posted 10-12-2011 09:56 PM ET (US)        

BRP has recently invested $15-million in the Evinrude plant in Sturtevant, Wisconsin where it builds the higher-horsepower Evinrude engines using E-TEC technology in the 25-HP to 300-HP range.

posted 10-12-2011 10:58 PM ET (US)         

But it sounds like a winning proposition for all, and helps a North American company fill a badly needed HP void, and helps the Joint Venture utilize more manufacturing capacity. After all, this Venture can crank out 200,000 engines a year.

I wonder why they didn't turn to their previous supplier, Suzuki? Maybe the Mercohats are better?

posted 10-13-2011 12:30 AM ET (US)         

http://www.brunswick-marine.com/en/News.aspx?id=8766

Note that Mercury indicated they were happy that none of their people were injured, and that Mercury is working to continue to source the necessary components needed for these engines. In another document, Mercury shows the TMC plant as one of Mercury's many manufacturing locations. I don't think OMC ever showed Suzuki as one of their manufacturing locations.

My guess is that now the plant is back up and running, they have the capacity to produce the engines to sell to Evinrude.

posted 10-13-2011 09:49 AM ET (US)            

DFI 2-stroke still provides a superior power curve for the same displacement. The problem is there is no weight savings at the low HP level and a superior power curve isn't a strong selling point for a 2.5 HP to 15 HP outboard where you aren't pulling up water skiier's or pushing heavy high deadrise boats. Application of DFI to small 2-strokes would, however, seem to solve the hydraulic lock up problem that happens some times with portable 4-strokes.

posted 10-13-2011 01:35 PM ET (US)            

This probably means the end of the 35 cubic inch 15 HO which is a detuned 25. That one never made any sense to me.

Tohatsu and Evinrude are similar now in the low HP range they offer 4-strokes and in the higher HP ranges (25 and up for Evinrude and 40 and up for Tohatsu), they go 2-stroke DFI.

Given that Evinrude had a gap in its line up below 25 HP (I don't count the 15 HO) which Tohatsu fills in and Tohatsu has a gap above 140 HP, I wonder whether we will see a Tohatsu rebranding of Evinrude E-TECs above 115 HP for sale in Asia?

posted 10-13-2011 04:05 PM ET (US)            

There is a Ford-Mazda joint-venture plant in Flatrock, Michigan. It builds the MAZDA 6. The Ford version of that frame or chassis is built in Mexico as the FUSION. Figure out those arrangements.

posted 10-13-2011 06:15 PM ET (US)         

If Tohatsu sells to Nissan in Japan, maybe Mercury could sell to Evinrude over here? After all, the majority of the engine output of the JV that comes over here, are painted black. I doubt if Tohatsu USA sells many compared to what Mercury sells.

I agree, that kickers are a big sales item in any of the fishing market segments, fresh or salt. It's good that Evinrude dealers can now sell a matching kicker. The 9.9HP Mercury Pro-Kicker with power trim is a big seller, so now Evinrude will have it also. Probably both in blue for the bass/walleye crowd, and white for the saltwater crowd.

posted 10-13-2011 06:33 PM ET (US)            

Sadly, as well as that old motor runs, I really hate all the smoke when I'm trolling slowly and the wind is behind me. The little bugger is louder at trolling speeds than the big 200 too.

posted 10-13-2011 08:12 PM ET (US)            

The current Evinrude E-TEC line uses the same direct injector in all the engines. This injector can deliver enough fuel to make 50-HP from one cylinder, as in the 300-HP V6 E-TEC. If Evinrude tries to make a 5-HP engine, it seems like they might have to develop a smaller direct injector. It does not seem reasonable to use an injector that can make 50-HP in one cylinder to be the injector in a 5-HP engine. That injector is too big. Having the right direct injector to bring E-TEC to smaller engines may be what's missing.

I don't have any real information about future plans for making lower horsepower E-TEC engines, but I speculate that BRP is probably continuing to pursue that goal. The Tohastsu-BRP deal may just be a temporary fill-in, much in the same way Mercury filled in a gap in their product line when they bought thousands of 225-HP four-cycle engines from Yamaha when their VERADO project did come to market on time.

posted 10-14-2011 01:07 PM ET (US)            

I don't think the electrical load would be the hold back. Why would the electrical overhead be any worse than the mechanical valve train overhead of a 4-stroke or the air compressor in the Aprilia system?

I think this move is driven primarily by economic, not technical, constraints.

I think that at some point, as Jim has mentioned, getting into the smaller sizes probably requires development and tooling of a smaller injector. It's likely that this injector would not be manufactured in the same volumes as the larger common injector that serves 2 to 6 cylinder engines from 25 to 300 HP given that the 3.5 to 15 HP motors are either 1 or 2 cylinder engines.

posted 10-15-2011 10:29 PM ET (US)         

It would be interesting to know the true reason why the E-TEC technology has not been miniaturized, first to smaller outboards then on to mowers, chainsaw and weed-wackers.

The four-stroke outboard makers got off easy here because a simple carburetor four-stroke can still attain a 3-Star emission rating which would be impossible for a two-stroke without DFI.

posted 10-17-2011 05:15 PM ET (US)            

Last boat show in Dec showed our single Evinrude dealer from northern Utah in the show and when I stopped by he had the cowling off a 225 E-tec and surrounding plastic shields off revealing what I had not seen before on E-Tecs. It looked complicated. Really complicated. The main ICU was huge, on top of the motor and was plumbed for water to go through it. Alot of wires, sensors and the main injectors were explosed.

It look downright intimidating when compared to my last 1993 Evinrude 225 vindicator. Simple then, very complex now.

Hats off to Evinrude to pulling this all off, but I think when a portable low hp kicker is involved and the competitive price point market that exists, it seems that simple carb 4 stroke that can still hit a 3 star rating without all this cost and complexity seems to be the answer for why Evinrude is doing it.

Four stroke, 3 star kickers look simple now.

It's not like Evinrude can't build a 4 stroke either, They have great ones in the BRP lineup with everything else.

Just probably not worth tooling up for this and alot easier to pick up the phone and order these in unfortnately.

posted 10-19-2011 08:20 PM ET (US)            

B) Not a Greg...My name is Elvin D'Angelo.

posted 10-20-2011 08:14 AM ET (US)            

quote:

---

A joint venture is a contractual business undertaking between two or more parties. It is similar to a business partnership, with one key difference: a partnership generally involves an ongoing, long-term business relationship, whereas a joint venture is based on a single business transaction. Individuals or companies choose to enter joint ventures in order to share strengths, minimize risks, and increase competitive advantages in the marketplace. Joint ventures can be distinct business units (a new business entity may be created for the joint venture) or collaborations between businesses. In a collaboration, for example, a high-technology firm may contract with a manufacturer to bring its idea for a product to market; the former provides the know-how, the latter the means.

---

Given that the Tohatsu, Nissan and Mercury 4-strokes are virtually identical, and it is likely that Evinrude products will be identical, it would appear that in the Mercury-Tohatsu joint venture, Tohatsu brings its expertise in making small 4-stroke outboards and Mercury brings its expertise in the application of black paint and Mercury decals.

posted 10-20-2011 09:11 AM ET (US)            

Mercury--who is subject to criminal prosecution if they issue fraudulent information to investors--simply says that some of their engines are manufactured in Japan by Tohatsu in an arrangement they call a joint venture. I think that is about as far as Mercury is willing to go on this topic. However, Mercury fans are willing to go much further. They have invented the notion of 50:50 in the venture. They have invented the notion that Mercury owns the plant in Komagane or at least has some major role in its operation.

Tohatsu never mentions Mercury in their presentations. They say they make their outboards at their plant and sell them all around the world.

I have published several photographs of the Komagane plant. The signs on the plant all say TOHATSU. There is no indication of any presence of Mercury. I even published shipping documentation that showed engines manufactured in Komagane were being shipped to a customer in Wisconsin--Mercury.

Participants who have said they are familiar with the plant say that at best there are perhaps one or two people from Mercury who work there in a liaison capacity.

When an award was given for innovation in four-cycle outboard engine design for the engines manufactured in Komagane, the award was given to Tohatsu.

posted 10-20-2011 09:16 AM ET (US)            

TMC selling to Evinrude makes perfect sense as it allows them to make more money off of the sale of an Evinrude then Evinrude themselves. Everything is already in place all that is needed is a blue paint gun and different stickers.

posted 10-20-2011 09:30 AM ET (US)            

If BRP sells a Tohatsu engine as an Evinrude, it could mean a loss in sales to Mercury of an identical engine. Any speculative possibility for Mercury to profit on the OEM sale to Evinrude is offset by the loss of income from the lost retail sail to a dealer-customer.

Also, the notion that there is great profit to be made as an OEM instead of as a retailer would undermine the entire business model of Mercury. If OEM sales were profitable, then Mercury should be dropping all of its retail sales and concentrate on being an OEM. Of course, they don't, and, in fact, they do just the opposite. They have a history of buying engines from other original equipment manufacturers and then re-selling them at retail as their own. This history shows that there is considerable profit in being the branded-seller, the retail seller.

As long as everyone wants to speculate, I would offer this assessment. Tohatsu probably has excess manufacturing capacity at Komegane at the moment as a result of two events: the general global economic downturn which will affect outboard engine sales, and the especially difficult economic conditions locally in Japan due to the tsunami earlier this year. Tohatsu may have seen that in the near future the plant would be operating at lower production than it is capable. Based on these factors, Tohatsu may have been in a position to take on OEM business for another customer, BRP.

posted 10-20-2011 09:43 AM ET (US)            

Tohatsu is not in control of the 2.5 thru 30hp engines sales. That is TMC. There is a specific difference between TMC and Tohatsu. Our views are different as we view differences in where the profits go.

Mercury currently controls the life of an OB from birth to sale in all aspects. The only reason that went to other OEMs was to fill a gap in there line up.

"If BRP sells a Tohatsu engine as an Evinrude, it could mean a loss in sales to Mercury of an identical engine."

posted 10-20-2011 10:05 AM ET (US)            

quote:

---

However, Mercury fans are willing to go much further. They have invented the notion of 50:50 in the venture. They have invented the notion that Mercury owns the plant in Komagane or at least has some major role in its operation.

---

This is a completely made up notion. No one has suggested the TMC joint venture with Mercury was or is 50:50, or that Mercury owns the Komagane plant. Since Tohatsu clearly seems to characterize the relationship with Mercury as a joint venture, I don't see why the E-Crowd wants to dispel this notion so vehemently.

And further:

quote:

---

Also, the notion that there is great profit to be made as an OEM instead of as a retailer would undermine the entire business model of Mercury.

---

really????their entire business model??? It seems to me that Mercury has figured out that is is more profitable to have a mix of OEM sales and re-branded retail sales, just as many successful companies often to...Not surprisingly, BRP is just figuring this out.

posted 10-20-2011 10:55 AM ET (US)            

wakabayashi@tohcorp.com

As a courtesy to him I would suggest that one in the "TMC is God crowd" appoint one person to send the email so the guy does not have to repeat himself...

posted 10-20-2011 11:01 AM ET (US)            

For the right price, I would think that Mercury would be happy to sell engines to anyone. The same way that Yamaha sold engines to its largest rival Mercury.

My point is backed up with years of history

TMC selling to Nissan and now Evinrude
Suzuki selling to Johnson
Yamaha selling to Mercury
Honda selling to Nissan

Is it better business to manufacture the vast majority (75%-80%) of the engines sold in the 3.5hp to 30hp range or to manufacture and sell under your own name 25% of the engines sold in the 3.5hp to 30hp range.

We will never know because I am sure the margins on these engines is kept very secretive as is the percentage of the market but I am sure that it better to be the manufacturer as history has proven time and time again.

The sale of replacement parts after the sale is also something to take into consideration.

posted 10-20-2011 11:01 AM ET (US)            

Jim - you should be more careful in your posts to distinguish between Tohatsu Corporation and Tohatsu Marine Corporation. These are two separate entities, the latter being the joint venture with Brunswick.

It should also be noted that BRP's press release indicates that it's small motors will be manufactured by Tohatsu Corporation, not Tohatsu Marine Corporation. See: http://corp.brp.com/en-ca/company/news/ brp-provide-lower-hp-evinrude-outboard-engines-tohatsu . This would seem to indicate that Brunswick will not profit from the sale of small motors by BRP.

posted 10-20-2011 11:11 AM ET (US)            

WRONG!!! It started over a decade earlier in 1988 when Tohatsu and Mercury formed TMC. Also TMC is a Joint venture company not facility. Tohatsu themselves say this many times.

posted 10-20-2011 11:27 AM ET (US)         

So this "thing" has been around for a long time. Most of the engines manufactured by this JV that are shipped to the US are sold as Mercurys, and now maybe some as Evinrudes, not Tohatsus. I'm sure that most sold in Asia, are sold as Tohatsus and Nissans. It seems that both partners now have an affiliate brand of the same nationality.

These are popular engines. I see of lot of these Mercurys.
Ever been in a Bass Pro Shop or West Marine, or one of thousands of Mercury dealerships? Ever been in a Tohatsu dealership?

I'm just the messenger here. You guys feel free to attack me and call me stupid anyway you like, and interpret the information anyway you like. It's your choice of how you want to think of these Joint Venture engines.

Incidentally, Mercury's corporate literature shows this plant as ONE OF THEIR MANUFACTURING LOCATIONS.

Guru's claim that this is only a real estate deal is ridiculous. Since 1988? Just a troll. As I said, he has no clue, and obviously, no business knowledge. I have noticed that Tohatsu now builds their TLDI's in this plant also, but unlike the small 4-strokes, they are specifically NOT joint venture engines - just Tohatsu. But is it a coincidence that both companies just happen to use the Orbital 2-stroke DFI system? Who knows?

With no kickers to sell, Evinrude desperately needed this deal. Afterall, the biggest market for 150 DFI's and larger, is the Bass/Walleye go fast fishing segment. For Evinrude to really compete with the Merc Opti ProXS on this type of boat, they need a same color 4-stroke kicker. Merc's 9.9 Pro Kicker is a big seller alongside the black Opti's. So now the Evinrude fans can get a white or blue Pro Kicker, to go with the E-Tec HO's, from their selling dealer. No longer a need to put a black or gray (horrors) kicker on their rig.

posted 10-20-2011 11:49 AM ET (US)         

As has been stated, neither Mercury or Tohatsu say much about the legal aspects of this engine manufacturing operation, other than what they have published in press releases, above, etc. So for this guy to claim he has inside information is a joke. Now if you want to believe Gura, and consider Mercury publishing false information, be my guest. I have not seem any claim by Tohatsu that Mercury is misrepresenting this 23 year old deal in saying it is one of their manufacturing operations.

Guru has no clue, as I said. The "Capt" seems to agree, and probably knows more about this than anybody here.

posted 10-20-2011 12:01 PM ET (US)            

It all comes from common sense and public documents.

Here is the perfect example.

Please read chapter 5 pages 38-41.

http://www.tohatsu.com/news/Tohatsu75Years.pdf

This comes directly from Tohatsu and their own webpage. I highly doubt anyone knows the details of the joint venture company but it must be substantial and not just a real estate deal.

The facts are that TMC is a joint venture company between Mercury and Tohatsu. The 3.5hp to 30hp engines are built by that joint venture company. Evinrude is buying small engines from TMC.

posted 10-20-2011 12:12 PM ET (US)            

It does not make sense that an engine builder would go through the trouble to set up a joint venture simply to own part of building. It must be more then simply jointly own the building.

Also what was the joint venture prior to the construction of that new TMC building?

posted 10-20-2011 12:31 PM ET (US)            

According to the E-CROWD's assertions (Note all caps in the proper spelling, Owtrayj) regarding the Mercury-Tohatsu arrangement, Evinrude could now claim Komagane as one of their manufacturing facilities as well. Lets keep an eye out for an announcement about this manufacturing base expansion.

Additionally, this news of offshore outsourcing by Evinrude will enable the marginally relevant insertion of "foreign built motor" implying inferiority or hoping to spark jingoistic aversion to these products at every chance available and some self-manufactured. You know, like the remarks about Mercury's low HP offerings.

posted 10-20-2011 12:48 PM ET (US)            

Since everybody is speculating about the Brunswick joint venture with Tohatsu, I'll take a stab at it as well. If I had to guess, I would guess that the manufacturing equipment in the Komagane plant is owned by Tohatsu Corporation (or one of its subsidiaries). Brunswick and Tohatsu Corporation (which I will refer to as "Tohatsu") formed a joint venture which is known as Tohatsu Marine Corporation (I'll refer to the joint venture as "TMC"). I would guess that Tohatsu either manufacturers motors which are then sold to TMC, or that TMC leases or uses the Tohatsu manufacturing equipment on a part-time basis to manufacture its own motors (the TMC motors). I would further speculate that when the equipment is not being used to manufacture the TMC motors, it is used to produce the same motors for companies other than TMC. Under this scenario, there would likely be as many as three separate agreements covering the TMC motors which are eventually sold as Mercury motors: 1) Brunswick has a joint venture agreement with Tohatsu for the creation of TMC; 2) TMC has an agreement with Tohatsu whereby Tohatsu either manufactures the TMC motors for TMC or Tohatsu allows TMC to use the Tohatsu equipment to manufacture the TMC motors; and 3) TMC has an agreement with Mercury Marine to sell the TMC motors in the U.S. and elsewhere as Mercury Motors.

posted 10-20-2011 01:14 PM ET (US)            

The Joint Venture (TMC) was established in 1988.

From previously cited Tohatsu Corporate History:

"In February 1988, Tohatsu established a joint venture company, “Tohatsu Marine Corporation”, with Brunswick. Matsumoto became the first president of that company.

With Nissho Iwai and Itochu, two of the Japan’s biggest trading companies, Tohatsu had introduced its outboards to U.S., the biggest market for outboard motors. Brunswick, the parent company of Mercury Marine, was seeking a Japanese partner who could supply products with advanced technology and productivity.

After fierce competition, Mercury Marine showed a great interest in Tohatsu.

Mercury Marine hoped to have a capital participation in Tohatsu in early discussion, but at last it was decided that a joint venture company would be established. This new company was located in Okaya, Nagano, a mountainous area of Japan. At the same time, Tohatsu started to reconstruct the facilities of Okaya Plant, and the first stage of the construction; a new full - scale assembly line for Outboard motors up to 120-horsepower, was completed in November 1988.

Brunswick was not the only company to show an interest in Tohatsu outboard motors; but Nissan Motor Corp. also sought affiliation with Tohatsu, conceiving their domestic and worldwide expansion plan.

Tohatsu’s outboard business has thrived and established a strong position, especially overseas, by collaborating with these great partners."

posted 10-20-2011 01:24 PM ET (US)            

The quoted material from the Tohatsu history does not state that the motors are manufactured for Mercury by Tohatsu. It merely states that a joint venture was formed.

posted 10-20-2011 01:32 PM ET (US)            

Provide black paint and Mercury decals. ;)

This is what Brunswick's 10K has to say about the risk relating to its JV's --

quote:

---

Some of the Company’s operations are conducted by joint ventures that it cannot operate solely for its benefit.

Some of the Company’s operations are carried on through jointly owned companies such as BAC, Tohatsu Marine Corporation or Cummins MerCruiser Diesel Marine LLC (CMD), Mercury Marine’s joint venture with Cummins Marine, a division of Cummins Inc. With respect to these joint ventures, the Company shares ownership and management of these companies with one or more parties who may not have the same goals, strategies, priorities or resources as the Company. These joint ventures are intended to be operated for the equal benefit of all co-owners, rather than for the Company’s exclusive benefit.

---

posted 10-20-2011 01:37 PM ET (US)            

quote:

---

What role could Mercury play in the manufacture of the TMC motors?

---

posted 10-20-2011 02:15 PM ET (US)            

quote:

---

I take Mercury at their word, which is some of the engines they sell are built in Komagane for them by Tohatsu in a joint-venture.

---

posted 10-20-2011 02:40 PM ET (US)            

quote:

---

Sorry to have to correct you, but the 50:50 notion has been a popular theme for the Mercury-Tohatsu arrangement. I guess you mean to say that it is not a 50:50 arrangement--is that fair to say?

---

posted 10-20-2011 02:55 PM ET (US)            

These joint ventures are intended to be operated for the equal benefit of all co-owners, rather than for the Company’s exclusive benefit.

That note in addition to the sentence above it seem to suggest that the JV is a bit more than an agreement allowing Mercury to purchase Tohatsu engines, as the E-CROWD repeatedly asserts.

With respect to these joint ventures, the Company shares ownership and management of these companies with one or more parties.

posted 10-20-2011 03:10 PM ET (US)         

Tom - Mercury's role is that they are probably 1/2 owner of the manufacturing operation and facilities going all the way back to 1988. But you don't know the percentage and I don't know. But Joint Ventures are USUALLY 50/50 deals (at least the automotive ones between American and Japanese manufacturers that I have been involved with are). I am sure percentage of interests can change, however. Since Mercury sells a large percentage of these engines, it could be that Mercury now owns more than 50% of the TMC Joint Venture. But anyway you want to look at it, Mercury and Tohatsu both claim to be in the business of manufacturing small 4-stroke outboards.

Tohatsu has never said they sell engines to Mercury, and Mercury has never said they sell engines to Tohatsu. That's because they make them together as Joint Venture partners.

I think the Evinrude guys have beat this horse long enough. This thread has become great free advertizing for Mercury's and Tohatsu's small 4-stroke products. The two companies seem to work together very well, with a long standing relationship.

posted 10-20-2011 03:14 PM ET (US)            

Maybe, and maybe not. Your inference makes an assumption that there are only two co-owners. If there are more than two co-owners than "equal" would not necessarily mean 50/50.

posted 10-20-2011 03:23 PM ET (US)            

quote:

---

Tom - Mercury's role is that they are probably 1/2 owner of the manufacturing operation and facilities going all the way back to 1988.

---

No, Larry, I see no evidence of that though there is evidence that neither Brunswick nor Mercury has any equity in the Komagane plant:

"Mercury Marine hoped to have a capital participation in Tohatsu in early discussion, but at last it was decided that a joint venture company would be established."

posted 10-20-2011 09:02 PM ET (US)            

As I said earlier, the notion of 50-50 was introduced, as I recall, by L H G, and based, as far as I can tell, on his own speculation. I have never seen any statement from either Tohatsu or Mercury that gives any support to a 50-50 arrangement concerning the ownership, operation, or management of Komagane.

Here is some recent statement by a Tohatsu representative about the history of Tohatsu. Look closely to see any mention of how Tohatsu is partnered with Mercury , or that Mercury is a joint operator of their plant--there is none:

Who is Tohatsu?

Who is Tohatsu? Tohatsu recently published this description of their company.

quote:

---

RELIABLE OUTBOARD MOTORS

Creative and intelligent engineering has enabled [Tohatsu] to survive and thrive for 89 years. Founded in 1922 as Takata Motor Research Institute, the manufacturer got its start building railcars. It developed high-speed portable engine generators the following decade [1930's]. In the 1950's Tohatsu began producing motorcycles. Boating fans were introduced to the brand in 1956 when the first Tohatsu outboard debuted: the OB-2, an air-cooled 1.5-HP motor, Since that time, Tohatsu outboards have served a variety of marine marketplaces from commercial fishing and transport to recreational boats.

"The Tohatsu marine tradition began with the reliable motors we built for commercial Japanese fisherman," said [Kurt Gardner, national sales manager for Tohatsu].

"Those fishermen needed a motor that could run for days on end, no matter what the weather. The ocean-tested engineering that enables our motors to work under demanding and often harsh conditions makes Tohatsu one of the toughest, most reliable engines available. Tohatsu knows that when it comes to an outboard motor, reliability is most important. That's true for a commercial fisherman or the guy who is watching the sunset with his family on board. You need a motor that will get you back every time."

Today, Tohatsu manufactures a full line of four-stoke and direct-injection two-stroke outboard engines that range in size from 2.5-HP to 115-HP. They are designed for freshwater and saltwater use. A 35-HP jet engine is also offered. All products are manufactured at a state-of-the-art facility at Komegane, Japan, that was built in 2005. It boasts over 370,000 square feet of space and has a production capacity of over 200,000 units per year. The plant uses technologically advanced machinery that's fully automated to produce reliable outboards with award-winning reputations.

Award-winning technology from Tohatsu includes its Two-stroke Low-pressure Direct-Injection, also known as TLDI. Motors that feature this system have established a repuation for being compact in size while demonstrating features that are in high demand among today's boat owners: namely, low emissions and high fuel economy. Essentially TLDI is powerful direct-injection system that reduces emissions over conventional two-strke motors while also greatly increasing fuel economy. With a TLDI outboard, owners get all the efficiencies of a four-stroke outboard and all the power of a two-stroke outboard in one motor.

---

posted 10-20-2011 09:11 PM ET (US)            

I think this taught Mercury a lesson with regard to supplier arrangements, so when they decided to become a customer of Tohatsu for their smaller four-cycle engines, Mercury took the lesson they learned with Yamaha and applied it. Mercury and Tohatsu entered into some sort of partnership so that Tohatsu could not just jettison Mercury overboard like Yamaha had done.

I also think Mercury suffered badly in public opinion when they were widely seen as being nothing more than a re-painter of Yamaha engines, so they set out to get some better play on their relationship with Tohatsu. By insisting that the engines they sell as Mercury but made by Tohatsu are part of a "joint venture" there is less bad publicity.

posted 10-21-2011 05:07 AM ET (US)            

Seems both Mercury and Tohatsu agree they have a joint venture (whatever that means) called Tohatsu Marine Corporation (TMC).

To back up that statement I offer the following:

Mercury in it's corporate literature and website list Komagane, Japan (TMC joint venture) as a Mercury manufacturing facility. http://www.mercurymarine.com/about/plant-and-locations/

Tohatsu in it's corporate literature from their website had this document http://www.tohatsu.com/news/Tohatsu75Years.pdf

In that document they describe the Joint venture with Tohatsu / Mercury Marine and that Joint venture is called Tohatsu Marine Corporation (or TMC).

Directly following the description of TMC, they identify themselves as being an OEM to Nissan (note that they never say they are an OEM to Mercury).

Still further along in that document while discussing consolidation of manufacturing facilities they specifically identify Tohatsu as a separate entity from TMC.

"there was a series of discussions on whether to move Tokyo Plant in which cylinder heads for bigger motors (bigger than 60-horsepower) had been made, to Komagane along with TMC which was moving there from old Okaya. Both TMC and Tohatsu have found a lot of advantages in working at the same place."

Unfortunately Tohatsu kind of muddies the waters a bit when they refer to both Mercury and Nissan as "great partners" But I think that the difference is that TMC only makes Nissan outboards up to 30 hp and Tohatsu makes motors up to 115 HP and so both TMC and Tohatsu are OEM's to Nissan. Mercury on the other hand only uses the smaller TMC outboards. I base that assumption on the fact that Tohatsu outboards equal to or greater than 35 HP are all 2-stroke TLDI motors. Where as Mercury motors above 35 HP are not 2-stroke TLDI motors.

Seems to me if both companies agree to have a joint venture called TMC and both companies agree it is not solely a Tohatsu entity nor solely a Mercury entity and both companies agree they are in the same manufacturing facility and Tohatsu points out that they are an OEM to Nissan but do not indicate that they are a OEM to Mercury then TMC is not just an OEM supplier to Mercury but they have a different type of relationship referred to as a joint venture.

What is confusing is BRP's announcement that they have an agreement with "Tohatsu Corporation" for these small motors. So either these motors are not being made by TMC, TMC no longer exists as originally concieved or someone got lazy in their reporting and BRP actually has an agreement with "Tohatsu Marine Corporation" and not "Tohatsu Corporation".

Thanks for the little brain escape guys...

posted 10-21-2011 07:48 AM ET (US)            

Not too long ago I pointed out several other clear inconsistencies in Larry's theory of the world. First of all, the principals in Tohatsu Marine Corporation are all people with Japanese names. I listed them in my article. Second, at the USITC Tohatsu Marine Corporation was a participant and testified against everything Mercury had to say. With those two stunning revelations I thought I had crushed Larry's fanciful notion that Mercury was somehow running the show in TMC.

posted 10-21-2011 10:23 AM ET (US)            

quote:

---

Larry has turned Mercury into an equal partner with Tohatsu

---

Thats simply not true. If you had read Peter's posting of Brunswick's statement regarding Joint Ventures, and my repeat with bolds of same, you would see that it is Brunswick who is claiming the "equal" part in the JV, not Larry.

Now, if you would prefer to think that Mercury is receiving or intending to receive equal benefits without being an equal partner, feel free to do so. Do you actually believe that Japanese businessmen are so incompetent as to allow a minority partner equal benefits Jim?

If your proposed arrangement were readily available, I can assure you I'd be chasing minority ownerships with equal benefits from here 'til Sunday. Its not a particularly sound business arrangement for the majority owner though, is it?

posted 10-22-2011 09:58 AM ET (US)            

First, we have two totally separate companies, Tohatsu of Japan, and Brunswick of the USA. Brunswick operates Mercury Marine. Hereafter we call this "Mercury." Tohatsu is a Japanese company; hereafter we call them "Tohatsu."

Mercury and Tohatsu have a joint venture called Tohatsu Marine Corporation, and hereafter "TMC".

There is a very large, very modern outboard engine plant in Komagane, Nagano Prefecture, Japan, hereafter called "Komagane."

At issue is what exactly goes on at Komagane, who runs its, and who makes what and sells what to whom.

According to the published report of the USITC, TMC is an outboard engine manufacturer in Japan. Here is an excerpt from USITC's Final Report on their Investigation into Import of Outboard Engines from Japan. Unfortunately, for some reason--probably the insistence of some participants that certain information was not to be revealed to the public--portions of the report are redacted. However, in some cases we can make a fairly educated guess about what was redacted.

quote:

---

THE INDUSTRY IN JAPAN

There are seven known manufacturers/exporters of outboard engines in Japan:

--Honda Motor Co., Ltd. (“Honda Japan);

--Mercury Marine Japan (“Mercury Marine”), which is affiliated with the U.S. producer Mercury;

--Nissan Marine Co., Ltd. (“Nissan”);

--Suzuki Motor Co. (“Suzuki Japan”);

--Tohatsu Corp. (“Tohatsu Japan”);

--Tohatsu Marine Corp. (“TMC”); and

--Yamaha Motor Co. Ltd. (“Yamaha Japan”).

Data on the seven firms’ production and exports of outboard engines and powerheads to the United States during 2003 are presented in table VII-2. Yamaha Japan was dominant, with *** percent of the production and *** percent of the exports to the United States in 2003. TMC and Honda Japan together shared about *** percent of the production. TMC and Yamaha Japan shipped a portion of their production to ***. TMC also shipped its production to Tohatsu Japan, which exported complete engines to the United States and other countries. Tohatsu Japan had *** production levels of its own, but mainly relies on TMC’s production for its shipments. TMC did not have its own customers beyond *** and Tohatsu Japan. Tohatsu Japan shipped some of its purchases from ***, which is also an exporter to the United States. Nissan has no production of outboard engines in Japan but had a small amount of home market sales and sales to other export markets during the period of investigation. Mercury Marine acted as the exporter for much of Mercury’s imports of the subject product from 2002 to 2004. In 2001 Mercury Marine ***.

---

Let me offer several comments about this quoted material:

--the above excerpt is the only instance in the entire report in which TMC is mentioned.

--there clearly have been some figures redacted related to unit volume or market share percentages, obviously done because the report has agreed to keep confidential and out of the public view this sort of information; none of the manufacturers wanted to share with the public their sales figures. This is an entirely reasonable wish, and I don't have any problem accepting that this data has been redacted.

--unlike the sales data that has been redacted, I find it very odd that certain other names have been redacted. Specifically, I want to point out this sentence:

"TMC did not have its own customers beyond *** and Tohatsu Japan."

It seems to me that it is quite transparent that the report originally said this:

TMC did not have its own customers beyond Mercury and Tohatsu Japan."

My basis for this is as follows:

--we know that TMC is a joint-venture between Mercury and Tohatsu;

--we know that Mercury is selling Mercury-branded engines that are made in Japan by TMC;

--since the report excludes all other possible customers, the redacted customer must be Mercury

It seems bizarre to me that Mercury would want their name redacted from this report as being a customer of TMC. I think it goes to the nature of Mercury as an organization. They did not want to reveal to the public that their engines were being built in Japan by even their own joint-venture company.

Now we look at TMC. As described above, it exists only to make engines for two customers: Tohatsu and Mercury. As I see it. TMC is a little shell company that was formed so that Mercury would not have to buy engines directly from Tohatsu. It gives Mercury a little bit of wiggle room and they can say they buy their engines from TMC, which is a joint venture. Tohatsu also buys engine from TMC, but they essentially buy engine from themselves, as they're running the show at Komagane.

At about the same time frame as this report (c.2005) here is what Tohatsu was saying about Komagane:

quote:

---

"TOHATSU: NEW STATE OF THE ART FACTORY IN 2005

"After the success Tohatsu are reaping world wide, Tohatsu invested heavily in a modern factory in Tokyo. Tohatsu believe in delivering only Reliability & Qaulity [sic] Salt Water Outboards. The new factory is 200km away from Tokyo in Komagane. It has 3 production assembly lines, 360 factory workers working in 2 shifts and total capacity for 200,000 units. The total factory build up area is 36,000 [square-meters] with futher area available for expansion. The new machines in the factory have increased the production schedules, always aiming to achieve better quality standards & best quality rewards: ISO 9001:2000 & ISO 14001 Certifications. To be in Tohastu's position in being of Japan's leader in Outboard Manufacturing is no mean feat. In the Tohatsu Factory, all Outboards manufactured are tested individually to ensure that the end delivered product reach the optimum at the final destination."

---

This is but one of many instances where Tohatsu refers to Komagane as being a factory they built, being their factory, and being under their control.

Tohatsu is proud of their plant. They have a picture of it on their website:

http://www.tohatsu.co.jp/en/boat/profile.html

Please note that at the bottom of the page, Tohatsu lists TMC as an affiliated company.

Based on this evidence, my view is that TMC is a legal shell that exists so it can make outboard engines in Japan for Mercury. TMC operates inside the Tohatsu plant, not the other way around. Mercury takes this and spins it to its own advantage, even convincing some that Mercury is running the show at Komagane, operates and manages the plant, and is an equal partner with Tohatsu in the Komagane operation. Sorry, but I just can't see it that way. If that is true, then Tohatsu is telling a completely different story. Mercury management ought to get on the next plane to Japan, straighten those people out, and get their name up on the building.

Also, here is a list of some of the executives of TMC:

Tohatsu Marine Corporation
4495-9 Shimodaira, Komagane-City
Nagano, Japan 399-4101

President Mr. Mitsuru Kaneko
Senior Managing Director Mr. Tomatsu Hamananaka
Director of the Komagane Plant Mr. Kazuhiro Masumoto
Director of General Affairs Mr. Tsuneo Tanaka

This ought to give readers an idea of who is controlling Komagane's production under the TMC sub-corporation.

Also, Tohatsu list the following personnel on their website:

Director / Plant Manager, Komagane
Tsuneo Tanaka
http://www.tohatsu.co.jp/en/htm/comp/index.html

posted 10-22-2011 10:01 AM ET (US)            

Here's a few other tidbits.

I sold my interest in internetoutboards.com in March of last year.

I worked for the U.S. Tohatsu distributor(NIMAC)in the early 90's

I presently do work for a dealership that is a Mercury and a Tohatsu dealership.

I speak to the two top U.S. employees at Tohatsu America every week.

I correspond directly with Tohatsu Japan employees by email.

It is also possible that I might be in error about some thing, some time.

I'm not in error about the relationship between Mercury and Tohatsu.

posted 10-22-2011 12:43 PM ET (US)            

"TMC and Yamaha Japan shipped a portion of their production to ***. "

I think it is transparently obvious that the redacted name is again Mercury, and the original read as follows:

TMC and Yamaha Japan shipped a portion of their production to Mercury.

It was very well known in c.2005 that Mercury was getting power heads, components, and in some cases completely built engines from Yamaha. That Mercury would be redacted from this is very strange to me, and, again, it goes to the nature of the Mercury organization. Mercury did not want a public statement to go out from the USITC saying they were a customer of Yamaha. What other explanation is reasonable for the redaction? I can't think of any.

posted 10-22-2011 01:13 PM ET (US)            

quote:

---

Legally, Mercury Marine is not a subsidiary of Brunswick. It is referred to in Brunswick documents as a “group” (or sometimes as a “division” or “segment.”) Since it is not a subsidiary, Mercury has no independent status, no board nor shareholders. It files no tax returns. It is integrated into Brunswick’s overall corporate structure.

---

On this basis I don't think Mercury is in a joint venture with anyone, it is Brunswick that would be involved.

posted 10-27-2011 09:46 PM ET (US)            

TMC is not a real-estate company.

And

Here's how this Tohatsu Mercury relationship actually works.

Tohatsu owns the land, building and equipment. Then Tohatsu lease's the building to TMC. TMC is a 50-50 joint venture company. Mercury put in less than $1,000,000.00 years ago. Mercury has one employee who is at the plant. He has no role in management and his role is limited to relaying suggestions and occasional Mercury requirements for their Mercury labeled engines. Tohatsu is 100% in control of production, research and development and management. TMC should be considered the builder of the outboard. TMC then sells that production to Mercury and Tohatsu. Mercury had zero input into the decision by Tohatsu to sell to Evinrude and Mercury was only informed of that decision after Tohatsu had made the decision. Mercury is unhappy. Tohatsu is sorry that Mercury is unhappy. Tohatsu will do whatever is in it's best interest.

This information comes from point blank, face to face meeting I had today with the top guy at Tohatsu...Same guy that four years ago told me what I preaching about TMC being a real-estate company. His English is a lot better now than then and I can only assume that:

A) There was a language barrier issue that led me to an error in facts.

or

B) My memory is completely gone and I must have misunderstood what he told me way back then.

posted 10-28-2011 01:00 AM ET (US)         

So with a little reasoning and research, we now know:

1. Mercury and Tohatsu formed a 50/50 Joint Venture company called TMC in 1988, and have been putting out engines ever since. We are not sure it is 50/50, but as I have said, in most cases they are. Kind of what the word "Joint" implies. A 50/50 deal would also imply profits are split 50-50 also. But we don't know, and probably never will.

2. Mercury and Tohatsu BOTH claim they are manufacturing a new line of small 4-strokes at a modern manufacturing facility they own in Japan, with first engines from the new plant for the 2003 model year. Unless both Partners are liars, this sounds accurate enough to be true. It would be illegal for Brunswick to mis-represent that fact to Stockholders.

ASIDE: two of the engines from this plant were new 25 and 30HP models. So in 2003 Mercury stopped making their older design 25 and 30 HP engines in WI. That caused Yamaha to lose the 25 and 30 HP powerheads they were getting from Mercury. Check Yamaha's line in 03'- '06. They had no engine between 15 and 40 HP after Mercury stopped supplying them. They needed time to develop their own 25-30's, which they now have.

3. TMC has only two customers, the Partners themselves.
Joint Ventures are usually not designed to furnish/sell to other than the Partners.

4. Tohatsu sells some of the engines it takes from the TMC Joint Venture to Nissan, with blue paint.

5. We now know that Tohatsu Corp is also going to sell some of the engines it takes from the TMC Joint Venture to Evinrude. From Evinrude's perspective, it HAD to be this way. Buying from the Mercury side of the JV would be a public relations disaster for Evinrude here in the States, or in Europe. But people will still know they are white painted Merc or Tohatsus. Take your choice of what you want to call them.

6. It would be safe to GUESS that the majority of the engines produced in this deal which are sold in North America would be Mercurys. They have a huge distribution channel over here, including Bass Pro shops, Cabela's, West Marine and thousands of Mercury dealers. Tohatsu has minimal channels over here.

7. We don't know if Mercury makes any money from the Evinrude deal, but as a JV partner, it would make sense.

My guess is that Mercury will probably not lose sales from the deal, since there is no way an Evinrude customer would put a black Merc on his boat in the first place, at least as a kicker. Yamaha, Suzuki and Honda are the likely losers, and Mercury/Tohatsu are the likely winners.

posted 10-28-2011 08:46 AM ET (US)            

Let's say the auxiliary could run at 0.1-GPH. This would be a saving of 0.1-GPH compared to running the main engine. The implication is that one could save 1-gallon of fuel every ten hours of operation. My boating history over the last decade shows that I consistently use the boat less than 100-hours per season. Let's use 100-hours per year as a over-estimate. My seasonal fuel savings by running the auxiliary would amount to 0.1-GPH x 100-hour = 10-gallons. Even at marina fuel prices of $5-per-gallon, the savings from the use of the auxiliary would only be $50 per year. The payback from the auxiliary engine saved fuel is a very long time span.

posted 10-28-2011 09:03 AM ET (US)            

It looks like TMC pays the overhead on the plant to the landlord, Tohatsu. The burden of the plant overhead is shared 50-50 by Mercury and Tohatsu in their joint-venture shell TMC. We know (from the USITC investigation) that TMC only has two customers: Mercury and Tohatsu. The crux of the deal is that through this arrangement Mercury gets to buy these TMC engines at the same cost as Tohatsu. Once Mercury and Tohatsu buy the engines from TMC, they each go their own way and sell the engines as they wish.

The advantage for Tohatsu in this arrangement is that the plant becomes a profit center for them because they lease it to TMC. The advantage for Mercury is they get access to the plant's output at the same cost basis as Tohatsu--that's where the "equal benefit" of the arrangement applies.

posted 10-30-2011 10:02 PM ET (US)            

My 200 Etec is a joy to run, but trolling for salmon can require a slower troll than the 19 pitch propeller will allow.

The hours of running time that you save on the main power is a bonus.

posted 10-31-2011 03:24 PM ET (US)         

The idea that Sea Tow is a reliable backup, if they are even operating within range of where you may be boating, is risky judgement.

When I was much younger, and much more foolish, I used to routinely troll 15 miles offshore in Lake Michigan or the Atlantic, in a single engine Nauset. One day I looked back at the engine, and then the distant buildings, and thought this is crazy. That week I bought a matching kicker!

posted 10-31-2011 08:00 PM ET (US)            

Thank you for reminding me of the more important bonus of having a kicker on the transom.

posted 11-01-2011 12:19 PM ET (US)         

I time share a cabin on a island at the mouth of the Chassahowitzka river only accessible by boat. I am not getting back in if my engine isn't working, Seatow cannot navigate that area, their boats are too big. My 6hp kicker will get me back up the river in an hour and a half.

You see a more kickers on Chassahowitzka than down in the bay.

Even when I get a new motor that I am more confident in than my old Merc I will be getting a new matching kicker with charging circuit so it will run on the same fuel.

It may seem silly but The E-TEC 90 not having a matching 6hp kicker offering was a detraction for buying it. Yes because of using the same dealer for both, but also matching cowl's etc. I think I have heard jimh speak of the pleasing ascetics of a white E-TEC on a Whalers transom, no one wants a mismatched kicker to go with such a nice looking setup, unless you just don't care about how your boat looks, I do. My current white Johnson 6hp clashes with my old Merc, but they use the same fuel and it was cheap, I might just paint it black at some point.

So now that Evinrude will have a matching kicker, for me that eliminates one minor plus a all Suzuki setup would have. I am glad they are doing it, even if it's actually a 4-stroke Merc/Tohatsu, that part is actually kind of amusing.

posted 11-02-2011 07:27 PM ET (US)         

Xerox will tell you other wise , but cost of manufacturing makes it impossibel to make a grade for Xerox.

I have to assume that Tohatsu is making motors with the Evinrude name on them. Evinrude then buys them and re-sells them.

Mercury does the same thing.Buys Tohatsu and re-sells under the Mercury label. No joint ventures. Simple Supplier, re-seller relationship.

posted 11-02-2011 07:42 PM ET (US)            

quote:

---

...I have heard jimh speak of the pleasing ascetics of a white E-TEC on a Whalers transom...

---

I hope I spoke about the pleasant aesthetics. As for pleasing ascetics on my transom, well, that is another story.

From M-W.COM

ascetic

noun

: [one who practices] strict self-denial as a measure of personal and especially spiritual discipline

posted 01-16-2012 04:53 PM ET (US)            

I don't think Mercury's name is anywhere on the outside of the Tahatsu plant over in Japan.

I don't think there is a special office inside the plant with coffee and donuts for Mercury executives.

I think its a ongoing shame to lose North America jobs and manfacturing overseas. Thats a entire different discussion.

I don't think Mercury Techs are over there to oversee, influence , wave their fingers in the air to invoke Mercury ghosts of bygone decades to help the black paint dry smoother or to help the decals stay on longer.

I think its just an agreement to have Tahatsu make make them so Mercury can resell them. They make them there, they land on the shipping docks here.

Unfortunately the same applies to Evinrude. Its just an agreement and the business goes elsewhere.

posted 01-18-2012 11:38 PM ET (US)            

They are 4 strokes, 3.5hp through 15hp and they are all in Evinrude dark blue at this point.

Here is the link

http://www.evinrude.com/en-US/Engines/portable_engines

posted 01-19-2012 12:38 AM ET (US)            

The 6 hp by Mercury is said to be the lightest in its class at 55lbs.

The Evinrude 6 hp appears to have the exactly the same cowling and weighs,,,,,55lbs.

It appears to be just paint and stickers, not even a cowling change.

Oh well, makes one feel really special about their new Merc/Evinrude kicker motor purchase

Evinmercs.

Larry isn't going to like this.

Who would have thought?

posted 01-19-2012 07:27 AM ET (US)            

The shape of the upper cowling of the Mercury and Evinrude 9.8 and 15 HP 4-stroke models are different. The shape of the upper cowling of the Evinrude and Tohatsu 15 HP models are the same. The Evinrude 9.8 and 15 HP 4-strokes are a Tohatsu with Evinrude paint and decals.

The shape of the upper cowling of the Evinrude 6 and 4 HP models are the same as the Mercury 6 and 4 HP models. Tohatsu uses a different shape for the 6 and 4 HP models. The shape of the upper cowling of the Evinrude, Mercury and Tohatus 3.5 HP models are the same.

From this information we can reasonably speculate about the Mercury-Tohatsu "joint venture". Mercury supplies the black paint and decals, Tohatsu supplies the rest to make Mercury portable 4-stroke outboards. Tohatsu appears to be in complete control.

posted 01-19-2012 06:27 PM ET (US)            

I purchased it online for hundreds of dollars less than the Mercury version for the loss of shift on the throttle tiller and a few other insignificant features. The Mercury versions listed weight is a few pounds heavier as well.

I see that BRP chose not to include the 8hp version in its lineup. It also did not list accurate motor weights for the long shaft and electric start versions. It will be interesting to see how much more they will want for them over the Tohatsu. It looks identical to my Tohatsu.

posted 01-20-2012 01:35 PM ET (US)            

Nice to see an electric tilt option as well, and I'd like to see more details on mounting and rigging requirements for those models.