posted 06-02-2009 01:55 PM ET (US)         

Think of the dealers that have all of these boats in their inventory. There's going to be quite a few that go under. Warranty work will be non-existent.

According to Phil Keeter. President of MRAA, "There will be a lot of dealers that will never sell another Genmar boat regardless of what Irwin does," Keeter predicted. "It's devastating."

posted 06-02-2009 02:40 PM ET (US)         

http://www.tradeonlytoday.com/home/ 498209-genmar-deals-with-bankruptcy-filing

Picking up on Nick's post, it is widely known that Jacobs hated Mercury because of their own boat brand competition, and only installed Mercs when customers demanded it.

He had a close relationship with BRP/Evinrude, having bought many of the old OMC boat brands, so this could have a devastating effect on BRP also, who will have to get in line to get paid I would imagine. Recently, he had been promoting Ranger Bass boats with flag draped Evinrude 250HO's.

It's now becoming clear that in the spend and borrow days of highly leveraged America, now hopefully behind us, the boating industry also got out of control in number of look alike boat brands, number of dealerships and number of engine brands. Now it's down to who will survive as boating also de-leverages back to reality. I do think that a few of Genmar's brands will survive. It looks like the people who gave him credit in good faith, and under the assumption of getting paid back on their loans, are the ones going to take a bath, and of course, their employees and dealerships.

posted 06-02-2009 02:45 PM ET (US)         

As far as what to believe regarding bankruptcy of the second largest recreational boat builder in the World and some builder with 15 dealers that sells "factory-direct", I'm not sure how to measure the inability to compare. What I do know is, "According to court documents, Genmar Holdings has between 100 and 199 creditors, between $10 million and $50 million in estimated assets, and $100 million to $500 million in estimated liabilities." I promise you, Federal Bankruptcy judges don't gossip!

If you listen to Irwin Jacobs' statement, he claims $100 million in assets. Guess whose version counts!

posted 06-02-2009 02:55 PM ET (US)            

According to the Trade Only article linked by LHG above:

quote:

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According to court documents, Genmar Holdings has between 100 and 199 creditors. the company has listed assets of $237.5 million and liabilities of $216.5 million.

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That is quite different than the $10-$50 million assets and $100-$500 million liabilities you cite. I'm looking but not seeing that information.

This is a sad chapter in American recreational boating.

posted 06-02-2009 03:00 PM ET (US)         

See here, paragraph 13: http://www.tradeonlytoday.com/home/ 498209-genmar-deals-with-bankruptcy-filing

posted 06-02-2009 03:02 PM ET (US)            

Look again. That is exactly where I'm pulling my information in my post above. I've pasted it below; paragraphs 12 and 13 from that article:

quote:

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According to court documents, Genmar Holdings has between 100 and 199 creditors. the company has listed assets of $237.5 million and liabilities of $216.5 million. Jacobs said these figures do not include more than $400 million in intngible assets.

In the list of creditors holding the 20 largest unsecured claims, Minneapolis law firm Maslon, Edelman, Borman, Brand is listed as the largest, with a claim of $186,690. Other creditors include additional law firms, Deloitte Tax, PricewaterhouseCoopers, Statistical Surveys and Google.

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posted 06-02-2009 03:05 PM ET (US)         

quote:

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More details on Genmar's Chapter 11 filing Print
June, 02 2009, 11:00 AM

Announcing that his company had filed for bankruptcy, Genmar Holdings chairman and CEO Irwin Jacobs noted that previous economic downturns "do not even remotely resemble" anything close to what has taken place in the industry during the last year.
See Related Articles

* Dealers and Distributors
* EXTRA: Genmar files for bankruptcy protection
* Genmar expanding its FinCraft line
* Genmar extends holiday shutdown in Wisconsin
* Genmar is expanding its FinCraft line

Genmar, the country's second-largest boatbuilder, yesterday filed for Chapter 11 reorganization protection in U.S. bankruptcy court in Minnesota. The filings were made by Genmar Holdings and its 21 subsidiaries.

Those other companies include Carver Industries, Carver Yachts International, Genmar Industries, Genmar Yacht Group, Marine Media, Triumph Boats and VEC Technology.

The debtors intend to file a motion for joint administration of their Chapter 11 cases.

According to court documents, Genmar's board of directors decided May 29 that it was in the best interest of the company to file for Chapter 11.

"If someone would have said to me as recently as even one month ago that Genmar would someday be filing for Chapter 11, I would have said it was not even a remote possibility," Jacobs said in a statement.

"I've always looked for ways to enhance Genmar's balance sheet and felt that, even though business conditions were incredibly difficult, there were alternatives available," he added. "Unfortunately, I didn't have the necessary time to complete any of the alternative financing acceptable to the banks."

Jacobs did not immediately return a call for comment this morning.

In his statement, Jacobs said Genmar has access to sufficient cash and has current assets available to support its ongoing business and pay its vendor suppliers on future purchases.

The company has received a commitment for a Debtor-in-Possession financing proposal from Wells Fargo and Fifth Third banks that will be submitted to the court for approval, Jacobs said.

"Additionally, in the first court hearing, Genmar will be asking the bankruptcy court for approval to allow Genmar to pay appropriate dealer warranty and rebate claims," he added.

Genmar has more than $100 million in current assets, as well as additional fixed assets and intangible assets that will allow the company to come through this, Jacobs said in his statement.

According to court documents, Genmar Holdings has between 100 and 199 creditors, between $10 million and $50 million in estimated assets, and $100 million to $500 million in estimated liabilities.

In the list of creditors holding the 20 largest unsecured claims, Minneapolis law firm Maslon, Edelman, Borman, Brand is listed as the largest, with a claim of $186,690. Other creditors include additional law firms, Deloitte Tax, PricewaterhouseCoopers, Statistical Surveys and Google.

Jacobs said he plans to reorganize and come out of Chapter 11 "as a stronger and better company." The company will submit its overall reorganization plan for approval to the court as soon as possible.

Genmar has until Sept. 29 to file its Chapter 11 plan with the court, documents show.

Minneapolis-based Genmar Holdings has approximately 1,500 employees in five manufacturing centers. The company builds 15 boat brands, including the recently introduced FinCraft, which are sold worldwide through its approximately 1,100 dealers.

Click here to read Jacobs' complete statement.

Click here for a story in today's Star Tribune.

— Beth Rosenberg

b.rosenberg@tradeonlytoday.com

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posted 06-02-2009 03:08 PM ET (US)            

Now, I wonder which is correct?

If the first version is correct, they are in dire straits indeed, but if it is the second one, I would guess that they can make things work.

posted 06-02-2009 03:34 PM ET (US)         

He was accumulating the stock of NYSE traded CML, the parent of Boston Whaler and other recreational companies. His sole intention was to get control of CML in order to get Whaler out of it. So, to avoid loosing their entire CML operation, and keep Boston Whaler away from him, the CML people quickly contacted the CEO of Reebock, whom they evidently knew, and sold Whaler to him on very short notice.

posted 06-03-2009 07:40 PM ET (US)         

http://www.tradeonlytoday.com/home/ 498267-analysts-more-manufacturer-bankruptcies-to-come

It looks like Yamaha, not Evinrude, had most of Genmar's outboard engine business. So Yamaha suffers on this one, and it looks like Mercury may eat a few million too.
Evinrude never had the business to begin with evidentally.

posted 06-04-2009 08:13 AM ET (US)            

"Jacobs testified against Mercury in the dumping litigation, in favor of the Japanese. Even though Mercury won the case, to be overturned by the White House under Honda/Suzuki influence peddling, as far as I am concerned, what goes around comes around."

Mercury did not "win the case." There was no ligitation. A complaint was heard before the United States International Trade Commission. Mercury charged that importers of outboard motors from Japan were selling them at less than fair market value and that they had been damaged as a result. The United States International Trade Commission (USITC) found that outboards from Japan were sold at less than fair market value, but Mercury had not demonstrated any damage. Mercury was (and still is) a major importer of outboards made in Japan, a somewhat paradoxical situation for them to be in.

Mercury failed to sustain their claim of damage because many witnesses who had prior involvement with Mercury testified about the poor quality of Mercury products or the lack of available Mercury products. These problems, along with the collapse of OMC products at the same time, resulted in a substantial shift in market share to Japanese outboards. The testimony of many witnesses was rather embarrassing for Mercury.

posted 06-04-2009 09:11 AM ET (US)            

quote:

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[The] ITC could not be further from reproach. This is a top-notch group of folks, that serve nine year terms (even a twice elected president looses influence here). To blame this on ties to a certain administration or anything but the presented evidence and eventual decision is at best disingenuous. Of all government processes, this may be the most transparent of all.
Consider the makeup of the board:

Chairman - Stephen Koplan (D) Virginia - Clinton Appointee
Vice Chair - Deanna Tanner Okum (R) - Clinton Appointee
Marcia Miller (D) Indiana - Clinton Appointee
Jennifer Hillman (D) Indiana - Clinton Appointee
Charlotte Lane (R) - West Virginia - Bush Appointee
Daniel Pearson (R) Minnesota - Bush Appointee

In the 4-2 vote, the dissention came from Chairman Koplan and Board Member Lane: a democrat Clinton appointee and a republican Bush appointee. I don't think you'll see this kind of board makeup or voting results on any issue in Washington outside of the ITC.

By the way, that (R) behind the Vice-Chair is not an error, nor is her Clinton Appointment. I have to admit that that surprised me more than anything did.

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posted 06-04-2009 11:07 AM ET (US)         

No wonder the US auto industry is bankrupt. Detroit has completely ignored the success of the Japanese for years. But you will never hear anybody in the Goverment saying to buy American cars now that the US government has bailed them our with taxpayer dollars, and not to buy Japanese cars. No way, the Japanese would scream and threaten. So our auto companies may indeed be destined to eventually fail permanently, and people in MI will still wonder why, as Americans continue to buy Japanese and Chinese, with a few European autos thrown in for good measure.

posted 06-05-2009 10:30 PM ET (US)            

L H G's claims of "foul" in the USITC were heard before and refuted before, so rather than go over this ground again, I would simply refer readers to the link above which is the source of the quote I cited about the political party affiliation of the commission members.

posted 06-05-2009 11:45 PM ET (US)            

The reason that you see Yamahas, almost exclusively, below the equator in the western hemisphere, note the following (And I in a family of long time boater with Yamahas on the transom)

Yamaha (Japanese) cared more about access to fishing in the Western hemisphere protected waters, than it cared about selling motors. To incentivize the peoples of Mexico, Ecuador, etc. they almost gave their motors away, to exclusive fishing rights in these waters, to local governments.

Now your moderator may refer to this as 3rd hand information from a ......

But I can tell you, with absolute certainty, that this occurred and continues still.

posted 06-06-2009 09:09 AM ET (US)            

We have already seen that outboard motors from Japan are being sold at below fair market value in the United States, so it is not surprising to learn that they may also be sold at less than fair market value in South America. The proposition that the selling of outboard motors imported from Japan in South America at less than fair market value is part of a quid pro quo arrangement for access to fishing grounds is quite fanciful. Let us examine this notion more closely.

The people in coastal areas in the southern hemisphere who use outboard motors for fishing are primarily individuals operating small fishing boats in littoral waters. As individuals it is exceedingly unlikely that they would have sufficient political influence to cause each of their nations to amend their fishing regulations. Even supposing a strong organization for political influence, it again seems unlikely that the outboard motor fishermen of South America could collectively exert enough influence to alter national policy. However, let us suppose they can.

With the power to influence national policy, would outboard motor fishermen be willing to trade marginally lower prices on their outboard motors in exchange for permitting non-nationals to enter their waters and compete with them for access to the fish? This seems like a poor trade. In exchange for a discount on a motor you give up exclusive access to the fishery? Further, this conspiracy would need to be repeated in each of the many countries in South America.

posted 06-07-2009 10:09 AM ET (US)         

Frankly, I'm not sure how the discussion veered in this direction. I do believe jimh's comparison to Ford and GM is dead on. To further this thesis, Ford has been dealing with financial woes for quite some time. I think this created a cautionary management approach that aided them at just the right time. Brunswick has also been dealing with some financial woes that caused them to sell off various assets over the last few years that have created a cash position cushion.

posted 06-07-2009 11:05 AM ET (US)            

In contrast our equipment was sold with little support literature, poor documentation, and no replacement parts lists. Our company philosophy regarding repair of our instruments was to have them sent back to the factory. This worked well for our domestic customers, but was not a good approach for foreign markets. What service literature we had was not particularly good quality and was available only in English. It was often poorly produced and poorly presented.

The products of our German competitor were different, too. They tended to have fewer controls and were simpler to operate. Control markings and legends were often in iconic presentation, while our controls were marked with English legends. Power supplies for our products used 120-VAC 60-Hertz current and American connectors. Power cords were attached directly to the unit. The German products contained detachable power cords, had power supplies that operated at both 50 and 60-Hz and both 120 and 240-VAC, and could be fitted with a variety of common connectors used in various countries.

The result was that our export sales where very small, while for our German competitor the entire globe was their marketplace. This result was disappointing, because the performance of our products was generally superior to our German competitors. However, our German competitor was so much better at operating in overseas markets than we were, that his products outsold ours by 1,000 to 1.

posted 06-09-2009 02:29 PM ET (US)            

quote:

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Since, BRP was mentioned previously in this article and BRP is/was/maybe a large supplier to Genmar, I thought the following news would be germane: http://www.tradeonlytoday.com/home/ 498381-brp-raises-funds-to-strengthen-financial-position

Hopefully, BRP can maintain their financial well-being during these rough times. As consumers, we need as much choice as we can get.

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I agree; competition makes everyone better in the long run. Even though I presently own a Mercury engine, I wouldn't want to be in the market for an engine and not have the choice to buy another engine brand (even if it is 'mandatory' on brand X attached boat). Best of luck to all boat and engine manufacturers.

posted 06-22-2009 05:33 PM ET (US)         

Here are some of the people Jacobs is not paying back:

$5,266,000 to Volvo Penta $2,000,000 to Mercury $845,000 to EZ Loader $1,800,000 to a Turkish company $1,000,000 to GE $557,000 to Interplastics Corp $415,000 to Inland Plywood $467,000 to EVINRUDE/BRP $536,000 to Textron $779,000 to North American Composites, $495,000 to Nuvolari $270,000 to Johnson Outdoors, $238,000 to Inland Power, $241,000 to Navico
$1,000,000 to various Law Firms and Consultants

How could a Company get so badly in debt without the suppliers figuring out something was wrong, and why would they continue to send him material when they weren't getting paid for previous material?

My guess is Genmar is finished, and will be sold off for the individual companies that may survive. Which engine company will give him more product when he owes the previous powerplant suppliers 8MM which they will never see.

posted 06-24-2009 10:59 AM ET (US)         

"In an unprecedented move, the Marine Retailers Association of America is working to form a committee of Genmar dealers who want their interests represented in court, as Genmar moves through the reorganization process following its June 1 Chapter 11 bankruptcy filing."

The MRAA and the Genmar dealers are concerned over warranties and receivables from what may be the new entity that emerges out of bankruptcy.