so to speak, I see tax reform and reducing government spending as my focus to retain more of my income. Regardless, I think we can agree that the larger cruiser market is pretty much done in this decade. As you say, the Elements, personal watercraft, etc are now the cash generators for the builders.
                            1990 2755 - sold
                            2005 275 current vessel

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