Click for Abeking Click for Walker Click for Burger Click for United Click for JetForums

Searay restructuring?

Discussion in 'General Yachting Discussion' started by Mtm, Aug 19, 2018.

  1. Mtm

    Mtm New Member

    Joined:
    Aug 19, 2018
    Messages:
    1
    Location:
    Florida
    What is going on with Searay? I heard the sale was unsuccessful and that they are restructuring the company reducing the product lineup.

    Any other word? Thanks.
  2. olderboater

    olderboater Senior Member

    Joined:
    Sep 2, 2013
    Messages:
    4,568
    Location:
    Fort Lauderdale
    That's pretty much it. Dropping all the Yachts and Sport Yachts. Adding more outboards. Their line will be 35' and less. Trying to figure out how to compensate for loss of EU business on I/O's due to tariffs.
  3. PacBlue

    PacBlue Senior Member

    Joined:
    Jan 9, 2009
    Messages:
    1,155
    Location:
    Dana Point, Ca
    There is plenty of discussion on SR on this forum just search it and you will find it.

    I know OB has embraced the tariff point of view but there is plenty of margin between the European dealer and the Brunswick Boat Group to overcome the 20% hit.
    It may have given a poor performing or struggling European dealer an out contractually, it may have enabled political sided behavior, but it certainly could be overcome if the two would have sat down to make it happen.

    The real motivation would have been on the BBG side, and if they really valued tariff affected markets.
  4. olderboater

    olderboater Senior Member

    Joined:
    Sep 2, 2013
    Messages:
    4,568
    Location:
    Fort Lauderdale
    You clearly haven't reviewed anyone's financials if you think there is margin to take a 25% tariff hit. History tells us a 10% tax nearly shut down the industry until almost immediately repealed. The response is to expand outboards and hope that fills the gap since they are not subject to the tariff.
  5. PacBlue

    PacBlue Senior Member

    Joined:
    Jan 9, 2009
    Messages:
    1,155
    Location:
    Dana Point, Ca
    Well, that is an interesting observation, with you not knowing that in a past position, I have directly seen exactly how they have built up the dealer price , including cost and margins. So that is why I am saying, if they really were motivated to keep the Sport Yacht and Yacht lines, they had the ability , even to weather the tariff storm.

    Your focus on tariffs ignores the very real decision - BBG has lost their appetite for Yacht brands with product which
    doesn't have a Mercruiser product-Sealine, Hatteras, SR, Meridian, etc.

    Having been laid off from my first job in this Industry directly due to the 10% Luxury tax, I am fully aware of what was happening at that time and the today's tariff is an export tax, not a domestic market tax, different animal different financial climate. Apples to oranges.
  6. olderboater

    olderboater Senior Member

    Joined:
    Sep 2, 2013
    Messages:
    4,568
    Location:
    Fort Lauderdale
    Yes, apples to oranges as today's is much more than the luxury tax. I'm not addressing the parts of the line that are gone as they're killed by many factors, but the stern drive products remaining for export. And I fully know how their margins are arrived at as well as the margins they're actually running and the margins their dealers are running. Brunswick and Marine Max information is publicly available. I've also seen other prior dealers financials. I will just post publicly available information. The boat groups operating margin has been 6.4%, 6.2% and 4.4% the last three years. Gross Margin for Brunswick as a whole has been 27.4% and that's inflated by Engines. Boat and Fitness are slightly lower, perhaps 26% or so. Marine Max runs about a 25% gross margin. It's decreased by their larger boats and increased by smaller, but based on the 30 and 35% margins at Suggested retail and other discounts, it seems about right for the remaining Sea Ray boats and fits with what I know of the industry. Their operating margin is 4.3%.

    So, if you're talking an EU dealer and Sea Ray with a 26% gross margin, the dealer with 25%, Sea Ray with 6% operating margin, the dealer with 5-6%, you've got no ability to absorb 25% between the two. They're both better off just foregoing the impacted sales.

    No, there was no motivation to keep the yacht and sport yacht lines. They didn't sell engines. But a large percentage of their remaining sales is impacted by the tariffs on stern drive boats. While much of it is not Sea Ray, Brunswick's boat sales were about 27% international. My best estimate based on available information is Sea Ray's are 15%. Of that, Canada and EU are impacted by the tariffs. The rest of the world is not yet.

    My comment above was "Trying to figure out how to compensate for loss of EU business on I/O's due to tariffs." I stand by that statement.
  7. PacBlue

    PacBlue Senior Member

    Joined:
    Jan 9, 2009
    Messages:
    1,155
    Location:
    Dana Point, Ca
    upload_2018-8-20_16-9-24.png upload_2018-8-20_16-15-30.png EU is only 9% of boat revenue including the product built in the EU by Quicksilver, Rayglass and Uttern. Others brands play in the International markets as well including Princecraft and Thunder Jet. The portion of SR I/O boats in the EU market affected by tariffs are much less than you have stated.
  8. olderboater

    olderboater Senior Member

    Joined:
    Sep 2, 2013
    Messages:
    4,568
    Location:
    Fort Lauderdale
    I quoted 27% of Brunswick Boat's sales international which your chart supports. I estimated 15% of Sea Ray outside the US with Canada and EU impacted by tariffs. The numbers that you show include many brands with no exports. Lowe, Harris, Cypress Cay, Crestliner do have significant sales to Canada but not to EU. Boston Whaler and Bayliner export less than Sea Ray. Until I'm provided with a definitive number saying different, I'll stick with 15% exported. You do realize your chart doesn't even show Sea Ray?

    The tariff isn't a death knell to Sea Ray. They can lose 10% of their business and survive. However, it's a significant item to them and it does lower the value of the company.
  9. PacBlue

    PacBlue Senior Member

    Joined:
    Jan 9, 2009
    Messages:
    1,155
    Location:
    Dana Point, Ca
    Finally, you got it, that is my exact point.

    And yes, it is quite obvious that SR isn’t on the chart and doesn’t need to be.
  10. PacBlue

    PacBlue Senior Member

    Joined:
    Jan 9, 2009
    Messages:
    1,155
    Location:
    Dana Point, Ca
    Ferretti up 22% in 2018 versus last year, 36% of sales ($521M) in US!

    SR could never quite figure out how to grow into a Ferretti like line. Even with the acquisition of the large Cape Canaveral Plant which now has Ocean Alexander, no Brunswick/SR visionaries to realize their ultimate potential, what could have been if only......
  11. PacBlue

    PacBlue Senior Member

    Joined:
    Jan 9, 2009
    Messages:
    1,155
    Location:
    Dana Point, Ca
  12. olderboater

    olderboater Senior Member

    Joined:
    Sep 2, 2013
    Messages:
    4,568
    Location:
    Fort Lauderdale
    Sea Ray and Ferretti were never in the same market. One made small boats, one large. As to Ferretti's size, most of their growth has been through acquisitions. Even so, they faced serious financial problems had they not been acquired.
  13. PacBlue

    PacBlue Senior Member

    Joined:
    Jan 9, 2009
    Messages:
    1,155
    Location:
    Dana Point, Ca
    As usual, the opposite of what I post from Mr. Olderboater, getting used to the theme by now.

    https://www.ferretti-yachts.com/en-us/

    Ferretti today has the 450/550/670 plus larger models. Definite product overlap. They have had Dealer (Marine Max) overlap through the years as well. Many a Sundancer owner was migrated to a Ferretti by the shared dealer, a perfect set-up for Dealer and Ferretti, not so much for SR potential growth.

    And they had a facility to go larger, reach out beyond their constraints if Brunswick and Hatteras (at the time) would have seen fit to allow them to reach that vision. We have learned it was never going to happen with an OB manufacturer pulling the strings.
  14. Capt Ralph

    Capt Ralph Senior Member

    Joined:
    Sep 8, 2004
    Messages:
    5,862
    Location:
    Jax FL
    All the hardware been sold off from the SR Palm Coast site also. Not sure what line was mfg'd there.
  15. olderboater

    olderboater Senior Member

    Joined:
    Sep 2, 2013
    Messages:
    4,568
    Location:
    Fort Lauderdale
    Now you're talking Brunswick and Hatteras. We were discussing Sea Ray and you just change to fit whatever it is you're arguing. There is no similarity between Sea Ray and the Ferretti Group. Could Brunswick have competed? Perhaps had they wanted to but that was never their mission. And Sea Ray is just one brand of primarily small boats. If you're going to compare Sea Ray to Ferretti Group, why don't you just toss Feadship into the conversation. Or why not keep it reasonable and compare Sea Ray to Chaparral and to Cobalt and to Glastron and Four Winns.
  16. PacBlue

    PacBlue Senior Member

    Joined:
    Jan 9, 2009
    Messages:
    1,155
    Location:
    Dana Point, Ca
    The Palm Coast site was tough location for a boat builder. Even though they were there before the homes started to really surround the area, it became a "not-in-my-backyard" thing and the home owners wanted them out. Lots of complaints nearby from wakes when running sea trials, they had a target on their back.They were severely restricted on any improvements/expansions, I have to imagine that the property may be worth more to a developer than another manufacturing interest.

    They built the L-Series and Sport Yachts there, here's an article with a picture of the inside of the Palm Coast Plant - notice the low ceiling, was not really set-up correctly for larger product:

    http://cruisingodyssey.com/2018/06/...n-florida-will-focus-on-25-to-40-foot-models/
  17. PacBlue

    PacBlue Senior Member

    Joined:
    Jan 9, 2009
    Messages:
    1,155
    Location:
    Dana Point, Ca
    You do realize I have just presented a potential path that was never taken, a sort of alternate universe if things went in a better direction for SR brand? Why so angry? Why take every opportunity of your valuable time to be a naysayer on a hypothetical situation when you could just ignore it if doesn't mesh with your point of view. Or better yet, have an open discussion without tossing in ridiculous comments like bringing in Feadship?

    Brunswick Corp > Brunswick Boat Group > Owns Sea Ray as it stands today and since they bought them in 1986. Has the final word on SR

    Brunswick Corp > Brunswick Boat Group > Bought Hatteras from Genmar in 2001 and sold them in 2013.

    The BBG and Hatteras have played a factor in the SR product portfolio and growth potential since 2001, at least up until 2013, and you can like that viewpoint or not. Large (60MY+) go to Hatteras, a 60' Product limit on SR a sort of unwritten but subscribed rule in the BBG.

    And yes, the competitive set targets developed for the SR brand had Ferretti product in them.
  18. olderboater

    olderboater Senior Member

    Joined:
    Sep 2, 2013
    Messages:
    4,568
    Location:
    Fort Lauderdale
    There are a million hypothetical paths never taken. Brunswick could have relabeled all brands Sea Ray. Regardless you can't compare Sea Ray as a brand to the entire Ferretti Group and it was the Group's sales you were referencing in the article you linked too, not the brand, Ferretti whose website you then went to. So you site the group's sales, that of Ferretti, Pershing, Itama, Riva, Mochi, CRN and Custom Line and then say Sea Ray could never figure out how to grow into a Ferretti like line. Sea Ray is one brand of a portfolio and Ferretti Group is a huge boat company of which Ferretti is one brand.

    Then you get into Brunswick and Sea Ray is only a small part of Brunswick a very unimportant part. Yes, Brunswick could have developed or acquired all sorts of lines.

    As to Sea Ray trying yachts, well they did twice and failed with them twice. So are you now saying they should have gone larger or should have made acquisitions or just what are you saying?
  19. PacBlue

    PacBlue Senior Member

    Joined:
    Jan 9, 2009
    Messages:
    1,155
    Location:
    Dana Point, Ca
    "So you site the group's sales, that of Ferretti, Pershing, Itama, Riva, Mochi, CRN and Custom Line and then say Sea Ray could never figure out how to grow into a Ferretti like line."

    That's it, you got it now.
  20. Liam

    Liam Senior Member

    Joined:
    Jan 13, 2010
    Messages:
    438
    Location:
    Malta
    I think Sea Ray as a vision could have become what Princess, Fairline or Sunseeker did transform over the years from the nineties onwards.
    All the three British brands had the same size of boats on offer as Sea Ray till the eighties.
    From a marketing and growth strategy they could have followed that philosophy.
    In USA and for a public listed company as the boss (Brunswick) who also happens to make engines (mostly OB) this could never work.
    To much bean counting interest.

    Ferretti Group's numbers while very nice are also costly because of the brand names and different tooling and philosophies each brand carries.

    I add that Brunswick also failed with Hatteras and Cabo (needing to sell them) and also the British Sealine.
    All very renowned brands which when they purchased had important production numbers.

Share This Page