SARASOTA, Fla. (AP) — Sarasota’s Chris-Craft Corp. and its owner, Winnebago Industries Inc., have big plans.
The blueprint for increasing the number of boat models Chris-Craft offers, the size of its plant and its workforce are about the same as they were before the recreational vehicle manufacturer bought the boatmaker in June. In fact, those plans were part of the reason it was an attractive acquisition.
But the money the publicly traded Winnebago, with a market capitalization of nearly $1 billion, can supply to fuel Chris-Craft’s progress can make those plans happen much faster.
“Over time, we’ll invest multiple eight figures in this business,” Winnebago president and CEO Michael Happe (pronounced Happy) said during a recent visit to Chris-Craft’s plant near Sarasota-Bradenton International Airport.
“It’s pretty much our same growth plan we had before the acquisition, but now we can execute it more quickly,” Chris-Craft president and CEO Stephen Heese said.
Plans under consideration include:
- Expanding its plant on 17 acres. The company has site-plan approval from Manatee County to add 80,000 square feet of building, increasing its current 160,000 square feet by about a third.
- Adding up to 250 staff to its current payroll of about 340 over the next five years. The company had 20 openings last month. The immediate aim is to produce more boats and fill a gap in its lineup.
“There are parts of the market we don’t participate in, and we’re going to be able to migrate into those,” Heese said. “Right now, we compete mainly above 25 feet and there’s a lot of market below 25 feet, so we don’t have to go very far down to pick up a lot of potential market.”
The company now produces 18 models on five production lines. It doesn’t plan to add lines but will be able to produce more models more quickly, he said.
Speed is important. The company as of late January had a four-month order backlog, marketing director Allison Scharnow said.
At first blush, a recreational vehicle manufacturer in Forest City, Iowa, buying a boatmaker in Sarasota, Fla., might not seem like an obvious combination.
So why did Winnebago acquire Chris-Craft?
The CEOs of both companies say the idea was inspired by thoughts of design and diversification.
But first, Chris-Craft, which had moved to Sarasota in 1990, had to become a company worth buying.
The Chris-Craft name had been famous for making boats for more than 100 years, but the company closed for about nine months in 2001 when a London-based private-equity firm picked it out of the wreckage left by the bankruptcy of the Outboard Marine Corp. That company had bought Chris-Craft after it had declared bankruptcy in 1988 because of falling sales after years of squandering its reputation by selling generic boats.
Outboard Marine Corp. didn’t even own the rights to the name Chris-Craft. It was paying $500,000 a year plus 1 percent of sales for the right to use it. The company that owned the brand was Rupert Murdoch’s News Corp., a result of a decades-long move of the Chris-Craft name into television broadcasting.
Stellican Ltd., the London firm that bought Chris-Craft, paid News Corp. a reported $5 million to own the brand and $5 million for the company’s assets.
Stellican was founded by Stephen Julius and included Steve Heese, who had met Julius while they both attended Harvard Business School. The firm focused on rescuing neglected heritage brands and had already engineered a turnaround at the Italian luxury boatbuilder Riva, bought in 1998 and sold to Italian yacht company Ferretti Group in 2000.
Stellican and the Chris-Craft team scrapped the generic designs the company had been making and created watercraft that were high quality and unusual in their focus on nautical beauty. Their hulls are fiberglass, but nearly all of them include chrome fittings and decks or other parts made with yacht-worthy, hand-selected teak.
“They took a brand that could have gone either way if they hadn’t done a good job,” said Michael Verdon, the editor of the trade publication Soundings Trade Only Today, who has been following the boating industry for 30 years.
“I have to hand it to them,” Verdon said. “There’s not a lot of people who come in with that imagination and sense of style.”
Verdon also credited Chris-Craft for its “very strong, quality-driven and design-driven” products that occupy a rare niche in the motorboat industry.
“Like any premium brand, they can charge a lot more,” he said. “Chris-Craft has been able to ride that wave of higher prices.”
It’s difficult to compare prices of boats, even at similar lengths, because engines and other options vary widely. This is not unique to boats. Just think about comparing a Chevrolet with a Mercedes of similar size and number of seats. But its clear that a Chris-Craft is closer to the Mercedes on the price spectrum.
A 22-foot Bayliner VR6 Bowrider with a 250-horsepower inboard-outboard engine lists for around $46,400, according to that company’s website. A 23-foot Chris-Craft in its Launch series with the smallest available 300-horsepower inboard-outboard engine lists for just over $100,000, the Chris-Craft website indicates.
But a Corsair 34 Chris-Craft with a small cabin and outboard engines would run around $290,000 and a 34-foot Boston Whaler Conquest 345 with outboards lists at about $500,000, according to the companies’ websites.
One of the goals the Winnebago board of directors gave Happe when he was brought in to lead the company in January 2016 after 20 years with the Toro Co. was diversification.
The Great Recession had cost Winnebago 85 percent of its revenue and, while its leadership had done well to keep the company afloat and independent, its board thought someone from the outside, as Happe was, could accelerate its recovery.
A survey commissioned at the time found Winnebago was a leading legacy brand that was tired and needed to be refreshed to remain relevant to customers today and in the future, Happe said.
The CEO was asked to strengthen the company’s core and invest in towable trailers, to find ways to grow its profit and to diversify. “We looked for opportunities inside and outside the RV business,” Happe said.
Then Heese and company talked to Winnebago about an idea for a Chris-Craft-branded recreational vehicle with the quality design cues, craftsmanship and attention to detail the boatmaker was using in its products.
“Chris-Craft was interested in whether the RV industry could use a more refined approach to design,” Happe said, “and we were looking to expand our design approach as well.”
The two companies discussed opportunities and projects and developed trust. Happe said Winnebago officials also learned about Chris-Craft’s “growth plans and what they aspired to be, where they wanted to take their brand, and our team at Winnebago got excited about their vision and the way they did things, the way they treated their employees, the dealers, the way they took care of their customers.”
“So we started with this strategic, emotional marriage more than anything.”
Winnebago’s new vision statement is to become a premier outdoor lifestyle company, not just a recreational vehicle manufacturer. “The marine industry is an adjacent industry we believe will grow as more people continue to come back to the water.”