An Interview with
Irwin Jacobs

A couple of weeks before the Miami Boat Show we connected with Irwin Jacobs, chairman and CEO of Genmar Holdings–undoubtedly an influential player–to get his view on the marine market. His take? Work smart, immerse yourself in the market to find niches and needs and be quick on your feet.

MBJ: What is Genmar doing to ride out the current economic?situation in the U.S.?and?what’s your strategy moving toward 2010?

Jacobs: We are hunkering down, making sure our factories are as efficient possible, keeping inventories in line, monitoring our dealers’ inventories and making sure we’re not compounding their problems by sending them more product. In fact, we want inventories to be at historical lows as this thing continues to wind down.
As to strategy, I think we’ve always been aggressive; presenting ourselves as a company that thinks forward, and we continue to do new things such as our FinCraft line. With the FinCraft 17 SC, we now have a package retailing for $13,995. With a down payment somebody could be paying five dollars a day for a boat. There’s not much like it.
Most of the people in the industry aren’t really looking at entry level. Today, the bigger the boat, the more money you make. What’s taking place isn’t helping the future of boating, meaning bringing in new people, or even [helping current] boaters to downsize.
We’ve spent a lot of money to bring out new product lines. The problem, as I see it, is all of the other products [boat brands] that are sitting out there have to go through the system.
When you talk about things, just look at how much Sea Ray inventory [is on the market]. I’m glad they shut their factories down, I really am. We’re shutting ours down, too, by the way. You’ve got to manage inventories in the field today like never before, because nothing’s going to happen until those inventories are managed down.

MBJ: When you talk to your?contemporaries, is there a sense of light at the end of the tunnel, or are we still going to be in the tunnel for some time when it comes to sales in the boating industry??

Jacobs: I believe this is going to be more profound than ever before. There isn’t a doubt in my mind that we’re going to lose the biggest percent of manufacturers ever in the boating industry, as well as many, many dealers. Boat companies aren’t making what I call money in this industry. There are some that can afford to make it through; there are others that can’t.

MBJ: Why does Genmar seem to be in a better position than Brunswick? What’s Genmar doing right?

Jacobs: One answer to that is we’re private and they’re public. They’ve got to worry about what their shareholders perceive them to be. They’ve got to be careful what they do and how they do it from a capital point of view. As you’ve seen, they’re going through enormous restructuring and write-downs. We’re a lot more nimble; we can make decisions that they [Brunswick] can’t make on a moment’s notice, and they’ve got to go through procedures and everything else.

MBJ: With some of your brands, exporting is a key element of the business plan. What is the market picture for Genmar in Europe, South America and Asia??

Jacobs: We aren’t counting on growth in these markets until we see the world economy showing signs of coming back. Our export business is very important, but my optimism isn’t incredible. In this case, we’re just going to have to wait it through, piece-by-piece, country-by-country.

MBJ: What programs are in place or being considered to create more interest in boating and boat ownership?

Jacobs: My number one priority is to create retail credit for our dealers. I would say within the next ninety to one hundred twenty days we’ve got a very good shot at putting together what we think is a model business plan with some partners who have shown a great deal of interest in getting into the retail credit business. I’ve got to give our dealers things they can’t get anywhere else, and I believe our scale will finally give us some opportunities to help that happen and our dealers should be the beneficiaries.

MBJ: How is the Genmar workforce being affected by belt-tightening?

Jacobs: We’ve obviously cut back and had layoffs, and we may be on three weeks and off one–based on orders. We will adjust week-by-week. We have not had any pay cuts; we do have pay freezes, and regarding placement assistance, we do what we can for our employees.
From the standpoint of the overall industry, we have to adjust as quickly as possible. I would say we’re anticipating things, and we take action rather than to wait for it [market conditions] to tell us what to do.

MBJ: Some of your production is in an urban environment. What are the challenges involved with being a good neighbor and a good boatbuilder at the same time?

Jacobs: We are a very important part of every community we’re in. We want to do everything we can for the communities, our people who work there and their neighbors. Our VEC technology clearly is the greenest boat manufacturing operation in the world. We’re being awarded for that, as well as the Roplene technology in our Triumph boats.

MBJ: What’s the five-year forecast for Genmar in terms of models and markets?

Jacobs: We’re looking ahead six months at a time right now and trying to adjust to that. As things show more stability or normality, we will [shift] to a long-term plan.