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"What's Next for OMC?"
|Author||Topic: "What's Next for OMC?"|
posted 12-21-2000 02:30 PM ET (US)
Well thought out up to date speculation if you care to read it and form your own opinion you can find the article here
posted 12-21-2000 08:49 PM ET (US)
Tom: Thanks for the reference to the article. EVERYBODY here should read it to help understand what a tough business the boating world really is. The follow up e-mails coming in are VERY interesting, especially those from inside employees.
Things sound very, very bad. Talk of imminent bankruptcy and a permanent shut down. But I do believe someone will pick up the pieces and attempt to continue the Johnson and Evinrude brand names. I'll vote for Genmar's Irwin Jacobs as far the engine division is concerned. He's a tough enough and experienced business man to pull it off, and he needs engines to compete with Brunswick effectively. Just a guess. And there's always someone who thinks they can make money building boats (even though most can't), so those divisions should sell.
I had been hearing rumors for some time they (the current owners) weren't going to make it, in spite of what they were telling their Dealer network.
Although the very first outboard my Dad bought me, in 1954, was an Evinrude, I have never been much of a fan of theirs. Most of the current technology now taken for granted on outboards came from Mercury - electronic ignition, power trim, through hub exhaust, EDP painting, etc.
But my real problem with OMC came about 20 years ago, when it was revealed they were almost completely responsible for the horrendous PCB pollution of Lake Michigan and it's fish population. The source was their engine plant in Waukegan, and they REFUSED to clean it up and fought the EPA in court for ten years to avoid having to do it. Finally they lost, and had to drain and dredge Waukegan (IL) harbor, spending 20 million. Now here was a company selling marine engines and boats to fisherman, refusing to be environmentally friendly, and having been responsible for the in-edibility of most of the fish (salmon, trout & whitefish)! At that time, 20 years ago, I swore I'd never buy one of their products, and haven't!
But I still hate to see an old time American company like this go out of business. But as usual, mis-management probably brought it on.
posted 12-22-2000 04:56 PM ET (US)
Tom, thanks for the lead, very grim outlook for OMC. If it doesn`t kill them this time, maybee it will make them stronger. Regards-Jack Graner.
posted 12-22-2000 05:30 PM ET (US)
lhg....I love your posts. They are very informative , especially for a someone new to power boating. Thanks for that info on OMC. Sounds to me like they made some bad karma for themselves. What goes around comes around, eh?
posted 12-23-2000 07:28 AM ET (US)
OMC files Chaper 11 Bankruptcy:
Manufacturing & Fabrication - 12/22/00 7:06:24 PM
Outboard Marine Corp. (OMC), which commands a third of the US marine outboard motor market and a significant share of recreational boat sales, said late Friday that it has filed for protection from creditors under US bankruptcy laws and that it will sell off its boat and engine manufacturing divisions.
In a statement faxed to news organizations, company officials said OMC and several of its subsidiaries have filed for voluntary reorganization under Chapter 11 of the US Bankruptcy Code in US Bankruptcy Court in Chicago. In the statement, OMC said it has sought protection under Chapter 11 so that the company can implement its plans to sell some or all of its engine and boat operations.
OMC also announced a reduction of about 4,000 employees at its boat and engine operations in North America. This move affects both salaried and hourly employees at all of its operations.
The OMC statement said the company expects to continue operations during the reorganization process and that it has requested that the Bankruptcy Court allow the company to continue its compensation and benefit plans for remaining employees, maintain customer sales support and service activities, and make post-petition payments due to suppliers in the ordinary course of business.
The statement said it has received a commitment from its bank group to provide debtor-in-possession financing totaling US$35 million, which the company said is expected to be sufficient to permit it to operate while it implements its restructuring plan.
The statement said OMC has support for this course of action from its major investors.
The company said the filing has been made in order to enable OMC to complete the sale of its boat and engine operations under court supervision. OMC said it intends to do everything it can to expedite this process and to consummate a beneficial transaction as quickly as possible.
Knowledgeable industry observers have been speculating that OMC's engine manufacturing and marketing operations would make a logical acquisition for a non-domestic engine company with advanced technology seeking to grab OMC's estimated one-third share of the North American outboard engine market, and there were unconfirmed reports that OMC has held talks with at least one such possible suitor.
There have also been reports that OMC had met with a number of boat building companies which would make logical buyers for its boat divisions, which include Chris-Craft, Four Winns, Seaswirl, Stratos, Javelin, Hydra-Sports, Princecraft and Lowe.
Attempts to reach company representatives to confirm these reports have been unsuccessful.
Several weeks ago OMC retained an investment banking firm to advise it on "strategic alternatives." Such investment bankers often act as business brokers who seek out logical buyers for companies which need to be restructured. Sometimes the investment bankers bring in new investors, sometimes they seek buyers for the entire company and sometimes they seek to break up the company and sell off its viable operating divisions.
In the meantime, OMC has notified many workers that they have lost their jobs for good.
In a letter to OMC employees at its Waukegan, IL, headquarters, Jim Rusk, vice president of OMC Human Resources, said the company was shutting down operations indefinitely and 1,190 employees were being permanently laid off at the location.
The letter said, "During the past few months, the operating performance of Outboard Marine Corp. has been disappointing and our efforts to secure additional financing were unsuccessful. As a result, we must shut down our operation indefinitely and, regrettably, let go many of our valued employees."
According to The Associated Press (AP), layoffs were also announced at other OMC facilities in the United States. Around 500 workers were laid off at OMC's Four Winns boatbuilding plant in Cadillac, Michigan, according to AP.
The letter to Waukegan employees concludes, "Outboard Marine Corp. regrets the need for this action and wishes you well in your future endeavors. Should the Company's operational situation change, we invite you to reapply for a position with the Company."
Jim Baker, vice president of the Independent Marine Machinists Association (IMMA), a union representing hourly workers in Waukegan, said this letter was a legal notice to employees as required by the federal Warrant Act, which requires prior notification for plant closings.
Baker added that the union had not received any further information on the future plans of OMC, but he was expecting an announcement soon.
OMC financial situation has been deteriorating recently. In October, former chairman and chief executive David Jones left Outboard Marine in August; Roger Fix was named CEO, and later that month the company amended its credit agreement with senior lenders, giving it added liquidity for ongoing operations. An affiliate of Soros Fund Management, which provided the capital to take the company private three years ago, pumped another $45 million into the company at the time.
posted 12-23-2000 08:24 AM ET (US)
The link I posted above has now been updated with all the current news reports on OMC as of yesterday --- Z
posted 12-26-2000 10:36 AM ET (US)
Things keep getting worse for OMC:
Outboard Marine Corp. filed for Chapter 11 bankruptcy Friday, seeking protection from creditors owed more than $768 million.
The U.S. Bankruptcy Court filing in Chicago came one day after OMC virtually halted operations, laying off employees from Calhoun, Ga., to Traverse City, Mich. Its workforce, which numbered 7,200 at the beginning of the month, has been slashed to 3,000 employees.
OMC said that it filed for reorganization under Chapter 11 in order to "sell some or all of its engine and boat operations."
OMC has a commitment for $35 million in debtor-in-possession financing from its bank group. The proposed financing will be submitted for court approval Tuesday.
Company officials said the loan is "expected to be sufficient to permit the company to operate while it implements its restructuring plan."
In its petition, OMC listed assets of $877.1 million and debts of $768 million. Based on the company's second-quarter financial statement, OMC lost $59.5 million on sales of $565.7 million during the first six months of the year. Its third-quarter report will be late, the company has said.
Its 20 largest unsecured creditors are owed nearly $250 million, according to the petition. The largest unsecured debt belongs to Connecticut-based State Street Bank & Trust, which holds notes totaling $160 million.
Suppliers are owed at least $11.4 million. The company also listed more than $7.4 million in economic development loans from three counties, none in Illinois.
In addition to the parent company, eight subsidiary or affiliate firms also filed for bankruptcy.
OMC is among the world's largest makers of boats and motors. Its engine brands include Evinrude and Johnson; boat lines include Chris-Craft, Four Winns and Javelin.
posted 12-26-2000 10:52 AM ET (US)
Well, at least its not Chapter 7 (liquidation), yet.
posted 12-28-2000 10:06 AM ET (US)
Unfortunately, Chapter 11 is often just a waypoint to Chapter 7 - it is ofter easier to sell a company in an 11 than in a 7 (less of the "fire sale" spectre hanging over the process). For the sake of the investors and consumers, I hope they can hang on.
posted 12-29-2000 05:06 AM ET (US)
I am about to repower my classic 16 Nauset (pre 72') and have been considering an OMC... with this Chapter 11 stuff hanging over OMC what is the future of the OMC for those of us about to buy an engine? If OMC goes away, what will that do to the price for Mercs and Yamahas ????
posted 12-29-2000 09:25 AM ET (US)
I understand that OMC's market share is about 1/3. As a simple matter of the law of supply and demand, if OMC were to disappear, there would be an immediate impact on the price of Mercs and Yamahas. Even without its disappearance, the price for Mercs and Yamahas may go up given that the uncertanties in the news about OMC may create a reluctance to buy OMC products and thereby increase demand for Merc and Yamaha products, at least for the short term. Given OMC's market share, I don't think it is, and I hope it is not, going to disappear. The current bankruptcy filing gives OMC some breathing room from its creditors to give it a chance to reorganize (i.e., get its act together somehow under an approved plan, or if not, liquidate).
posted 12-29-2000 12:42 PM ET (US)
In my opinion it is just a matter of time before OMC announces a new owner -- they have already notified the boat divisions they are for sale -- the motor division will be sold to whom I can't say, but the Ficht patents are worth a lot of money -- (an aside note they are ready to introduce a 250hp engine using it for 2001) ---
It may very well prove the engine division won't be sold though if enough cash can be raised from the sale of the other operations --- think that is remote though --- OMC needs a major player with major $$$ to stay in the game --- look for one of the prime "we want a be a major outboard manufacture" companies which are in contention to grab the reins ---
posted 12-29-2000 02:36 PM ET (US)
I wonder if one of the quiet companies like Tohatsu, Nissan, Honda, or Suzuki would be interested. I have heard very good things about the reliability of Tohatsu outboards, but I don`t really know what kind of finances Tuhatsu has, or what other kinds of products they make? Just a thought. Regards-Jack Graner.
posted 12-29-2000 08:56 PM ET (US)
I was told that OMC's marketers introduced the Ficht 250 for the 2000 model year but OMC never actually made one because of problems. I think they were actually making them for the 2001 model year. Perhaps they have ironed out some of the problems.
posted 12-29-2000 09:02 PM ET (US)
Some good info and links on this site.
posted 12-29-2000 09:18 PM ET (US)
As far as i know tohatsu and nissan is the same company.So that should explain finances.-Easy E
posted 12-29-2000 11:56 PM ET (US)
Thanks Easy E. I didn`t know Tohatsu and Nissan were affiliated. I guess that would make them financially capeable of investing in OMC. I would definately would want too see the OMC engines to continue to be made in the USA. What ever happens to OMC, I hope they survive and makes them stronger and an even better product. Regards-Jack Graner.
posted 12-30-2000 06:05 AM ET (US)
My OMC dealer (also good friends) informed me they had received notice of a 250 for 2001. To back this up Salt Water Sportsman just did a run down on motors for '01 features the 250 for OMC.
Now the Ficht system glitches have all but disappeared as of '99 models according to my dealer's mechanics the '00 units were trouble free!
At this point everything though is on hold. In fact my dealer is seriously looking into Yamaha as a replacement or a supplement ---
Jack whatever happens, unless OMC disappears from the face of the earth, I would bet 2 bits to a buck manufacturing would stay right here regardless who buys them --- this is by far the their largest market and the market any potential buyer wants!
posted 12-30-2000 12:03 PM ET (US)
Thanks for the info. I sure hope that they have the glitches ironed out for 2001 but the're going to need to prove it to the customer. I think your friend may be wise to pick up an alternative like Yamaha (although I think they are very pricey.)
posted 12-30-2000 03:53 PM ET (US)
Check out the article at
There are some players listed that no one has thought of yet. Very interesting!
posted 12-31-2000 07:03 AM ET (US)
Hmm Dick there are a couple which one might not have thought of --- interesting news ---
Ironicly what just may happen in these types of situations the "real" buyer isn't even recognized until the event happens!
Anyway the bottom line looks good for a fast track sale -- which the dealer organization needs completed ASAP with the season just around the corner.
Thanks for the link Tom
posted 12-31-2000 09:07 PM ET (US)
More info at www.boating-industry.com
Gen Mar realy rips OMC for what it did to their dealers.
Sure hope it sorts out soon. I have friends who are OMC dealers and our boat show starts Jan 12th. I can't imagine what it would be like going into a show under these conditions.
posted 01-02-2001 05:38 PM ET (US)
OMC goes to court Thursday, Jan.4th to begin proceedings. Should be interesting! Another possible candidate for a buyer: Harley-Davidson. Sounds crazy, but there are some connections. Apparently, there are two high ranking engineers at OMC that came from H-D. Don't know identity, but it makes for an interesting scenario. I wonder if the ficht technology could carry over to cycles? I guess we need one of our engineering gurus to speak on this subject. Regardless, I think it would make a tremendous amount of marketing sense to marry two oldline U.S. companies. OMC would greatly benefit from the association, and H-D would benefit from the diversification. Biggest gainers would, of course, be us, the consumer. Secondly, the dealers could definitely breath a sigh of relief. Anyone know of what the H-D dealers feel about their Company? Is H-D fair and equitable with their distribution system? While we're at it, would H-D be interested in a little ol' boat company from Boston.
posted 01-02-2001 07:02 PM ET (US)
I wonder, should Harley Davidson get OMC, if the new outboards will have that "potatopotatopotato" sound.
posted 01-02-2001 08:22 PM ET (US)
I wish Harley Davidson would have bought Boston Whaler instead of Brunswick, maybee they would have been left the Whaler hulls more traditional and left them in the Boston Mass. area. Well, just dreaming again! Regards-Jack Graner.
posted 01-02-2001 09:10 PM ET (US)
I was a Whaler dealer in the mid 80s in Alaska. Had the oppertunity to go to a dealer meeting in Boston and tour the factory. That was the cleanest and most organized boat factory I have been through. Greatest dealer meeting I have ever been to, of course the lobster feeds helped. My boat was made in the Florida plant but I still love it.
posted 01-02-2001 09:23 PM ET (US)
Dick, thnks for some history, I wish I would have visited the plant they made the `13 and `17s. They moved and I missed the boat so to speak. That will tell you that it wasn`t the plant it was, I belive Meridian that moved them to Florida, probably for cheaper labor costs and a tan. Regards-Jack Graner.
posted 01-02-2001 10:12 PM ET (US)
Somewhere I have pictures of that dealer meeting. When I find them I'll try to scan and post them.
posted 01-03-2001 04:24 PM ET (US)
Thanks Dick, I would really appreciate that! Regards-Jack Graner.
posted 01-04-2001 10:06 AM ET (US)
Some updates on the the OMC situation. as well as industry numbers for 2000.
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