Confusion greets Brunswick's announcement of Attwood acquisition

by IBI Magazine / Michael Verdon on 4 Sep 2003 After Brunswick announced yesterday that it had acquired Attwood Corporation for US$47.9 million, some industry leaders wondered about the long-term consequences of Brunswick owning the industry's largest aftermarket distribution chain and one of its main accessories manufacturers.

‘The lines of production and distribution are blurred here,’ said one distributor, requesting anonymity. ‘We've never seen anything like this before.’ Some manufacturers and distributors say the combination of Land 'N' Sea and Attwood will mean a new chapter in the marine industry, though they weren't sure how it would unfold.

‘Participating in the boat parts and accessories segment achieves a number of strategic objectives,’ Brunswick chair George Buckley said in the press release announcing the Attwood acquisition. ‘It facilitates our efforts to integrate boat and engine design and engineering.

It also enables us to offer a higher level of service to our dealers. In addition, it provides Brunswick a chance to increase sales since aftermarket P&A traditionally offers higher margins.’

Randy Gray, vice president of Brunswick Boat Group's Parts and Accessories division, who is overseeing the integration of Attwood and Land 'N' Sea into the Boat Group, said that he's ‘convinced that Attwood will bring a broad base of boating accessories to us, and a seasoned team of design and engineering personnel to help us design boat accessories that are higher quality, more reliable and will incorporate innovative features that will make boating more enjoyable.’

He said that the acquisition will help with Brunswick's ultimate goal of ‘eliminating many of the hassles that boaters experience.’ (Click here for Gray interview.)

But how that will impact the rest of the industry remains unclear. Gray said that Land 'N' Sea will continue to stock Attwood's competitors' products, and that Attwood will ‘have to earn’ any Brunswick Boat Group Business. He added that he has spoken with some rival OEM boatbuilders, and ‘assured them that we will maintain an arm's length approach in their Attwood relationships.’

‘We knew it was coming,’ said Genmar Chair Irwin Jacobs, who said that his boat companies are customers of Attwood. ‘I'm not sure why they're doing it. Maybe they have some grandiose plan. All I know is that we're not going to knee-jerk and suddenly pull that business away from them without further exploration.’ Jacobs added that Genmar ‘will do what is right for Genmar in the long-term.’

‘I have significant reservations about the competitive tools that Brunswick will have, both in its dealer-direct programs and through Land 'N' Sea,’ said the distributor. ‘They have control of some pretty potent products and pricing, and that could come back to haunt us. They can take their products to market through us, or Land 'N' Sea or even go directly to the dealers through the Mercury Quicksilver program or a private brand.’

He added that ‘hypothetically, there's nothing stopping them from selling products directly to dealers with distributor's pricing, and still making a pretty healthy margin.’

He added that he was ‘alarmed’ by the Brunswick press release that spoke about proprietary products for boat dealers. ‘Their dealers are my dealers,’ he said. ‘There are a lot of ways they could leverage this. As a preferred dealer, they could give you a discount if all you handled was Brunswick products or if you only used Land 'N' Sea.’

But he also recognized that Attwood needed independent distributor business. ‘My guess is that they'll be shrewd enough to have their cake and eat it, too,’ he said. ‘They won't want to do something too blatant and tick off 50 aftermarket distributors. We represent a significant amount of business out of that $56 million in Attwood's annual sales.’

‘Independent boat builders aren't going to sit there and support Brunswick,’ said another boatbuilding executive, also requesting anonymity. ‘There are a lot of people out there who compete with Attwood, so it won't be that hard to find new suppliers.’

One of those suppliers, also asking to stay anonymous, says that he expects to lose his OEM sales to the Brunswick Boat Group companies, but will pick up more business with other boatbuilders.

‘The acquisition news didn't necessarily ruin my day,’ he said, ‘because any non-Brunswick company would automatically be supporting their competition now by buying Attwood products. At the end of the day, quality products will win out. We expect a strong long-term gain from this.’

But the distributor is not so sure about the long-term impact it will have on two-step distribution. ‘I worry about them whittling away our market share,’ he said. ‘They have the potential strength of a 'total package program' that would be pretty enticing to a dealer. While the dealer might buy from us normally, they might be enticed by terms that gave them no better choice.’

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