In early March, The New York Times quoted an executive at global shipping giant A.P. Moller-Maersk, who said, “I’ve never seen anything like this.” He was describing how all the links in the global supply chain are stretched. Ships, trucks, warehouses, everything.
This assessment was not news to OEMs in the U.S. marine industry. Keeping the supply chain moving and products available to meet consumer demand has become a huge part of some industry leaders’ jobs in the past year.
“It’s taking up more than 50 percent of my time,” Knut Frostad, CEO of Navico, tells Soundings Trade Only. Leading a marine-electronics company with a constellation of brands such as Lowrance, C-Map, B&G and Simrad, he understandably has much on his mind about supplying product in a timely manner during the pandemic.
Looking back over the past year, the challenges Navico faced during the pandemic — keeping staff safe and healthy at its myriad manufacturing locations and offices in Asia, North America and Europe — was paramount. But then something unexpected happened: the boating market exploded. “The [market-demand] rebound hit much quicker than we expected, which was a great thing,” Frostad says. “We started really building into Q2, Q3 in the last year, and we ended the year fantastically well.”
His thoughts about the current year are tempered by the current global supply chain crunch. “We have a huge surge of demand, and we have constraints on logistics with shipping delays, massive capacity reduction in air freight and a lot of component shortages everywhere due to demand. In the electronics world, we also have one other factor: Everything related to electronics right now is going extremely well, but we share component suppliers with the automotive industry, and there is a big surge of demand in the car industry.” Cars are using more and more electronics, he says, which has put the squeeze on the supply chain for marine electronics. “I call it the perfect hurricane.”
Numerous marine executives are watching problems in multiple areas converge as they ramp up production capacity, add shifts at factories, and talk to supplier and dealer networks about ideas to keep the pipeline moving. The industry is heading into the heart of America’s prime boating season having survived and even thrived during the first year of the pandemic, but marine manufacturers are still struggling to get overall supply-chain issues under control.
“We reached out to our 200 biggest customers to have a dialogue about the situation, what we can do to support each other, whether a boatbuilder or a retailer,” Frostad says. “You discover that there are actually quite a few things we can do on how we plan inventories, how we plan safety stocks, how we plan logistics, how we plan timing and capacity. There’s a strong sense in the industry that we’re in this together and that, despite the challenges, we are very fortunate because we are in an industry where people are definitely going to spend more time on the water. There’s no doubt about that.”
Boatbuilder Reports
Candace Gawrysiak, communications specialist at Sea-Doo parent company Bombardier Recreational Products, says that for personal watercraft and boats, factories are running at full capacity with a plan to meet dealer orders at the peak retail season. “While this dynamic put pressure on our people, our suppliers and our dealers, everyone rose to the occasion to make the most of this opportunity while ensuring the health and safety of our teams everywhere around the world,” Gawrysiak says. “We were fortunate to be able to benefit from the unexpected surge in consumer demand.”
Sailfish Boats in Cairo, Ga., is one of several U.S. boatbuilders that recently announced manufacturing and workforce expansions, but president and CEO Rob Parmentier says raw-material and other shortages remain a problem industrywide. “We were on our way to trying to increase production 25 percent, and we’re doing everything we can to get more employees. Now we’re running out of parts and pieces,” he says. “That’s ubiquitous for all the bulk brands. I know almost every one of my peers [in the marine industry], and I’m also on the NMMA board for OEMs, and it’s ubiquitous. We have engine issues, numero uno. Number two, or tied with number one, is chrome, resin, stringers. And believe it or not, marine heads — toilets.”
He says February’s polar vortex in Texas delayed production of gelcoat, resin and similar boatbuilding materials. He also points to “upholstery and foam, some latches, stainless-steel products — stuff that we don’t necessarily buy from China, but our vendors do.”
Parmentier says builders are trading parts to help one another where possible. “We’re substituting the best we can. All of us [in the industry] are calling each other and trading parts and pieces trying to help each other. We’re a tight-knit group, and when things get a little out of kilter, everybody seems to come together,” he says. “We just hope and pray that our vendors can get back up to speed, and we get to continue to take advantage of the excellent market conditions.”
Peter Barrett, SmokerCraft senior vice president of marketing and corporate development, says that after reopening a year ago following the government-ordered pandemic closure, the company anticipated increased demand. It took on extra inventory and hired as many people as possible. “We communicated with our vendors about the demand we were seeing. Prior to the shutdown, we had 530 people working, and we were over 650 by December,” he says. “We are now over 700. We were able to increase production more than 40 percent in the last two quarters of last year.”
Indiana-based Barletta Boats also was preparing for market growth when Covid-19 struck. It began construction on a 125,000-square-foot production facility in the fall of 2020. The new facility was scheduled for completion in April, effectively doubling Barletta’s boatbuilding capacity.
“Both of our production facilities will be operating at near capacity by fall of 2021,” says company founder and president Bill Fenech, adding that there is room on Barletta’s 37-acre campus for additional growth if needed.
While the Barletta management team says that “every manufacturer across the board has had their fair share of supply/production disruptions,” clear communication has been a key component in making decisions to keep inventory moving. “Our supply-chain team is in constant contact with our vendor partners, our sales team is in constant contact with our dealer partners, and our dealer partners are in constant contact with our boat buyers. Clear communication has been the key to being a good partner. As a customer — and at some level all of us are customers — when you have clear and honest communication, you can adjust expectations and plan accordingly. When there is no communication, things start to fall apart,” the Barletta team says.
Propulsion Perspectives
Outboard companies are among the biggest beneficiaries of exploding consumer demand, and those that manufacture overseas are among the hardest hit by issues hampering the industry. “We are all fortunate for the high level of retail demand we’ve seen in the last 12 months, [and] we have been increasing production by adding new hires and adjusting short-term plant equipment and efficiencies to lift capacity,” says Ben Speciale, president of Yamaha U.S. Marine Business Unit. “There have been a lot of challenges ramping up speed in the vendor supply channel.”
Yamaha had a new propeller plant come online in April, which should help increase production. But the Texas freeze created shortages. Speciale mentions steps that Yamaha has taken to bolster resources. “Our component manufacturing facilities in the U.S. produce propellers, fuel tanks and trim tabs. Each plant is a little different,” he says. “We broke ground on a new propeller plant in 2019. It is coming on-line, which means we will be able to produce more propellers very soon. We continue to increase efficiencies at our other facilities.”
But like nearly all other manufacturers, shortages in product and unexpected issues — some related to the pandemic, some not — continue to concen them. “As for our boat companies and watercraft, we are now seeing shortages in flotation foam, resins and seat foam, a problem that is compounding other issues. We are now experiencing a shortage of intermodal cargo containers, which has hampered the movement of global supply,” Speciale says. “The recent change in shipping dates for outboards and parts is being driven by this developing new shortage of containers and resulting U.S. port backlogs. We are still shipping each day; just the timing, volume and dates are moving based on capacity allocation availability each week.”
Gus Blakey, vice president of Suzuki Marine USA, agrees about the difficult market conditions. “Meeting increased demand for product during a global pandemic has been a challenge for the entire industry, [and] Suzuki has put great effort into keeping our product levels as high as possible, despite obvious supply-and-delivery-chain challenges,” he says. “From a production standpoint, we took all possible steps to keep our workers safe while keeping things moving smoothly. Most importantly, our factories never shut down during the pandemic.”
Some of the biggest challenges Suzuki faces are shipping delays at ports, shortages of available shipping container space and other issues that are slowing the process of getting motors from the factory to the dealers.
“We’re very proud of the fact that, despite the many challenges the past year has thrown at us, Suzuki Marine has been able to increase sales and make the moves necessary to keep its boatbuilders and dealers supplied with product as well as possible,” he says.
Speciale adds that despite the current challenges, the future remains bright. “Many new customers have come into the sports of fishing and boating, and we really believe they will continue to enjoy the water,” he says. “The supply channels will stabilize as safety stocks recover.”
This article was originally published in the May 2021 issue.
