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Behind Pending Sale of Sea Ray, A Few Hints As to Why, None As To What Next

| December 15, 2017

The Sea Ray boat plant in Flagler Beach employs about 420 people. (© FlaglerLive)

The Sea Ray boat plant in Flagler Beach employs about 420 people. (© FlaglerLive)

In its latest annual report, Brunswick Corp., owner of Sea Ray Boats, whose manufacturing plant employs upward of 400 people off Colbert Lane in Flagler Beach, had stated: “We believe that our brands, including Mercury, Life Fitness, Sea Ray, Boston Whaler and Lund, significantly contribute to our success, and that maintaining and enhancing these brands is important to expanding our customer base.”


Months later, the Lake Forest, Ill.-based company announced it planned to sell Sea Ray–and just Sea Ray—from among the 15 brands that make up the company’s boat group. (Meridian Yachts is a division of Sea Ray, so Meridian’s plant in Knoxville, Tenn., is also affected.)

There’d been no hint of any issues with the boat division in the company’s previous reports other than notes of disappointment in its third quarter results, which it summed up as “Manufacturing inefficiencies, including costs related to the hurricane preparation and recovery efforts.” But that wasn’t Sea Ray’s fault so much as Irma’s. Third quarter results had also noted “unfavorable changes in sales mix” in the entire boat division. But the company does not appear to be strapped for cash. It has a debt-equity ratio of 28.3 percent and a market capitalization of nearly $5 billion. Its share price hit an all-time high of $63 in July. It’s not far from that now.

In a press release issued on Dec. 5, Mark Schwabero, the company’s chairman and chief executive officer, said the decision to sell “was made after careful consideration, and reflects the evolving contribution that the Sea Ray brand has made to our marine portfolio.” It was not so much an explanation as a restatement.

But a note in a Securities and Exchange filing the same day was less cryptic and perhaps more worrisome for the future of Sea Ray, as it suggested a darkening outlook for the division. The sale was authorized, the company stated, “as a result of, among other things, a change in strategic direction and a review of the expected future cash flows, market conditions and business trends.”

And a presentation to investors the company prepared in conjunction with its announcement included a slide that showed its 10-year trend, going back to 2007, of diminishing sales in some of its manufactured boats portfolio and increasing sales in outboard engines, “propulsion technologies, parts and accessories.” The illustrations it chose for its presentation told a story of their own. They featured an engine, a propeller, a fitness gym (the company also has a substantial fitness division), and only the back of a boat, the focus of the illustration being more on a man catching a swordfish than on the boat itself.

The 2016 annual report had also noted another issue that may be contributing to Brunswick’s decision: “Hurricanes, floods, earthquakes, storms and catastrophic natural or environmental disasters could disrupt our distribution channel, operations or supply chain and decrease consumer demand,” the report noted. “If such an event occurs near our business, manufacturing facilities or key suppliers’ facilities, business operations and/or operating systems could be interrupted. We could be uniquely affected by a catastrophic event due to the location of certain of our boat facilities in coastal Florida and the size of the manufacturing operation in Fond du Lac, Wisconsin.” Such statements are the routine stuff of annual reports, weighing in more as disclaimers than predictors. Perhaps the disruptions of two hurricanes in two successive years took a toll, as reflected in the report’s note about lost manufacturing days locally.

Still, public documents or the company’s December release did not explain why Sea Ray was being singled out in a boat group that had net sales of $1.37 billion in 2016 (up from $1.27 billion in 2015) and employed 5,000, up from 4,500 the previous year.

And the additional statement Schwabero was quoted as making in the release only begged the question further regarding the company’s motives to sell: “We believe that the Sea Ray business, through its leading brand and exciting product line, offers attractive value creation opportunities to a new owner,” he said. “Sea Ray is an iconic brand that is rich with history, with a reputation for craftsmanship, quality and styling. Sea Ray’s manufacturing facilities are among the most advanced in the marine industry, with talented and dedicated workforces.”

The pending sale has naturally left local officials wondering what comes next. “Depends on who’s buying and what their intentions are,” said Rick Belhumeur, a Flagler Beach city commissioner. “If they plan to keep the Sea Ray boat brand and not try to change things, I doubt the operations at our Flagler County assembly plant will change.” And while the company asserts that little is changing at Sea Ray itself, that certainty is out of its hands once the sale is executed, according to the company’s plans, in early 2018.

The company expects to record a loss loss and resulting charge in connection with the sale of these businesses. Brunswick bought Sea Ray–when it was known as Ray Industries–in 1986 for $350 million. Brunswick at the time had ended its last fiscal year with profits of $100 million on sales of $1.54 billion. It ended 2016 with profits of $409 million on sales of $4.49 billion.

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18 Responses for “Behind Pending Sale of Sea Ray, A Few Hints As to Why, None As To What Next”

  1. mark101 says:

    There goes those unemployment numbers if this plant doesn’t stay here if a when it get a new owner.

  2. Anonymous says:

    Now I guess the county and the city of Flalger Beach won’t have Sea Ray to fight over anymore. See what you corrupt politicians do–chase good business away. This place ought to be like living in paradise, not hell. There are no jobs and all the dumb ass commissioner can do it cut ribbons for retail businesses. Sorry, retail jobs don’t pay enough to pay the bills. We need to manufacture things here and bring some industry to generate some real jobs.

  3. Fredrick says:

    Damn rich republicans not buying enough big boats??

  4. Really says:

    Doesnt look good but hey whst do I know.

  5. Terminus says:

    Why wouldn’t they stay here? Cheap wages (compared to similar positions in other areas). High incentives (which I’m sure will come). A labor pool that can do the work without training.

  6. Just read says:

    Didn’t they say awhile ago that they might not stay if the residential development next to them was approved?

  7. Pogo says:

    @MAGA

    Probably selling the brand to people who can afford yachts in old Jersey*, China, Russia (oligarchs like to float too) – friends of Bugsy Trump and his family.

    That old Jersey – where it’s hard out here for a billionaire
    https://www.usatoday.com/story/news/world/2017/11/07/paradise-papers-apple-shifted-billions-offshore-avoid-tax/839565001/

  8. Chartman says:

    Could be a buyout. Existing SeaRay or other Brunswick executives could be the next owners. The company could be sold such that the buyers put some money down and just take it over and continue to pay it off with a rider that Brunswick/Mercury engines and drives must be used. Thus Brunswick would continue to make money off SeaRay boats being sold (sell them drives) plus get a revenue stream of payments off the sale. Brunswick would get a good chunk of money with none of the headaches of running SeaRay. Plus Brunswick is currently pointing Boston Whaler at some of the same customers.

  9. Will Camp says:

    Cue The Doors -The End

  10. Chris A Pickett says:

    Bottom line is Sea Rays are overpriced, this is why they have sales problems. You can get a comparable vessel for nearly half the price, and in many instances a better hull. Sea Ray was a great name and made great vessels at one time, but times change.

  11. Anonymous says:

    I can’t say I blame them….get out while you can. This place has gone down the tubes with the elected officials being so nasty, hard to get along with, and not looking out for us, the people. Politicians here in Flagler County are so self serving. They promise they are going to serve when they campaign, but once they get in office they turn into different animals. They must be drinking the Coffey! Sadly newcomers come here and wreck this place and die or leave…Flagler County used to be a wonderful place to live and raise a family…not anymore. The crime is out of control and the officials fight with themselves when they have no one else to fight with. If the CIty of Bunnell isn’t fighting with the County, the County is fighting with Palm Coast of Flagler Beach, If Palm Coast isn’t fighting with the County, they are fighting with us the people. That is why nothing gets done and nothing is getting done to make this a better place to live…no one can get anything done without fighting, and they are using our tax dollars to do it. We are flipping the bill for the dysfunctional county and city leaders. It is time for change. In 2018 vote all incumbents out! Hopefully something will come in and be just as good as Sea Ray.

  12. palmcoaster says:

    Some generally foreign rich investors buy the brand and the technology that then they move overseas to use slave wages labor. I have seeing hundreds of jobs lost in Palm Coast due to companies being bought by wealthy foreign investors and taken overseas for name and their tech…there went our jobs to Asia with one of them that I recall used to be located in the corner of Pinelakes Parkway North and Palm Coast Parkway NW.
    Also is expected that our hurricanes seasons will get worst starting 2018….and I surely hope this is wrong as I can’t afford hurricanes anymore financially speaking. I can imagine how much they cost to Sea-Ray.
    Hope is NOT the case with Sea-Ray that those workers that are our neighbors will loose their jobs on the sale.

  13. William says:

    That road has been zoned non industrial if the businesses shut down so what will replace them? Definitely not jobs. Word around town has it that contemporary machinery is on the brink of bankruptcy so out the door with another business. Flagler county really making a name for themselves.

  14. Flatsflyer says:

    Terminus, the reason they will be leaving is the same reason over 40 other boat manufacturers have left Florida. Rick Scott has chased them out and North and South Carolina has welcomed them with open arms and large tax abatements. This coupled with Federal dollars and other incentives creates a situation where it has become very profitable for companies to relocate. Remember these are not very high tech jobs, mostly laborers installing off the shelf components build by other and used by any different manufacturers. Everything from engines to lights to refrigerators to navigation equipment are common across many Brands. The drawbacks are mainly impacts to the labor force so very few will move from Florida to the Carolina’s, income tax, personal property taxes, etc. don’t effect the employers, they write off the cost of moving, employees moving would be out several dollars per hour with labor wages rates in the Carolina’s are not much different from Florida. So the Florida worker get’s to collect unemployment while the Carolina worker get’s a job that pays better then the unemployment her was collecting. It’s all smoke and mirrors that benefit the large corporations like AMF/Brunswick. Sea Ray made millions in profit each of the last five years and sales have also increased, consequently the are other reasons to sell and move operations that are not the typical profit & loss incurred issues.

  15. Dick says:

    Brunswick is selling because Sea Ray is a losing company and the boat quality has taken an astronomically huge decline in the past 5 years. It’s so bad that Marine Max has to bring in a third party inspector to ensure they aren’t buying crap boats. The employees work too many hours and they get treated like crap, so they really don’t care how they build, they just do what they can to get the day over with. Someone needs to buy the company, clean out the management from the group leads on up, go back to a 40 hour work week, and clean out the good old boys, Maybe then, when the employees feel appreciated for their work, you might actually get quality boats.

  16. vern says:

    As a long term employee here in Vonore Tennessee .you hit the nail on the head.Very poor management and support for the employees trying to build the boats s the biggest reason for the quality down turn of our boats.Brunswick has basically liquidated the assets of the company .A lot of the experienced and highly knowledgeable employees were ran off here.Very sad for a 30 + year employee..Hoping some one will buy the company that wants the rebuild it with the quality and commitment that we once knew

  17. Carol Snow Budd says:

    Did it ever occur to anyone here that Brunswick may be selling because they can get enough dosh to shore up the rest of their operations with the proceeds. What a bunch of whiners and Monday night quarterbacks you are. Sea Ray Ray is a wonderful trusted brand with a great well trained and motivated work force so quit knocking it down. Who ever purchases it will be on a winner. Nothing ever stays the same. All will be revealed with time. My family were whip manufacturers in the 19th century but were intelligent enough to get in the automotive business instead of crying over the loss of sales of whips. If you lose your job you find another.

  18. Anonymous says:

    Just another example of bad engineering from the “don’t give a dam” Americans who have little interest in the product they are manufacturing. The world is full of enthusiastic engineers who take their jobs seriously. None of those engineers work for American companies! Poor engineering and workmanship is what makes American products undesirable to the consumers of the world.

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