You are right there, but how you put things together makes a difference. For that matter, the material in a BMW and a Kia should cost pretty close to each other if you just count raw material. Engineering might play a "minor" part in the price here too. Like I stated earlier, there already are cheap boats on the market, it would be nice to have an inexpensive boat that's good. American made would be better yet.

So is anybody actually importing alumimum hulls from China or overseas yet?

I don't think so, yet, but I wouldn't put it out of the future. The one bright side of our exploding fuel prices is that it's now cheaper to make some stuff back here than to ship it across the ocean.

I'm sure there would be a leak somewhere!

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Artical from Bassfan.com

Genmar chairman and CEO Irwin Jacobs circulated a letter to all Genmar dealers that announced the company will aggressively re-enter the aluminum market. That's significant news for a couple of reasons.

Remember that Genmar sold its aluminum boat brands – Lund, Lund Canada, Crestliner and Lowe – to Brunswick Corp. in March 2004. With the sale, the company effectively divested itself from the aluminum market. At the time, Jacobs noted: "Genmar's board of directors unanimously agreed it would be in the best interests of the company and its shareholders to put all of our efforts and resources towards the future development and expansion of Genmar's 13 remaining fiberglass boat companies."

Lund, Lowe and Crestliner are monster brands in the aluminum market, and it appears that Genmar means to go head-to-head with those same brands it sold off 4 years ago.

In the letter, Jacobs announced plans to start a new aluminum boat company. Production would take place at a new, not-yet-built factory. The brand name, and factory location, will not be announced until next year.

Some other highlights from the letter Jacobs penned:


"It is hard for me to believe that currently there are several aluminum fishing boats in the retail market at the same price, if not higher, than equally equipped fiberglass fishing boats of identical size; which I believe offer many more benefits than today's selection of aluminum boats ever could. I believe fiberglass fishing boats (i.e. Ranger, Stratos, Champion Boats, plus others) offer a better ride and a greater value than aluminum boats. In other words, I believe aluminum boats presently being offered both in today's market are, in many instances, overpriced compared to many of the fiberglass fishing boats."


"As we develop our new aluminum boat line, it is Genmar's intention to substantially decrease the wholesale and retail prices in all of the aluminum boat segments of the market. This includes reducing wholesale and retail prices from entry level aluminum boats to the higher end and everything in between. I believe the only way that Genmar can once again become the industry leader in aluminum boats is for us to basically change the entire way aluminum boats are presently priced, manufactured and marketed to dealers and to the retail boat buying consumers."


"The new Genmar aluminum boat factory will be the most modern, high-tech aluminum boat factory in the world."


"We won't be announcing the new name for the aluminum boat company until late 2009 or early 2010. It will be a completely new name and company. We hope to announce the location for the new aluminum boat factory sometime in the middle or third quarter in 2009."


"I want to assure you that when you see and hear about what Genmar's specific plans are for our new aluminum boat company, there won't be any doubt in anyone's mind (including our competitors) who is going to once again be the leader in the aluminum boat segment of the market. It will be Genmar's new aluminum boat company."

More details will be published as they unfold.

I'll bet $20 that they won't be built by Americans.

why you say that

Looking at it from a price point. If they are truely interested in competing head to head with the upper end aluminum and glass boats but beating the price by enough of a margin to make the difference, you have to cut cost somewhere. You have your choice of labor cost, material cost and shipping cost. We all know that off shore labor is cheaper and many manufacturers have shipped jobs overseas because of it (helping to put us in the financial situation we are in), and you have the material manufacturing cost that are high in the USA due to several laws the the EPA and others enforce (and should be enforced around the globe, but they are not). In LDC's (Lesser Developed Countries) and UDC's (Under Developed Countries) Where you have people willing to basically work for room and board, and are allowed to dump hazardous waste in rivers and such, and the power plants run with basically no polution control producing very cheap electricity. Remember the China air quality issues they had this summer? That is a great way to make a good product for much less than you could here. Another thing is that most of the UDC and LDC countries don't have copyrite laws so it's very easy to reverse engineer a product and start making a copy.

The rising cost of fuel for transporting the product is the only factor at this point that can be the trump card in the whole deal.

There are several automobiles made in countires other than Japan and the USA that are very good in quality and much cheaper that the domesticly made stuff. Not saying they are competition to BMW, but they are good. Apply the same techniques to boat manufacturing (maybe get partnered up with one) and you have a recipe that will be hard to beat, unless you prefer to buy American.

Genmar has alot of cash from the sale that it has at it's disposal, so anything is possible. They could choose to make it here and just take less of a profit margin to keep the cost down, but who does that??

Just my opinion and I could very well be wrong, and hope that I am.

I think the argument that he is making is that they can cut costs simply by decreasing the profit margin. He seems to be implying that the Brunswick lines have such substantial mark up on them, that one can come into the market, build a great boat and sell it for a respectable profit and still be dramatically under the costs of the other boats.

Interesting though, that the company can't seem to make up its mind on aluminum boats. Why sell the established mature companies and start another? Why the change of heart? Especially considering the tough time the boating industry is under right now...

Good point. I don't know what kind of profit margin they run but I can't imagine it's enough to cut it and still make a big difference. If he seriously wants to compete with top of the line stuff (we are talking 50k+ here, which is what the top end Pro-Vs and 619-620-621 Rangers go for) beating someone by 1 or 2 percent isn't that much, and to swing someone away from one of the tried and true manufacturers is going to take much more than that.

What do you think its going to take to swing a guy away from a $50,000 boat to an upstart company? Fully knowing that these buyers are not new to the market, are more than likely not first time buyers and probably not median income and median education people. My next boat will be one of those upper end boats and to swing me I'd have to see something comparable for 30% less, and I'd have to figure that the resale of this upstart boat will just tank. With that said, I don't know if there is that much of a profit margin that they can cut?

Maybe I'm wrong but my interpretation of the original article is that this new company was going to go and compete with the top end glass and aluminum boats.

Maybe Irwin realizes that he doesn't have a price point fishing boat in any of his lines and knows he needs one in this market. He should have kept Lowe or Crestliner.

It will certainly be intresting to see how this plays out. I don't think he'll go overseas, they don't have any overseas builders so far, and it seems odd that he'd start now, but who can tell.

I think a lot of it is that the profit margins have gotten a bit out of control, hence the high price on the current major aluminum boats. I know raw materials costs have increased, but so have petroleum based products and the % increase you see on aluminum boats does not match the % increase in glass boats. I think the aluminum manufacturers wanted to see what people would pay for their brand of boat, and for the most part have been able to get it so far.

marine_man

I'm not sure overseas production would be viable. Many foriegn car manufactures have plants in the US. Yes, there are many cars that are shipped from overseas, but those are mostly from manufactures that sell a majority of their production outside of the US. Their US sales volume would not justify the investment in US based plant. Not sure what the Chinese market is for aluminum boats???? While shipping costs are one consideration, if I remember correctly one of the big factors in foriegn auto manufactures opening US plants was to help reduce volatility from fluctations in currency exchange rates. The Japenesse made their biggest inroads in the US market when the Yen was very weak...it allowed them to sell their cars (priced in stronger US$) for less in the US market. Along with that, I'm pretty sure Irwin knows his buyer and would not risk alienating his buyer with a foriegn built boat...and really, if it were economical to build boats overseas and sell them in the US market it would all ready be happening.

If anyone knows and understands the costs to building an aluminum boat comparable to Lund, it would be Irwin and his team of financial analysts that probably were involved with Lund. He is correct in saying that it will bring down prices in the aluminum boat market. Let's just hope they are commited to making a first class product. It will be interesting to see how it plays out.

With the variety of glass boats they sell, Genmar's current dealer network is much broader geographically. Genmar should be able to leverage that to sell to a larger audience...you do not see too many Lunds outside of the midwest....no dealer support. With an increase distribution area, should be able to sell a higher volume and help with pushing costs down....It will be interesting to watch. Based on the geography of the high end aluminum boat market, I'd be willing to bet the plant will be north of the Mason-Dixon line....but probably not too far north of that....And I wonder if they will be able to lure away a few Lund engineers???

I believe if it is built north of the line the labor cost will be to much. Then again, that might all change depending on who the target market is. If it's an upscale boat targeted at midwestern walleye fisherpeople then the savings on transportation could be huge, but if it's going to be a large market (ie tracker) boat, then building it in Alabama makes more sense.

In my remarks about being forign built, I was thinking if an upstart company could partner up with company like Kia or Hyundi (both Korean and both HUGE manufacturing companies) the possibility to build a Pro-V quality boat for less could be there, and from a buisiness point of view that would give the other company a better foothold in the USA.

But on the other hand, there are so many empty manufacuting plants around the USA that it could be built anywhere, and with the economy we have now there are lots of people willing to work for less.

Did anybody consider that maybe some of the difference in price would be made up by not having to spend all that sponsor/advertising money?