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Mercury Marine: Too Little Inventory
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ContinuousWave Whaler Moderated Discussion Areas
ContinuousWave: The Whaler GAM or General Area
Mercury Marine: Too Little Inventory
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| Author | Topic: Mercury Marine: Too Little Inventory |
| jimh |
posted 07-11-2010 01:49 PM ET (US)  
It is well known that Brunswick, the corporate parent of Mercury Marine, has been on a two-year program of drastic reduction of inventory, personnel, plants, and facilities. Recent presentations to investors continued to highlight the scale of layoffs, plant closings, plant consolidations, and other reductions undertaken to survive the severe market downturn in recreational boating. However, some recent comments by Mercury Marine dealers have me wondering if inventory reduction has gone too far. At least two Mercury Marine dealers have commented that outboard motors from Mercury are constrained by supply--there just are not enough motors available. I would be interested to hear from others who may have heard comments like this. Did Mercury Marine cut back too far, to the point where they do not have enough motors to satisfy even the reduced demand of the current market? I also have to wonder about their supply logistics. WIth the great majority of their products--everything 75-HP and under, I believe--made overseas, planning and managing production must be extremely difficult for Mercury Marine. In December 2008, Mercury Marine had 5,436 employees. By December 2009, Mercury Marine had only 3,683 employees, a reduction of 1,753 workers, or 32-percent. These figures likely do not include the furlough of workers at Stillwater, Oklahoma, where a shutdown is underway and is expected to occur throughout 2010 and 2011, as their work is moved to Fond du Lac. |
| Jkcam |
posted 07-11-2010 02:23 PM ET (US)
Jim, it doesn't seem that there is any inventory problem down here in Stuart, Fl. My local dealer has lots of new Whaler's from the 130SS that I just bought on up to the triple Verado Conquests. The local W... Marine is also stocked as were the Annapolis, Md. stores. I hope to get years of service out of my new, made in China, 40hp EFI. Maybe their prediction of the market was substantially accurate. We can hope for the health of the company. |
| glen e |
posted 07-11-2010 03:29 PM ET (US)
Verados are running 3- 4 weeks lead time in the largest re-power centers in S Fla. I do not consider that outrageous in this economy. Obviously they are build to order or close to that. Etec and Yam are the same. Zuke is all but extinct in the market for stock with lead times being 6 - 8 weeks as they are shipping Japan direct now and holding nothing here.. Luxury Import car inventories are off almost 40% ... I would say your conclusion is inaccurate. |
| jimh |
posted 07-11-2010 04:20 PM ET (US)
Glen--I have not made a conclusion. I was asking for reports. Two dealers say they're having trouble getting motors. That's all I said. Whether or not a four-week lead time is tolerable is not for me to say. It's for buyers who want a new Mercury to decide. In Michigan the boating season is about ten weeks long, so waiting four-weeks to get a motor might be a deal killer. A small volume dealer might have to wait longer than the biggest dealer in the world in Ft. Lauderdale. I do see that everywhere in manufacturing there are long lead times. Example: our firm is one of DELL Computer's largest customers. We have a pre-set standard order buy sheet with special pricing. I just ordered a standard model lap top computer off the standard price sheet. The delivery was quoted as four weeks. A year ago I would have had it overnight. Even a simple LCD monitor was a three week lead time. Welcome to the new lean manufacturing era. |
| jimh |
posted 07-11-2010 04:35 PM ET (US)
JK--I suspect that any order from Boston Whaler for a motor goes to the head of the line at Mercury Marine. In any case, I am sure that the production schedule of boats and motors at Boston Whaler is planned more than three weeks in advance. Boston Whaler only builds boats on order, and they don't keep a warehouse full of Mercury motors on hand. If you find a dealer with Boston Whaler boats on hand, he's the one taking the speculative risk about selling them, not Whaler. My inquiry was in regard to the supply and availability for individual motors from retailers who sell Mercury motors. It is especially problematic for a Mercury dealer. Mercury has so many different models of outboard motor it would be impossible for a dealer to have them all on-hand. If a customer walks in the door and wants to buy a particular motor, the dealer will likely have to order it from the factory. If he quotes a month lead time, the customer may be shopping elsewhere. The business model of almost no inventory sitting around sounds good, until a prospect walks away because you can't get delivery in time. |
| contender |
posted 07-11-2010 04:46 PM ET (US)
With the new computer age in TV, Cameras, Video, Engines, computer parts, etc. it makes more sense to me to have little stock, but the dealers should have an inventory on the show room to show you everything. These items go obsolete within six months, so why build a large inventory that the company will have to sell cheaper because something better will replace it in six months. |
| glen e |
posted 07-11-2010 05:21 PM ET (US)
[Changed TOPIC to a discussion of this website. We no longer collect and organize discussions whose topic are this website or how it works. Contact the moderator via email for that topic. We will be pleased to inform you on that subject.--jimh] |
| jimh |
posted 07-11-2010 06:44 PM ET (US)
Contender--You seem to have forgotten that Mercury Marine no longer gives their products any sort of model year designator, so they never go obsolete on that basis. The customer always gets the newest model from Mercury Marine, even if it was manufactured two years ago. |
| contender |
posted 07-11-2010 08:23 PM ET (US)
Jim: I'm not that up to date with mercs, I was going to state that I think Yamaha does the same but not 100%. Question: how do you know when you purchase a new engine you will get the newest model or the one that is most up to date? With this system a dealer could have an engine laying around for 2 years and sell (could have been an engine/components change during this period) it as new (which it is) but not made in the year purchased, may not have the newest computer brain on the engine... |
| Dave Sutton |
posted 07-11-2010 08:53 PM ET (US)
Outboard motor purchases are not generally impulse purchases. At the boat manufacturer level, they are ordered to support new orders, and in the repower market, consumers usually spend quite a while making a selection. Yeahj, there's always the "Damn... it blew UP right on the FIRST DAY of the fishing season.. I need another one NOW!" sort of problem, but... let's face it... good luck even getting a mechanic to look at a motor in the busy season, never mind getting a repower done "Now, Dammit". In RI, non-professional fishermen are looking right now (peak season) at a week before a good mechanic can even take a look at a dirty carb or similar. As a professional guide, I am very glad to get a motor looked at within two days (a courtesy from the mechanic I use, that he extends for guys who earn their living with a boat). If I wanted a repower "Now", the soonest he could do it would be in about a month... so having an engine "on hand" even at the distributor level is irrelevent. Naturally that may differ elsewhere, but let's face it" In the "Off Season" there's no hurry, and in the "Prime Season" it's a shortage of mechanic time that is the pig-in-the-python, not the availability of motors. I'd actually prefer to have an engine "built to order" and delivered to me fresh with whatever the latest service bulletin status is, as opposed to buying a motor in a box that might (or might not be) the latest and greatest. I'd say that Merc is running a pretty smart business model. If the competition is doing the same, then it's just a new paradigm of putboard manufacture. Eventually everyone will get used to it. Dave . |
| Gary L |
posted 07-11-2010 11:14 PM ET (US)
One of the largest loosers in the OB motor industry is similar to what our wives go through when cooking. What to do with the left overs? Should she buy the 5 pound roast or will the 3 pound feed us all. I think every company and every cook gets caught with their pants around their ankles from time to time. OB motors are pretty much brand specific in that a Merc guy usually will not go buy a Yamaha or Evinrude just because he has to wait. Chances are he will have to wait for them too in this slump. I think it is safe to say that all these companies take good care of those who take good care of their product line. The big dealer in Ft. Lauderdale will likely get that new motor a lot quicker than Local Marine up in the Adirondacks who might buy a few per year. That entire Left Over market is a killer any way you view it. Gary |
| hauptjm |
posted 07-12-2010 08:17 AM ET (US)
Back in the 1960s and 1970s, I remember my Dad having to wait at least a month or two for the new cars he ordered. The dealerships never had huge inventories. Recently, I passed a new car dealership on I-10 near Mobile, AL that must have had over 1000 cars of different makes on 10 or more acres of concrete. I can't imagine how they stay in business. As an informal poll, how many of us purchase a replacement motor either "now" or after careful "timed" consideration. As jimh said, we may have to adjust our buying habits to the new "lean manfacturing era." |
| Plotman |
posted 07-12-2010 09:45 AM ET (US)
I just talked to a small mercury dealer in Iron River, Wisconsin, across the street from another dealer that just went out of business. This gent said that he has stopped carrying any inventory. Floor-plan financing costs him 28%, and the motor dealers have stopped offering any terms other than net 30. That means he has to pay for any inventory he buys in 30 days, or finance it externally at 28%. He said he simply couldn't afford to do it. 3 years ago he could order outboards, and have 120 days to pay for them after delivery. |
| SC Joe |
posted 07-12-2010 04:41 PM ET (US)
While trading my Montauk 170 last week, my dealer commented that they were unable to get any new Montauk or super sport 170's,as well as several sea ray models. He said that the cut back was starting to hurt their sales. And Jimh, we have discussed the model year thing many times. S.C. requires a model year for titling, taxing, and registration. I have copies of my MSO, engine title, and state registration with that info stated. It is also on the paperwork of the Yamaha that replaced it. |
| gnr |
posted 07-12-2010 05:17 PM ET (US)
Guy I work with is waiting six weeks for a little (don't remember what size) Merc to push his little aluminum boat around. The dealer told him to be glad he wasn't looking for a 90h + as they are out even longer. |
| L H G |
posted 07-12-2010 07:01 PM ET (US)
It appears that Mercuy's largest Dealer, Bass Pro Shops, has thousands of Mercs available and for sale, and at great pricing, too. Just might have to travel a little to get what you want. |
| dfmcintyre |
posted 07-12-2010 07:06 PM ET (US)
hauptjm - There's a good chance that the dealer you mentioned may be doing his own floorplan. IOW, he may own the vehicles outright. Our family business since the late 40's has been in automotive sales. One of the celebrations that my father had was to pay off the Motors Holding Division of GM. They provide capitol to dealers for, the business. A number of older well established dealers were able to own their own stock. Regards - Don |
| jimh |
posted 07-12-2010 08:08 PM ET (US)
Mercury Marine has such a crazy outboard product line, it is no wonder it is hard to keep inventory up to demand. Mercury figured out modern manufacturing with the VERADO. They can make one motor and turn it into five different models with just a change in firmware. That is modern manufacturing. Make a bunch of motors, then turn them into whatever horsepower is needed with just a tiny change in firmware in the engine controller unit. But these product managers running the OptiMax product line must have missed the big corporate meeting about modern methods of inventory control. The OptiMax product line has recently gone into a crazy expansion of models First there are all the standard models--what are often disparagingly called "fishing motors" by the cognoscenti--and these are the usual motors that you are accustomed to seeing. Other than different shaft length, there are not too many options. But someone got the idea to expand the product line into the semi-racer models, the OptiMax Pro XS series. Now for just about every motor in the standard product line there is an equivalent Pro XS model. So overnight Mercury doubled the number of models in the OptiMax product line. Figuring out how many of each of the dozens of models of OptiMax to make must be a production planning nightmare. That's not to mention the racing division, which sells even more OptiMax models, the XS series. I will give Mercury one nod: at least they figured out that they ought to paint all their motors the same color. |
| jimh |
posted 07-12-2010 08:09 PM ET (US)
Spoke with a third dealer today, and got the same story. Mercury outboard motor inventory is tight and motors are hard to get. |
| WT |
posted 07-12-2010 08:30 PM ET (US)
A lot of companies have been making themselves look good to their shareholders by cutting expenses. Selling inventory without replenishing that inventory makes you look pretty profitable. But when the shelves become bare, companies will have to buy or manufacture more inventory. My take on this is that many companies stock prices are priced to perfection and once the expense of purchases/manufacture are ramped back up, these companies will not look as profitable. But what do I know, I've been shorting the stock market the past 18 months and been betting wrong... Warren |
| glen e |
posted 07-12-2010 08:47 PM ET (US)
Jim - call a Yam and etec dealer and tell us what you find...and call a Zuke dealer too. I still do not understand your motivation here. Every marine company I know of is on a build to order basis right now. |
| Peter |
posted 07-12-2010 08:51 PM ET (US)
How does Bass Pro know what model year a particular motor is when Mercury outboards don't have model years? I was led to believe that Mercury eliminated model years but the Bass Pro lists suggest otherwise. |
| L H G |
posted 07-12-2010 09:01 PM ET (US)
Per JimH: "But someone got the idea to expand the product line into the semi-racer models, the OptiMax Pro XS series. Now for just about every motor in the standard product line there is an equivalent Pro XS model. So overnight Mercury doubled the number of models in the OptiMax product line." Let me see, in performance 2 stroke DFI's, Evinrude has done the SAME thing with "High Output": Evinrude 15HO and ? (Mercury thankfully has no "performance" 15!) Evinrude has no racing division with a 40 year history, so they have nothing to compete with the Mercury "XS" line. It appears that someone at Evinrude also got the idea to expand product line into semi-racers, so Evinrude has also doubled their product line, plus 2 optional color schemes. The Japanese must be laughing at this whole dog and pony show coming out of Wisconsin, as Evinrude tries to compete with Mercury and their boat builders. Mercury's inventory is low because demand is higher than expected, both pre-rigged and loose? |
| jimh |
posted 07-12-2010 10:11 PM ET (US)
One reason to focus on Mercury is they're supposed to be the market leader. They're the biggest seller in North American, aren't they? And they're also linked closely with Boston Whaler. I really am not worried about Suzuki outboards. They're very scarce in my area--almost non-existent. I can easily accept the notion that they're hard to find. They have to come from half-way around the world to get here, so I suspect the lead time may be very long at the moment. Bombardier Recreational Products and Evinrude seem to be humming along. With a single focus product line--recall they only make one kind of engine, the E-TEC--and a single manufacturing plant located in the center of the U.S.A., I don't think Bombardier has production logistics and inventory management problems on the same scale as Mercury Marine. Evinrude is smart like the Verado folks--they make many models from one basic assembly. There is a very high use of common parts across production. That is efficient manufacturing. It really is not fair for me to call some local Mercury dealers and ask them about a new Verado. There just are no Mercury dealers around here that sold Verado motors even in boom times. And thanks for the tip on Bass Pro Shop inventory. It looks like if I want to get some two-to three-year-old out-of-date high-emission two-cycle throwback motors that they're the place to find one or two. |
| SC Joe |
posted 07-12-2010 10:34 PM ET (US)
Oddly, in my area of the world, there are very few E-TEC engines sold. Of the 3 dealers who are authorized to sell them within 75 miles, 2 of them require payment in advance to order one. Ironically, the 3rd dealer sells so few that although he stocks them, he seemingly cannot seem to sell any, as he constantly has an auction on Ebay trying to get rid of new-old stock of 90 HP, 115 HP and 150 HP E-TECs. |
| jimh |
posted 07-12-2010 10:57 PM ET (US)
We've been hearing for years that Bombardier is on the ropes, they have no R&D, they are on the verge of bankruptcy, and when you do see their motors on the water they're being towed in. So please, let's not turn this into some more of the usual palaver that E-TEC and Bombardier are on death's door. We've been getting a steady diet of that FUD for years. We already know you can't see an E-TEC anywhere south of Leamington, Ontario. (That's the southernmost point of Canada, by the way.) Tell me something new. But do it in another thread. I am here to talk about Mercury--number one on the water. World's biggest outboard seller--aren't they? It's a simple little thing I asked for: tell me about your local dealer. Can he get a motor to make a sale? |
| Clark Roberts |
posted 07-13-2010 09:34 AM ET (US)
I knew where this thread was going from the initial post and I'm not very smart. Beam me up! Clark SCN |
| SC Joe |
posted 07-13-2010 09:38 AM ET (US)
Jim, I haven't seen anyone say BRP or Evinrude is on deaths door. The simple fact is in the Charleston,SC area they probably account for less outboard engine sales than Suzuki does.It's odd to even see an E-TEC. Yamaha has at least a 5:1 sales advantage over pretty much anything else, followed distantly by Mercury, Suzuki, Evinrude, and then Honda. As for what our local dealers sell, I think the only folks who sell Mercury are those that have to due to the boat brand and the corporate affiliation like BW and Bayliner. Can the dealers get new Mercury outboard to sell? As I relayed, our only BW dealer is having difficulty getting Whalers and Sea Rays; whether that is caused by engine shortages would be speculation. |
| jimh |
posted 07-13-2010 09:44 AM ET (US)
ASIDE to L H G: The E-TEC H.O. engines are generally distinguished from the standard E-TEC by use of a different gear case, a different gear ratio, different cowling graphics, and different fuel map. The power heads are not substantially different than standard models. In some models, the designator of H.O. really is just a product distinguishing method. For example, I have a E-TEC 225 engine, and from what I can see there is no difference in my engine and a 200 H.O. engine, other than perhaps the fuel map and the price. (The 200 H.O. is about $500 cheaper.) This is very distinct from the Mercury Pro XS series in which there are substantive changes in the power heads of the Pro XS compared to the standard OptiMax.. The Mercury OptiMax Pro XS models are said to be outfitted with many unique Mercury Racing-designed components, including carbon fiber reeds, solid billet aluminum mounts and special dome-shaped, coated pistons. In other words, they build a substantially different engine than the fishing motor. This substantial difference in the power head is why I think the OptiMax product line is more of a production and inventory headache for Mercury than the H.O. line could be for E-TEC. In any case, Bombardier did not lay off 32-percent of their employees in the outboard division in the last two years, did not shut down any outboard manufacturing plants, and did not force their workers into re-opening labor agreements and re-negotiating contracts with pay cuts, reduced benefits, and other give-backs, and is not in the process of closing and consolidating a principal manufacturing like Stillwater, Oklahoma. It is not reasonable to transfer my inquiry to E-TEC because the fundamental basis for the inquiry to be made--that there has been a substantial cut-back in production capacity--has not occurred with Bombardier and E-TEC, so it would be meaningless to assert that such a cut back has caused Bombardier to be unable to supply dealers with motors. Bombardier has not made such a cut back as Mercury Marine has made, so it is not reasonable to investigate whether BRP production is constrained by reduced capacity--it was not reduced. |
| SC Joe |
posted 07-13-2010 09:57 AM ET (US)
so Jim, what is your point? It appears Brunswick cut back more than they originally thought they needed, and now is building boats and engines to order. in a questionable economy, this doesn't seem like a bad position to be in. |
| glen e |
posted 07-13-2010 10:23 AM ET (US)
Honestly, there is no point other than what you think. Mercury must be all things to all people 100% of the time according to the webmaster here. He is not interested in discussion here, "the chair does not recognize" others in this matter.
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