A MUST READ! Jacobs suggests floorplan financing solution

[LuckyLady]

Manufacturing & Fabrication
Jacobs suggests floorplan financing solution

Friday June 12, 2009




MINNEAPOLIS, Minn. – Genmar Holdings Inc. Chairman Irwin Jacobs wrote a letter to the industry this week suggesting a solution to its consumer and floorplan financing troubles.

“If something isn’t done very soon (and I mean soon) to help correct the boat dealer floor plan and retail financing problem in the U.S., it is conceivable that the entire recreational boating industry could be critically damaged for decades ahead,” he wrote.
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Jacobs proposed that if the U.S. Government required GMAC, to which it has given over $100 billion of taxpayer’s money, to serve the boating industry’s financing needs, “I believe the recreational boating industry would see an immediate end to the continuing downturn.”

“I don’t for a minute believe that a GMAC financing program for the recreational boating industry is going to single-handedly bring our industry back to where it was before the recession began, but I do believe that GMAC’s support will allow our industry to survive the present downturn and begin to show some life in the months ahead,” he explained in the letter. “I believe it will take a small fraction of the dollars that the U.S. Government gave to GMAC to support the wholesale and retail financing needs of the recreational boating industry.”

Then, Jacobs urged boat builders, dealers, industry vendors and their employees to lobby in favor of his proposal by writing and calling their state and federal representatives, sharing with them the hundreds of thousands of industry jobs that have already been lost due to “the worst economic downturn the industry has ever seen.”

The automotive industry has received the government’s help because the story of its devastation has been front and center, unlike the boating industry, he argued.

“No one seems to be telling our real life-threatening story to the Obama Administration, and if nothing is done very soon to correct the floor plan and retail financing problem for our industry, I predict it is only a short matter of time before what I call the boating industry’s life-threatening tsunami could put its final blow on the entire industry for decades ahead,” he wrote. “The reason the U.S. Government hasn’t paid any attention to our industry is that we’re not organized to speak loud enough. We’ve got to tell our story!”

[marine4003]

Thats interesting...cars,in our society (lack of good public transportation) are a necessity..whereas watercraft,are luxury's and in some cases a "tool" that produces income, America,or actually its citizens will raise holy hell if the govt starts financing and bailing out the marine industry,what needs to happen is the idiots who manufacture boats have to stop considering themselves "above it all" and offer the same deals and rates that are offered to potential car buyers.everything else has gone down in price or at the very least,been offering incentives to the consumer..while the boating industry has largely been ignoring the economy, i went and looked at center consoles in the 22 28' range from a wide spectrum of manufacturers...no deals to be had, in fact the general attitude was..don't have the $$ in pocket?...then you don't need to be here...like i said..a luxury product doesn't garner sympathy,or demand the same attention necessity do.

[bac jr]

Imagine, Genmar wouldn't be so far out on a limb if their hindsight wasn't such during their marine manufacter power buys. Looking to reap rewards while trying to become a kingpin in the industry is now moving in reverse for the worse.

It would be a possible priority if a boat was a essential such as homes or cars but not the case. Even if the government or whom ever could create better flooring that's not going to stimulate people to make purchases that they can't currently afford. Many that lost their home to foreclosure, gave up the boat first. New and used boat sales will remain slow for probably the next few years.

[Ultralite]

Boats = Highly discretionary purchase > Not necessary during tough economic times.

Virtually all the Japanese auto manufacturers provide the flooring finance for their U.S. Dealers. Boat manufacturers relied on 3rd party finance companies and banks such as GE and Key Bank, both of whom pulled out when it was apparent that the inventory was not moving.

A buddy of mine was a Sr. Naval Engineer for Sea Ray Yachts in Merrit Island, FL. He said that in 2007 Brunswick (parent of SeaRay) pumped out 12,000 boats and stuffed their dealers with inventory that could not be sold. In 2008 their production dropped to 7,000 boats, or almost a 50% decline.

Maybe Genmar should consider a different distribution model. Instead of building to inventory at dealers, they should build to order with dealers merely serving as the intermediary taking the orders?

As another post noted, Genmar strategy of rolling up the small boat marine industry left them with a concentration of of risk in the market which is probably most impacted in this recession. Good news is that one can easily scale down boat building and then scale it back up once sales pick-up. There aren't significant barriers to entry in boat building. It's sort of a localized cottage industry as the transportation costs significantly eat into margins.

[LuckyLady]

The issue with the existing floor plan companies is not know to alot of people

Now granted some manufacturers do jam and cram inventory down dealers throats but the fact of the matter is that GE took drastic measure recently to bail themselves out of their own stupidity. In the past 2 years this cram and jam has backed off a bit, the marine industry has been going down hill for over 2 years now, even before the fall stock market drop out.

Most dealers have at min 1 mil in floorplan most are up to 5 mil depending on the obvious.

All GE Floorplan dealers are now faced with a 20-25% increase on their existing floorplan interest payments every month now. Most dealers have 4 mil in floorplan and most are maxed out. You do the math of what the dealers are being faced with.

What kind of pain will this cause, in my opinion. Most dealers will say screw GE they can take the boats and the 25% increase and shove it you know where.

This is what jacobs is speaking of, not a bail out but control of this bs.

Is it fair that every single dealer out there got slapped with this increase, dealers that have been in good standing for 30 years, dealers that have been in biz for a year, good or bad everyone got nailed. This is not right in my book.

Who does this get passed on to outside the dealer, the consumer, what does this in turn do to jobs, economy and all of the rest.

Its impossible for any factory of any sort big or small to run their own floor plan. Its just impossible.

This is notice that I got last week

"Cook Composites and Polymers will increase the price for all unsaturated polyester and vinylester resins, gelcoats and Thermaclean products by five cents per pound."

This is one of the 4-6 increases per year that factories are faced with. That's approx $500.00 per 10k pounds and that is just one piece of what it takes to build boats.

Again Jacobs is not asking for a "auto bailout" and are not looking to so called stimualte purchases so and so forth

Shit Contender is still building 4-5 boats a week and have yet to shut down. Searay Knoxville gave notice 2 weeks ago they are closing for 3 months... Thier dealers restocking and inventory play a huge part in this, but that is mistakes they made.

The market is still good, you just got to work harder! Most dealers are used to being hand fed and people flowing in the doors and coming to them. Get off your butts are work a little harder and you just may reep the rewards


FRIGGEN BS!

[Fritz]

Government intervention / bail out of another industry/ WHAAAAAT? I refuse to ever buy another GM or Chrylser product. I will react the same to any government bailout or subsidy or whatever you want to call it of a marine related business. Its not the government's money they are spending, its our money and the future of our kids and grandchildren. Enough is enough. Death of the marine industry indeed. The marine industry will survive as long as people want to buy boats, its just going to change.

Some companies were over-leveraged, some had poor business models, and others got caught in changing times. Let's face it, the buyers are simply not there like they used to be and its going to be like that for some time. It sucks, but that is capitalism and that is how it works. The strongest will survive and even thrive. As others fail, others will rise up to fill the void.

All I have to say is stop the insanity!!!! Enough with the bailout and government intervention crap. Its sickening.

[Hatterized]

what if boat builders were union shops.....like machinist and UAW.....

guess boat prices would be 5 times what they are now with and a bail-out would be in order....

GENMAR = Govt Enabled Nautical Marine Assisted Retailer

since Uncle Sam now owns GMAC let them get into marine financing/lending where people really have the money for down payments....instead of leaving the marine industry alone helplessly adrift treading water barely afloat...

[LuckyLady]

Asking EVERYONE TO RE-READ AND PAY ATTN TO THE WORDS

"FLOORPLAN FINANCING SOLUTION", THERE NEEDS TO BE ANOTHER OPTION.

THERE IS NO BAILOUT BEING ASKED FOR!

NO ONE IS GETTING ANY MONEY AND NO ONE IS ASKING FOR MONEY. SOMETHING JUST NEEDS TO BE DONE

MAYBE THEY SHOULD REWRITE THE ARTICAL AND LEAVE GMAC OUT

Manufacturing & Fabrication
Jacobs suggests floorplan financing solution

Friday June 12, 2009




MINNEAPOLIS, Minn. – Genmar Holdings Inc. Chairman Irwin Jacobs wrote a letter to the industry this week suggesting a solution to its consumer and floorplan financing troubles.

“If something isn’t done very soon (and I mean soon) to help correct the boat dealer floor plan and retail financing problem in the U.S., it is conceivable that the entire recreational boating industry could be critically damaged for decades ahead,” he wrote.
Advertisement
Jacobs proposed that if the U.S. Government required GMAC, to which it has given over $100 billion of taxpayer’s money, to serve the boating industry’s financing needs, “I believe the recreational boating industry would see an immediate end to the continuing downturn.”

“I don’t for a minute believe that a GMAC financing program for the recreational boating industry is going to single-handedly bring our industry back to where it was before the recession began, but I do believe that GMAC’s support will allow our industry to survive the present downturn and begin to show some life in the months ahead,” he explained in the letter. “I believe it will take a small fraction of the dollars that the U.S. Government gave to GMAC to support the wholesale and retail financing needs of the recreational boating industry.”

Then, Jacobs urged boat builders, dealers, industry vendors and their employees to lobby in favor of his proposal by writing and calling their state and federal representatives, sharing with them the hundreds of thousands of industry jobs that have already been lost due to “the worst economic downturn the industry has ever seen.”

The automotive industry has received the government’s help because the story of its devastation has been front and center, unlike the boating industry, he argued.

“No one seems to be telling our real life-threatening story to the Obama Administration, and if nothing is done very soon to correct the floor plan and retail financing problem for our industry, I predict it is only a short matter of time before what I call the boating industry’s life-threatening tsunami could put its final blow on the entire industry for decades ahead,” he wrote. “The reason the U.S. Government hasn’t paid any attention to our industry is that we’re not organized to speak loud enough. We’ve got to tell our story!”

[LuckyLady]

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...

[bac jr]

NEVER MIND, I"M RE-READING THE ARTICLE OVER AND OVER.
SO TALK TO US LIKE WERE DUMB, KNOWING NOTHING ABOUT THE INDUSTRY, FLOOR PLANNING, INCENTIVES, VOLUME, ETC...

GOOD FOR CONTENDER IF THERE STILL DOING FOUR OR FIVE UNITS A WEEK, IT WON"T LAST! AS FOR COOKS COMPOSITE, THEY ARE ONE OF OUR VENDORS AND IT'S ALL PART OF DOING BUSINESS, LIKE PUTTING GAS IN YOUR CAR. MAYBE WITH ALL YOUR INDUSTRY SPECIALTIES YOU CAN FIX IT!!