The sluggish U.S. economy is prompting recreational boat builder Brunswick Corp. to shutter most of its fiberglass-boat production for the month of July, while the firm also prepares to close four plants for good by the end of 2009.
``Simply stated, in light of the well-known difficult economic conditions existing, we are downsizing Brunswick so we can be profitable even if these conditions continue, and be positioned to grow earnings when conditions improve,'' said Chairman and Chief Executive Officer Dustan McCoy, in a June 26 conference call with analysts.
The Lake Forest, Ill.-based firm did not identify which plants it will close. Brunswick already has cut eight other plants from its North American manufacturing, through sales of noncore brands and by closing other plants.
Brunswick makes fiberglass boats under a variety of brand names, including Boston Whaler, Sea Ray, Trophy and Bayliner. The majority of the firm's boat production in North America is in fiberglass hulls, with about two- thirds of more than 30 plants producing composite boats.
The company's boat sales dropped to $2.7 billion for 2007 from $2.86 billion in 2006. Industrywide, recreational boat sales dropped 13 percent in the fourth quarter of 2007, and fell another 21 percent in 2008. Demand for Brunswick's fiberglass boats fell 24 percent for the first quarter of 2008, with aluminum-hulled boats down 17 percent, McCoy said.
The firm has slowed production and added improvements, but its efforts can't keep pace with a retail market that shows no sign of recovering this year or in 2009 as consumers focus on home mortgage issues and cut discretionary spending.
``We believe it prudent to plan as if no catalyst for growth exists. We're not predicting where the market is going. What we're doing is sizing ourselves for the current market,'' he said.
The fiberglass boat production ``furlough'' in July at the majority of its plants will reduce the number of unsold boats already on the marketplace, he said. Brunswick also will lay off another 1,000 people from both hourly and salaried employee ranks in addition to 1,250 positions previously eliminated. The planned shutdown of the four plants beyond that will drop Brunswick's manufacturing footprint to 17 plants by 2010, from 29 in 2007.
Brunswick's European fiberglass boat sales have slowed, but less dramatically than in North America, McCoy said. Asian sales have climbed, he said.
