Brunswick announcement...Bad or good for Sea Ray??????

osd9

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Oct 3, 2006
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MidAtlantic
Boat Info
2003 410DA
Engines
Caterpillar 3126-TA w/ ZF 80-IV
LAKE FOREST, Ill., Nov. 9 /PRNewswire-FirstCall/ -- Brunswick Corporation (NYSE: BC - News) announced today that it is taking a series of actions to cut costs, better utilize overall capacity and improve general operating efficiencies.
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"Given current market conditions, we have planned for flat to declining production volumes in 2007. With that assumption, we must take appropriate actions to cut costs and capitalize on the productivity improvements we are realizing. This will create headroom in our cost structure so that we can continue to invest in strategic initiatives critical to achieving our long- term objectives and to help mitigate the effect of inflation on our costs," explained Brunswick Chairman and Chief Executive Officer Dustan E. McCoy. "We have undertaken a review of our manufacturing footprint as well as carefully scrutinized all processes and activities throughout our organization with an eye toward not only how we perform our tasks, but the benefit of the tasks performed. We are taking advantage of the more productive work processes we have introduced and employed in the past few years, along with ongoing integration efforts, to improve operations across the entire organization."

"Our cost-reduction efforts include consolidating certain boat manufacturing facilities, sales offices and distribution warehouses, and making reductions in our global work force. In recent years, a large part of our strategic focus in marine has been to acquire a wide selection of products and services that will enable our dealers to provide unmatched customer service to virtually every type of boater," McCoy added. "This included buying boat brands and establishing the industry's leading and most efficient boat parts and accessories (P&A) business. Now with the domestic acquisition phase largely complete and our integration efforts well under way, we are increasingly turning our attention toward how to best manage and employ the assets we have assembled to provide high-quality, innovative products at competitive prices."

The consolidation of boat production will affect Lund-Canada in Steinbach, Manitoba, and US Marine in Cumberland, Md. Lund boat manufacturing will be transferred to its plant in New York Mills, Minn., with Lund-Canada's sales, marketing and customer service functions remaining in Steinbach. US Marine will transfer production of certain Bayliner runabouts from one of its two Cumberland, Md., plants to its operations in Pipestone, Minn. Cumberland's remaining plant will continue to produce Trophy boats. A phased shutdown of the Steinbach and Cumberland facilities will commence in the current quarter and be completed in 2007.

"In addition to the boat plant closures, we will be realigning distribution for our bowling products business, streamlining some sales operations and eliminating select positions throughout our company; cutting across all functions and all levels. All of these actions combined will result in a reduction of 430 hourly and salaried production employees and 215 salaried positions in various corporate and division staff functions out of the company's worldwide work force of 28,500. The work force reductions will take place between now and the middle of next year," McCoy added.

The company said that severance, asset write-downs and other costs associated with the plant closures and distribution realignment will reduce operating earnings by approximately $25 million to $28 million. Approximately 80 percent of these costs will affect the fourth quarter of 2006, with the balance being recognized in 2007. The company's previously announced 2006 earnings estimate of $2.40 to $2.46 per share does not include any expenses associated with these cost-reduction efforts. The company added that anticipated savings of approximately $26 million in 2007 due to these actions will support continued investments in strategic initiatives as well as to help offset the effect of inflation on wages, benefits, insurance and health care costs, and higher material, energy and other operating expenses expected next year.

"As we look ahead, we will continue to identify additional opportunities, and take the appropriate actions, to ensure that we operate our business as efficiently as possible, while building long-term value in the company during a period of weak market conditions for marine products," McCoy added.
 
Most sweeping cost cutting measures tend to affect all divisions accross the board so I would look for Sea Ray to be affected somehow.
 
Here is the Reuters News Release:

CHICAGO, Nov 9 (Reuters) - Brunswick Corp. (BC.N: Quote, Profile, Research), the world's largest builder of recreational boats, said on Thursday it is cutting more than 600 jobs as it tries to respond to falling demand for its products brought on by higher interest rates and energy prices and deteriorating consumer confidence.

The company said the cuts involve 430 hourly and salaried production employees and 215 salaried workers. It said most of the job losses would take place between now and the middle of 2007 and be spread across its manufacturing, distribution and sales units.

The Lake Forest, Illinois-based company said it expects costs associated with the cuts to reduce operating earnings by between $25 million and $28 million. It said most of those costs -- about 80 percent -- would be taken in the fourth quarter and the rest in 2007.



Last month, Brunswick reported that its third-quarter earnings dropped 59 percent as the woes of the Detroit auto industry translated into "significant declines" in sales in the upper U.S. Midwest.

The company also cut its forecast for full-year earnings, saying the marine market, which has been hurt by higher interest rates and fuel prices, continues to be weak. Looking forward, Brunswick said it is girding for "flat to declining" markets again in 2007.

It said that while gasoline prices have eased in recent weeks, dealers have not reported a pickup in showroom traffic, and inventories continued to grow in the most recent quarter despite production cuts.

As a result, it said it would scale back production yet again. It cautioned that its reduced forecasts for full-year earnings do not reflect any costs related to cuts it might make during the fourth quarter.
 
Not sure how the Brunswick Corp announcement will specifically affect Sea Ray, but it is clear that this was written to directly address the stock holders. If one were to rewrite it and remove all the jargon, business speak and unnecessary diatribe, it may sound something like this.

“Overall sales sucked through some of this year and we didn’t make as much money as promised. Next year sales may continue to stay the same or perhaps suck a little more. To try and fix this we will operate lean, mean, close to the bone and purge the system of any dead wood. Don’t panic, we are on top of the problem and will do what is necessary to make money for everyone.â€
 
Since the brands are so similar, I speculate that Bayliner and Maxum will eventually undergo some consolidation in the under 19 ft products...
 
It's called good management and I perceive it as a good thing that will assure the preservation of Brunswick and the Sea Ray line. Their stock ought to rise in response to this announcement.
 
Looking at this a little different, we had a run thru the 90’s and early this century where stock market returns made thing temporarily better then they otherwise would have.

This was followed by a boom in real estate.

With both of these behind us for now these are regular good times and although they may seem dismal its really only when compared to the short window of time when things were out of balance that today does not look good.

Anyways that’s my macro economic theory.

So if you offer a person a penny for their thoughts and giving your opinion is your 2 cents, where did the other penny go? Who gets all those pennies?
 
Is Train Wreck still with MM

Hi Guys

In responce to the chilly economic forcast at SR I was wondering if our own Train Wreck is abord and still with Marine Max.
Anyone hear from him lately?
 

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