A MUST READ! Jacobs suggests floorplan financing solution

[Ultralite]

Maybe some people don't understand dealer floorplan

Dealer applies for a line of credit, gets approved based on credit history. Places order(s) for boats, floorplan company approves the builder to get funds and the dealer pays interest till the boat is sold and removed off the floor plan in to the consumers or lien holders name

No different than you or I taking a credit card or home equity loan...


How would you like your mortgage or home equity loan payments to sky rocketed 25% a month for the length of the loan????

I don't get it here....Something has to be done and this is what jacobs is saying...

Think the auto, the construction the housing industry is having a huge impact...add the marine industry and we will have a royal flush...

Lucky Lady, I love looking at your Avatar, but your posts indicate you don't really understand what has gone on in the financial markets. We've had a credit crunch of historic proportions. What that entails is that most financial institutions are deleveraging. That's right, they're paring back on their outstanding loans and extending little in the way of new loans. One way of accomplishing that is to raise the financing cost on new loans, thus making them unaffordable.

It don't matter what the credit history is for a boat dealer. The flooring financing is repaid by selling the boats acquired with the financing. It does not take a rocket scientist to understand that in this economy, few are buying boats. The recent peak activity for boat sales was the result of wildly inflated personal net worths, facilitated by exhorbitantly high real estate prices, all fueled by loosely extended mortgage financing. Many boats were bought using home equity lines of credit. Now many do not have equity in their homes and are facing deficit net worths, job loss, even foreclosure on their homes and even repossession of cars and boats. So it should not come as a surprise that boat sales are in the dump. Flooring finance only addresses the inventory at dealers. Arguably, in this market there should be little to no inventory at dealers because they can't sell it. The real solution would be to just build to order as inventory is expensive to carry. So there's your solution, as there will be no fix to flooring finance until the boats start selling/moving.

[Fritz]

Maybe some people don't understand dealer floorplan

Dealer applies for a line of credit, gets approved based on credit history. Places order(s) for boats, floorplan company approves the builder to get funds and the dealer pays interest till the boat is sold and removed off the floor plan in to the consumers or lien holders name

No different than you or I taking a credit card or home equity loan...


How would you like your mortgage or home equity loan payments to sky rocketed 25% a month for the length of the loan????

I don't get it here....Something has to be done and this is what jacobs is saying...

Think the auto, the construction the housing industry is having a huge impact...add the marine industry and we will have a royal flush...

Floor planning perfectly. OK, something has to be done. By who? If Genmar was not so burdened by debt they might have been able to offer flooring planning to their dealers. Banking is tight all over right now. Let's say you own commercial real estate and your LTV is 65%. That's pretty strong right? Your note is coming due and you need to refinance right? Here is the good part. THE BANKS ARE NOT LENDING. GET IT! You are probably going to lose the property. The banks are hording money because of the way the government values them. Its the whole Mark to Market valuation argument.

You are comparing the auto industry & marine industry to housing's impact. The entire American auto industry & marine industry don't amount to spit compared to housing.

BTW- The government helped create this whole mess by encouraging entities to lend B paper. So what do they do, they seize control of troubled banks. Now they have seized the auto industry, stiffed the bond holders, and handed it over to the unions. The auto industry should have been allowed to fail. Let's face it $90.00 an hour to put part A into part B is out of control.

As for the marine industry, there were way too many brands and pricing got way out of line. You buy a part for the car or home and it costs say $50.00. Stamp a label on the product that says Marine and the very same part costs $250.00. Come on now, don't you agree boat pricing was out of control? How about the sales taxes in NJ at 7%? A $500,000.00 boat sale has $35,000.00 in taxes attached and an additional $50,000 commission being paid by the seller and passed along to the buyer in the cost of product? Let's talk fuel prices- Don't you think the price of fuel has something to do with the downturn in the marine industry?

Ever here of a non-stocking dealer? You know the dealer get to represent the product and introduce customers to a sample / demo and the builder builds it. The problem with this approach is a large multi-line outfit can't survive building them a few at a time. I think that's better for the small builder in the long run. Home builders don't build out an entire development then sell the homes. They build a sample and maybe a spec or two and use those as demos. Until things turn around, its a thought.

So what's your plan Mary?

[canyongear]

I can tell you one thing..don't ever count out Irwin Jacobs..the man is a master..he has weathered many an economic downturn and has always survived. I have no dog in this hunt..but I do know one thing..Irwin Jacobs/Genmar may not look the same in 5 years but he will be around cleaning up the mess ..that you can take to any bank..with or without a floorplan.

This movie has been seen before and played out the strong survive and prosper..the weak will politely go away..the recreation industry is very cycle driven..floor plan financing works in good times on the up ramp and really blows on the downside.

This cycle is deeper than many..it will change and the good builders and dealers will survive..direct buys to manu's may actually begin to occur to take the fat out of the distribution chain..well actually "may" is wrong..should be "will" and it will happen with the deepening of the "D" or "R" word depending on your perspective on the Eco..how many Chrysler and GM dealers a year ago even contemplated they would have their dealer contracts closed out and bought out by the mothership?

[fountain17]

Thanks for posting the article LuckLady.

One thing is for certain; business across all industries must re-think their strategy and process.

In the 90's it was called 'process re-engineering'. More common today is Business Process Improvement or Business Process Management (which takes a more holistic approach).

The goal of each is to better align corporate strategy with process and market/customer needs.

Strategy Maps and Business Process Maps are essential.


Don