Chris-Craft’s president and CEO speaks with IBI about sales trends, working with Winnebago and what the future holds as the iconic US boat builder celebrates 145 years in business.
Celebrating its 145th anniversary with the 2020 model year, the senior management team at Chris-Craft Boats was in a particularly festive mood in early July as the company welcomed dealers, VIP customers and media to its Summer Showcase buying event in Sarasota, Florida. It’s been a little over a full year since the iconic US fibreglass boat builder came under new ownership, following its June 2018 acquisition by recreational vehicle manufacturer Winnebago Inc.
At the time of the acquisition Winnebago, which is publicly traded on the New York Stock Exchange, committed to investing in Chris-Craft with a view to making the premium brand more accessible, including a commitment to broaden the scope of its product portfolio to include more small boats. Fittingly, new models for Chris-Craft’s 2020 model year include a 25-foot Launch GT model with outboard power and, perhaps even more surprisingly, a Launch 28 GT Surf Edition – the first Chris-Craft designed specifically with wakesurfing in mind.
President and CEO Stephen Heese remains firmly at the helm of the company that he and partner Stephen Julius rescued from the ashes of the Outboard Marine Corporation bankruptcy 18 years ago. He spoke with IBI in early July as Chris-Craft unveiled its 2020 model year lineup and prepared to celebrate 145 years in the recreational boating business.
IBI: It’s been 13 months since the acquisition by Winnebago. Now with a full year of new ownership in the books, how are things progressing for Chris-Craft?
Winnebago have proven to be a wonderful parent company. They’re passionate about quality and service, and with an equal emphasis on building win-win relationships with their dealers and end-user customers. That’s something which fits very closely with our own core values.
Since the acquistion Winnebago has helped Chris-Craft with production, capacity planning and design for a new facility in a timeframe that wouldn’t have previous been possible. ”Having Winnebago as a parent company allowed us to stay focused on what we do best, which is designing and building boats.”
When we negotiated the acquisition, we felt that Winnebago would be a very strong steward of our brand and people, and that they would continue to build on the company’s reputation and legacy. They’ve demonstrated their track record in doing that, and it’s been truly wonderful. Our whole management team remains in place, and we’re accelerating our product development plan as scheduled.
Chris-Craft wasn’t for sale. But we got to know the senior management team at Winnebago, and we came to realize that both our companies were essentially in the same business, building positive relationships with dealers, building great products, looking after the retail customer, looking after our people, looking after the environment and the communities where we operate.
Having built our company out of the OMC bankruptcy in 2001, Chris-Craft is something that we continue to hold near and dear. But the simple fact is, none of us are getting any younger and even if your company is your family, you know that one day you’re going to have to sell it. You can’t just auction it off to the highest bidder, because it is your family, and you’re making a decision that will impact your entire team. We felt that the leaders at Winnebago shared our values so closely that they would look after our people, our customers, and our brand just as we have. We felt there was a natural fit, and that was really the compelling reason for doing the transaction. Because you get to a point in your life where it’s not only about making money. You want to do the right thing by the people that have worked so hard with you to build the company. Boat building is a team sport.
There’s still a lot of 50-, 60-, even 70- and 80-year old Chris-Craft boats out there on the water.
With that kind of heritage, you really feel a sense of responsibility to the brand.
Chris-Craft CEO Stephen Heese
IBI: How involved is Winnebago in the day-to-day operation of Chris-Craft?
I think they’ve determined where they can add value to the business. They’ve helped us with our production, they’ve helped us with our capacity planning. We’re building a new facility on our property, and they’ve helped with that design. They’ve brought another level of professionalism to the table. We could have done these jobs, but we couldn’t have done them as professionally nor in the same timeframe. Having Winnebago as a parent company allowed us to stay focused on what we do best, which is designing and building boats.
IBI: You mentioned a facility expansion. Can you tell us a bit more about that?
We have site-plan approval to build 80,000 sq ft of manufacturing space in the back yard of our property. We already have received planning permission from our county, and we’re now just in the design and planning phase. We’re probably going to break ground in January. The existing plant, including movable tents in the back yard, is about 200,000 sq ft so it’s a big jump. Construction should take around eight months, and we’re targeting having the expansion up and running for August or September of 2020. As that unfolds, we’ll need to add another 100 to 120 employees over the next couple of years.
We build four product lines and each of line has open spaces, so we’re going to be able to fill gaps in the lines with new models that we don’t presently offer. Having the backing of Winnebago means we’re going to be able to do that faster than we otherwise could have, so that’s obviously a big positive. We need the manufacturing space if we’re going to meet our future growth targets.
IBI: Interesting. Are Chris-Craft’s current sales being driven primarily by domestic or international sales?
Tariffs have significantly impacted our international sales, as they have for every US boat builder. Canada dropped its 10 percent tariff on US boats in May, but that timing wasn’t especially helpful for this year since it was already so far into the boating season by then. Europe has historically been a big part of our business and that has been negatively impacted by the 25 percent tariff in place there. We’re still making sales in Europe on the strength of the product design and quality, but obviously at a reduced level. Fortunately the rest of the world, and particularly the US domestic market, have picked up the slack so we’re still growing nicely.
IBI: Is that strong domestic business being driven by the new outboard-powered models Chris-Craft has more recently introduced?
The US and Canada are countries that have long traditions of fresh-water boating. The fresh-water boaters still prefer sterndrive power, where the salt-water boaters have largely preferred outboards. There’s a little bit of crossover but by and large, fresh-water markets are mostly sterndrive, and the salt-water market has gone primarily outboard.
IBI: Does that split also hold true for Chris-Craft’s export sales?
Not at all, our international buyers mainly want sterndrives. My sense is that outboard power is viewed differently in global markets. In many places they’re most commonly seen on RIBs. Few other countries have a tradition of outboard-powered fibreglass center consoles the way we do in the US, so the association between outboards and other styles of boats may not be so well-established outside of North America.
IBI: That would certainly be the case for the yacht tender market that Chris-Craft has been so successful in.
That’s a fun part of our business because unlike making a traditional retail sale through a dealer, there’s almost always some amount of additional engineering required in a tender, incorporating elements like special lifting rings, fold-down windshields, or things like special steps, hand rails or boarding rails. We recently sold a 30-footer as a tender for a customer’s 300-foot superyacht, which included provisions so it could be lifted from and lowered to the water from a deck crane. Watching that boat get launched from the yacht was one of the coolest things I’ve ever seen in my life. The yacht captain set a marble on the tender’s deck, and as this 11,000-pound boat got cantilevered out over the water, the marble didn’t even move. It was just an amazing thing to watch.
Afterward we were treated to a tour of the yacht, and our heads were just spinning. The level of detail in the doors, and joinery, and the carpet, and furniture, was just remarkable. We all felt a strong sense of pride to have our own product chosen to be associated with a vessel like that.
IBI: It sounds like you’re still having a lot of fun at this.
I’m still enjoying every moment. I’m in the office at seven and I can’t imagine not being here. There’s honestly no place I’d rather be.
There’s still a lot of 50-, 60-, even 70- and 80-year old Chris-Craft boats out there on the water. With that kind of heritage, you really feel a sense of responsibility to the brand. We take that sense of stewardship very seriously and we want to leave our mark, so that 80 years from now the boats that we’re building today are equally cherished and lovingly maintained.
We live in a particularly dynamic time and from a product standpoint, I’m fairly obsessed with how consumer tastes and shopping habits are evolving. We’re seeing people spending more and more hours on our website, shopping. Not that long ago, even 10 years ago, they spent the day at the boat show talking to manufacturers, talking to sales people, talking to the engine companies, talking to the electronics companies, talking to the navigation companies and putting it all together in their minds. Today, while they still come to shows, we’re seeing a lot more engagement on our website. That’s how today’s consumers want to learn and to do things – on their schedule, and on their time.
Last year I bought a new truck, and I did all of my homework online. I called the dealer, he gave me a price, and I bought the truck. And I did almost all of that when I wanted to do it, which was in the evenings after everyone was in bed. So, this is the world we’re living in today. We are all striving to better serve the customer’s needs, whether that’s in the form of innovative designs and appealing new models, or adding value by making it easy for the customer to find the information they need to buy their boat.