Whould YOU travel for a great deal on a new boat?

Bubba1235 · #1 June 8th, 2009, 04:43 PM

This is poll to see how far you would travel to buy a new boat if you got a great deal.

A engineering buddy of mine was recently laid off when a major OEM filed backruptcy. I can't mention names (at his request) but if you follow the news... We talked at some length over the weekend and he is trying to put together financing to start his own boat manufactuing company. Yes, I asked him if he had lost his mind given the economy and market but he said he believes this is a great time to try his idea. He is a firm believer that when the market gets shaken up it creates new opportunities.

He is convinced that many if not most of the manufactures fell into the trap of supporting dealers and all the middlemen as well as pricing themselves out of the market. He has the opportunity to by some molds at dirt cheap prices and has located a facility to rent.

We talked for half an hour going over his costs and he tells me that boats are WAY over priced. He explained that he can buy a Mecr drive and 4.3 V-6 package for about $6,000 complete and ready to drop in if he buys in a quantity of 50 or more from Merc. But, he can buy a couple of truck loads of units from other bankrupt builders for less than this. He went on to say that they used to figure around $2000 for materials (FG and Gel Coat) in the hull and cap for the average 19' bow rider and $3000 to $4000 for the fixtures and accessories. With labor included, he believes he ban build a nice 19' bow rider for under $15K and retail them out in the $20K to $25K range.

Now is where it gets a bit tricky. He wants nothing to do with a dealer network, trucking, financing inventories (boats will be built to order with a lead time of under 30 days) etc. Instead he is going to build a web site (thats why he called me) where the boater can log on, see the different options, etc. and order their new boat, and then come to the factory to pick it up. (His new facility is next to a small lake and he will provide test drive of your new boat before you accept it.)

The big unknown for him is will people buy that way without seeing the boat in a local dealers show room (he will have his own show room), will they drive and be responsibile for their own transporting the boat back home and in general is it so far from the old paradigm people will be too hesitant?

Please share your thoughts as I will give him the feedback from everyone here.

IVAZ · #2 June 8th, 2009, 05:00 PM

According to the bayliner website you can already get 19' bowrider for 20k-25k. How would his boats differ from something like this?http://www.bayliner.com/bowriders.asp?modelid=122446
I know bayliner is not known for great quality but the new ones seem to be pretty nice. It would be great if somebody could build a boat in that range with a higher level of refinenment and options.

rrhodes · #3 June 8th, 2009, 05:01 PM

The issue I think most people will have is not having a local dealer to go to for warranty work. Of course the powerplant would not be an issue because any Merc dealer could service it.

He needs to make sure that he has enough profit to deal with any design flaws and warranty claims that come through.

rjlipscomb · #4 June 8th, 2009, 05:05 PM

Speaking only for myself...
Web sites can show you a lot about the boat. Reputation goes a long way to selling it. Price gets me to drive a certain distance. BUT, how much will I save by driving to his shop and bringing the boat home? What do I do about warranty issues? Right now this boat has no reputation and we all know about boats. Seems he might do well in his geographic area. Me, I'd probably pass until there was more reason to substantiate my driving across the country to save a few dollars. I wish him luck and let me know when he starts building 26-27 ft cruisers (my next boat).

Bubba1235 · #5 June 8th, 2009, 05:07 PM

Quote:

Originally Posted by IVAZ

According to the bayliner website you can already get 19' bowrider for 20k-25k. How would his boats differ from something like this?http://www.bayliner.com/bowriders.asp?modelid=122446
I know bayliner is not known for great quality but the new ones seem to be pretty nice. It would be great if somebody could build a boat in that range with a higher level of refinenment and options.

Bayliner (Bruswick) is shut down. No one knows when they will go back into production. But, he is not going to try and compete with the cheapest out there, he intends to build a quality boat at a great price. But then again, its still speculative at this point.

capt sam · #6 June 8th, 2009, 05:11 PM

I'm editting my post after rereading your original post. I can tell you I know several custom builders with molds and a lifetime of experience who barely keep the doors open with very little overhead and they charge as much if not more than most mass production builders. There are numerous costs your friend hasn't considered yet.

ThePostMan · #7 June 8th, 2009, 05:18 PM

Well, I think you loaded your poll questions a bit, but that's understandable. I don't want a "dealer to hold my hand", but I wouldn't buy a new boat from an unproven start-up company, either. I'm sure he has the best of intentions, and might actually be able to pull it off. . .but bottom line, a boat is a big-ticket item. Most people prefer to spend that kind of money on proven name brands with solid reputations, rather than save a few bucks by going generic.

Bubba1235 · #8 June 8th, 2009, 05:20 PM

Quote:

Originally Posted by rjlipscomb

Speaking only for myself...
Web sites can show you a lot about the boat. Reputation goes a long way to selling it. Price gets me to drive a certain distance. BUT, how much will I save by driving to his shop and bringing the boat home? What do I do about warranty issues? Right now this boat has no reputation and we all know about boats. Seems he might do well in his geographic area. Me, I'd probably pass until there was more reason to substantiate my driving across the country to save a few dollars. I wish him luck and let me know when he starts building 26-27 ft cruisers (my next boat).

Again, I am only going by what he told me but he says his target is the $40K boat so we are talking about significant money. Warranty work can be handled by any Merc. shop so thats not a real issue but yes, if it was the boat itself it would ahve to go back and that could be a real problem and the reason he is going to be a real hard core on quality control.

I also told him I thought like you, he will do ok regionally and then maybe be able to expand once he builds a good reputation. I also suggested to him he look at trying to land a GSA (government) contract to get some out there in different parts of the country.

Bubba1235 · #9 June 8th, 2009, 05:21 PM

Quote:

Originally Posted by ThePostMan

Well, I think you loaded your poll questions a bit, but that's understandable. I don't want a "dealer to hold my hand", but I wouldn't buy a new boat from an unproven start-up company, either. I'm sure he has the best of intentions, and might actually be able to pull it off. . .but bottom line, a boat is a big-ticket item. Most people prefer to spend that kind of money on proven name brands with solid reputations, rather than save a few bucks by going generic.

Interesting, do you think it would make a big differnece if he bought the "name" along with the molds and parts?

Bubba1235 · #10 June 8th, 2009, 05:29 PM

Quote:

Originally Posted by capt sam

I'm editting my post after rereading your original post. I can tell you I know several custom builders with molds and a lifetime of experience who barely keep the doors open with very little overhead and they charge as much if not more than most mass production builders. There are numerous costs your friend hasn't considered yet.

To be honest, I don't know, but I would think that with 15 years as a boat design engineer he would have that down pretty well. I did mention the same things you did and his responce is that most custom builders are "too custom", are small shops, and end up reiventing the wheel with each boat which takes far too long and they end up eating inventory costs. They are not known for JIT manufacturing. Again, I can only relay what he told me.

I do know that when Bayliner first came out they shocked the boating world with thier prices. If he can control the costs as well as they did and build quality...

Bubba1235 · #11 June 8th, 2009, 05:32 PM

Quote:

Originally Posted by rrhodes

The issue I think most people will have is not having a local dealer to go to for warranty work. Of course the powerplant would not be an issue because any Merc dealer could service it.

He needs to make sure that he has enough profit to deal with any design flaws and warranty claims that come through.

I think his big saving grace is that he is buying existing hull designs (molds) that have proven themselves and got the "bugs" out over the years.

dingbat · #12 June 8th, 2009, 05:33 PM

Having been involved in the design, manufacturing, Marketing and Sales of a product line for 31 years I would suggest that your friend revisit his cost structure.

Way too many cost not accounted for. There is no profitability in the numbers your tossing around.

sickwilly · #13 June 8th, 2009, 05:38 PM

No, because I only buy slightly used. I would travel for a used boat, but not for a new one, when I could find a slightly used "better" brand for the same amount of money.

If he is going to do this and be successful, he will need to be able to provide great financing -- as I believe that will be the key to the someone willing to buy off the internet to save money. That is, pre-baked-in manufacture-financed low monthly payments.

I wish him luck!

Bubba1235 · #14 June 8th, 2009, 05:42 PM

Quote:

Originally Posted by dingbat

design, Marketing and Sales

The design (hull and cap) has been done and proven with several years of use. Marketing and Sales are the two things he wants to minimise or even eliminate and is his belief they are mill stone around the necks of other manufactures. (GM and Chrystler would certainly agree.) So it really comes down to manufacturing and inventory control.

I don't know if its possible to do it or not, but, I can't think of a time in the last 3 decades that the market has been more open to new ideas and a paradigm shift. It should be pretty obvious the old paradigm is not working in this market and in all probability will never come back in the same way.

As they say, "the only true constant is change".

Bubba1235 · #15 June 8th, 2009, 05:44 PM

Quote:

Originally Posted by sickwilly

No, because I only buy slightly used. I would travel for a used boat, but not for a new one, when I could find a slightly used "better" brand for the same amount of money.

If he is going to do this and be successful, he will need to be able to provide great financing -- as I believe that will be the key to the someone willing to buy off the internet to save money. That is, pre-baked-in manufacture-financed low monthly payments.

I wish him luck!

Nope, he will not touch financing, thats on the buyer. He is adamant that financing is what has caused so many manufactures to file bankruptcy. I am certain he will provide some third party type of financing but it won't be his money involved.

RotaryRacer · #16 June 8th, 2009, 06:07 PM

The name and reputation behind a boat is important. If there is no history at all, the up hill battle to actually start making meaningful sales numbers will be huge.

I would say that yes if he can buy the name and the molds he would have a better chance of success.

What is his general geographic location?

SouthEast
SouthWest
NorthEast
MidWest
West
NorthWest

The type of boats used in those areas and the local market is going to be a big contributor to this.

Bubba1235 · #17 June 8th, 2009, 06:24 PM

Quote:

Originally Posted by RotaryRacer

The name and reputation behind a boat is important. If there is no history at all, the up hill battle to actually start making meaningful sales numbers will be huge.

I would say that yes if he can buy the name and the molds he would have a better chance of success.

What is his general geographic location?

SouthEast
SouthWest
NorthEast
MidWest
West
NorthWest

The type of boats used in those areas and the local market is going to be a big contributor to this.

He is located just outside the Twin Cities (Minnesota). You would deffinately recognize the corporate name if I could publish it.

sickwilly · #18 June 8th, 2009, 06:27 PM

Sounds like he wants his cake and to eat it too. He does not want to mess around with marketing, wants to pre-buy the molds so no R&D, and does not want to deal with shipping, nor financing.

The internet is pretty powerful and a game changer, but can it really remove from the equation all the other aspects of manufacturing and selling boats?

I will be eager to watch this experiment from the side lines.

haulnazz15 · #19 June 8th, 2009, 06:32 PM

I don't think the name is hardly that important. There are more freakin boat manufacturers that have come and gone over the past 30 years than you can count. There are VERY few boat companies that were around in the 60/70's that are still around today. Cobalt, Chris Craft, Wellcraft, Sea Ray, etc. are just the main ones who survived the boating industry crunches.

Bass Pro seems to bring out some new brand every 5-7 years or so, and it doesn't seem to impact their sales much. Tahoe was nothing 10 years ago, now they are everywhere. Ebbtide and Four Winns were smaller groups from the late 80's that have now come into their prime with little history to show for it. My only issue with your friends idea is that he doesn't have anything to set him apart from the crowd. Reusing old molds doesn't show innovation, he is just claiming his quality will be better. The rest of the money-related holes in his plan are making his idea look like swiss cheese.

Bubba1235 · #20 June 8th, 2009, 06:43 PM

Quote:

Originally Posted by haulnazz15

I don't think the name is hardly that important. There are more freakin boat manufacturers that have come and gone over the past 30 years than you can count. There are VERY few boat companies that were around in the 60/70's that are still around today. Cobalt, Chris Craft, Wellcraft, Sea Ray, etc. are just the main ones who survived the boating industry crunches.

Bass Pro seems to bring out some new brand every 5-7 years or so, and it doesn't seem to impact their sales much. Tahoe was nothing 10 years ago, now they are everywhere. Ebbtide and Four Winns were smaller groups from the late 80's that have now come into their prime with little history to show for it. My only issue with your friends idea is that he doesn't have anything to set him apart from the crowd. Reusing old molds doesn't show innovation, he is just claiming his quality will be better. The rest of the money-related holes in his plan are making his idea look like swiss cheese.

Honestly, there isn't much differentation in hull design from manufacture to manufacture. Many of the "quailty" boats you mention have used the same hull design for years. As to costs, I can't say but his having been in the business for 15 years as a design engineer would indicate he has a pretty good idea what the costs are.

(An FYI: The molds he is considering have a good following if I could mention the name. Yeah, you would recognise it.)

exsailor · #21 June 8th, 2009, 08:39 PM

Would I? I just did.

Bought my new (leftover) 07 Trophy 1802 Walkaround from a dealer over 300 miles away. He beat the local guy's price by better than $5000. I'd drive a long way for $5000 ($4000 after you subtract NJ tolls

).

smitty1258 · #22 June 8th, 2009, 09:01 PM

3 questions

how much capitol is he starting with.

saying your not going to market/advertise is just silly, there are so many different formats that are much cheaper than traditional advertising, what would he be willing to due for a current customer that brought him a new customer? Nothing sells like word of mouth.

what does he purpose if something slides past QC and the end user lives 1000 miles away?

Im all for more competition in the boating industry and I would agree that the current industry is overpriced.

RollingWanderer · #23 June 8th, 2009, 09:13 PM

Hmmm...I've been thinking a lot about this one. Let me start by first saying that I agree with your friend that now is a good time to start a new business. It's always better to start when the market is at a low point, because that gives you the growing potential of an upswinging market. The worst time to start a business...right before a crash

!

I didn't vote in the poll, because I think I fall somewhere in between. I don't need my hand held by a dealer, but I do think it's important to have a good relationship with a local dealer/shop and support local business. For me the boat store is a lot like the motorcycle shop...I'm there more often to shoot the breeze and buy the occassional part even if it is a little more expensive. I do most of my own work, but it's nice to have a good relationship with someone local to do the things that I don't want to get into. I don't mind paying a little more to support the people in my community and I like having the peace of mind that if I need them...they'll be there. I'm sure I'm an abberation though, otherwise we wouldn't have so many big box stores and websites hawking stuff for a small fraction less than what I can go buy locally.

In the end, I would consider an offering like your friend is thinking about, but it needs to be considerably cheaper and with superb quality. Even then, I'm not sure I'd give up my local shop/dealer...but that's just my .02.

-RW

RotaryRacer · #24 June 8th, 2009, 09:18 PM

Quote:

Originally Posted by haulnazz15

There are VERY few boat companies that were around in the 60/70's that are still around today. Cobalt, Chris Craft, Wellcraft, Sea Ray, etc. are just the main ones who survived the boating industry crunches.

Ebbtide and Four Winns were smaller groups from the late 80's that have now come into their prime with little history to show for it.

A few thoughts on this...

The Four Winns name started in 75. They built upon the solid reputation that Saf-T-Mate had built since the early 60s.

Other companies you didn't mention that have been around a long time (30 -40 years or more) would be Glastron, Larson, Starcraft, Bayliner, Mastercraft, Nautique (Correct Craft), Century, Whaler, Grady White, Donzi, Cobia, Regal, Hurricane, Rinker...I could keep going.

The point is that almost all of the primary (staple) boat brands have been around a long, long time....Names are important.

Granted, many of these companies have been bought, sold, re-sold changed format and are hardly the same company they started off as.

However, reputation matters. Brands like Tahoe that emerged out of "nothing" are usually just an extension of existing companies (Tracker marine in this case). They had a reputation to fall back on.

Bubba1235 · #25 June 8th, 2009, 09:23 PM

Quote:

Originally Posted by sickwilly

Sounds like he wants his cake and to eat it too. He does not want to mess around with marketing, wants to pre-buy the molds so no R&D, and does not want to deal with shipping, nor financing.

The internet is pretty powerful and a game changer, but can it really remove from the equation all the other aspects of manufacturing and selling boats?

I will be eager to watch this experiment from the side lines.

I don't think he is opposed to Marketing itself, but its also obvious that the current paradigm of supporting a dealer network and providing marketing is not doing very well.

As to hull R&D, I don't think most boaters grasp how long current hulls have been around. Especially in the 18' to 21' range of runabouts. (A couple of the molds are less than two years old.)

The internet??? Well, it sure has paid off for the computer mail order companies. Will that work with boats? No idea honestly and its one of the reasons I made this post, I just wanted to get people's gut reaction to the idea. Leaving his costs out of it, would YOU be wiling to buy a boat in this manner if the price was right?

On a personal note, I think its great that there are "mavericks" out there that see the current situation as an opportuinity while the major manufactures are filing Chapter 11. If you look at history, big market shifts like this have always been game changers for all manufactures and the agile guys with a new idea seem to come out on top.