Brunswick Corporation, headquartered in Lake Forest, Illinois, has begun to wind down its boat manufacturing operations in Joinville, Santa Catarina, Brazil, as it prepares to close the facility.
The operation manufactures certain Bayliner and Sea Ray boat models for the South American market. According to the company, future demand in the region will be fulfilled through Brunswick’s remaining global boat manufacturing footprint.
“The region’s continued weak economy has made it difficult to profitably serve these markets with a dedicated manufacturing facility,” explains Huw Bower, President – Brunswick Boat Group. “With our existing commercial infrastructure and channel presence, we can return to our previous model of importing boats to the region to more efficiently and effectively fulfill demand to this important market.”
Brunswick says the resulting restructuring charges are estimated to be in the range of US $10 million to US $12 million pretax, substantially all of which will be recorded in the first quarter of 2017. Further, these actions are projected to have a modestly positive impact on earnings and a minimal impact on free cash flow, with the majority of the earnings benefit occurring in 2018.
The company says the decision to close the boat production facility has no impact on its strategy or plans for Brunswick’s Mercury Marine engine business or its Life Fitness business in the region. Though the region’s economy continues to be challenging, its effects have been more pronounced on the boat business.