On Monday, Dustan McCoy, Chairman and CEO of Brunswick Corporation, shared Brunswick's future outlook in view of a challenging economic climate. McCoy was the keynote speaker at the Boating Ontario Conference and Trade Show being held this week at the Markham Hilton Suites in Markham Ontario.
Despite the challenges facing the recreational boating industry in the US, McCoy was impressed with how the Canadian dealer base has been doing and has a positive outlook for the future of the industry overall. “We're actually going to be a very healthy industry going forward,” he predicts. “You're a bit different in Canada. Your country has a wonderful outdoor lifestyle. I know many of our dealers in Canada are having very good years. Still, we all have to understand what's going to happen to this industry.”
McCoy presented statistical information indicating that Brunswick is assuming a retail sales decline of 15 percent for 2010. In both 2008 and 2009 there was a decline of 24 percent in retail sales. He explained how Brunswick has adjusted itself in recent years to cope with and come out of the recession in a better position.
One change was a shift to overseas markets. From 2007 to 2010, Brunswick's marine business has shifted by six percent from domestic to international markets. “As we began to see what was going to happen in the US we said 'we had better get outside of the US quickly and into as many emerging markets as we can because the business we have there is probably not going to support all the infrastructure and people we have here,'” said McCoy.
Another response was Brunswick's emphasis on conserving cash. “Our view was that whoever had cash would be there in the end,” said McCoy. “We got our debt situation taken care of. Giving ourselves a long runway for debt was really important.” Brunswick has also scaled back in size significantly. The organization reduced its headcount by 25,000 employees to approximately 14,000. Brunswick also divested in its non-core brands reducing 24 lines to 16 as well as closed or mothballed 17 of its manufacturing plants.
Supporting the dealer network was also high on Brunswick's priority list according to McCoy. “In 2009 we spent about 120 million dollars helping dealers move product that we were afraid if it was left on the showroom floor would be very harmful for dealers going into 2010.”
In light of declining boat sales statistics, McCoy believes the industry needs to make a special effort to reach out new customers. “We're not attracting non-boaters to this wonderful recreation,” he explained.
During the question period, one observation from the floor suggested that the industry could better reach out to multi-racial communities.
In response McCoy revealed that Brunswick tested two markets in the summer, one in California and one in Texas. “We brought some of our dealer personnel up from Mexico to help us with some programs at two dealerships to see if we could do a better job attracting some of the local Hispanic population. They provided us many ideas that worked.” explained McCoy. “We had a lot of great music, food and activity for children. Our view was that the families that came were not boaters. They were both qualified successes. However, these were only events. We also need to improve in how we market to these groups. We'll likely take a harder run at this for this coming summer with some new dealerships and perhaps target other ethnic groups.”