Genmar will still build, but in a reduced capacity

by Jeni Bone on 6 Jun 2009 Minneapolis-based boat manufacturer, Genmar, once the largest builder of big powerboats in North America has announced bankruptcy, but the consequences are likely to be 'reorganization within the company', rather than folding, according to Bob VanGrunsven, president of the Genmar Yacht Group.

VanGrunsven blamed much of the demise of the company on the the downturn in the economy, led by the ructions in the banking industry last year.

'We've been able to hang in there through this because we do a pretty good international business,' VanGrunsven said. 'We are operating . . . and are building some boats that are under contract.'

VanGrunsven said the company would meet with yacht group employees to announce that the company plans to continue serving its loyal customer base, albeit through a reduced operation.

'We do have a market out there, though it is challenged due to the current global economic conditions, to get this company back on its feet and go forward; at least this division of Carver and Marquis brands,' he said.

Genmar Yacht Group currently has 80 or 90 employees, a dramatically reduced work force that once numbered in the hundreds.

Genmar purchased Carver, later renamed Genmar Yacht Group, in 1991.

Company founder Irwin Jacobs says Genmar has suffered from a rapid decrease in sales because of the credit crisis and weak economy. In court filings, Genmar also said banks have reduced available credit.

The company's Chapter 11 petition filed last week lists assets of US$237.5 million and liabilities of US$216.5 million. Jacobs says the bankruptcy petition does not include more than US$400 million in intangible assets.

Jacobs says Genmar's revenues for the year ending June 30 should drop by more than half to about US$460 million.

'If someone had said to me as recently as even one month ago that Genmar would someday be filing for Chapter 11, I would have said it was not even a remote possibility,' he said in a news release. 'We believe that Genmar will have access to sufficient cash and has current assets available to support our ongoing businesses to service and build dealer boat orders and pay our vendor suppliers on future purchases promptly.'

The rest of the US boating industry also has suffered in the past 2 years, first from higher gasoline prices, then from the impact of the GFC and availability of finance. The National Marine Manufacturers Association said sales of new boats fell 30% in 2008 and are expected to drop 20% this year.

'Right now, it's a tough market for boats,' said VanGrunsven. 'The finance industry drives everything.'