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Wednesday, March 11, 2009

boat docksBrunswick CEO Sees Reduction In Power Boat Sales
As Originally Posted at CNN Money

CHICAGO -(Dow Jones)- Sales of recreational power boats and floating boat docks in the U.S. may decline by more than 20% this year, as consumers continue to avoid purchases of luxury items in a weak economy, Brunswick Corp. (BC) Chief Executive Dustan McCoy said Tuesday.

McCoy said power boat sales volume may fall below 150,000 units from 196,000 boats in 2008. Brunswick, the world's largest producer of recreational boats, has been aggressively paring back its production in response to the falling demand for power boats and aluminum boat docks.

The Lake Forest, Ill.-based company has eliminated seven boat brands and reduced its roster of manufacturing plants to 14 from 28. The size of the company's marine workforce fell by 50% last year.

The reductions are expected to lower the company's fixed costs by $365 million this year, McCoy said.aluminum boat docks

And he said the company is prepared to throttle back its operations further to avoid a glut of unsold boats from developing at its dealers.

"We're choking off the new boats going into the pipeline, so the dealers can get rid of the old product," McCoy said during a presentation at a Raymond James institutional investor conference in Florida. "When the economy comes back both the dealer network and we will be a lot more healthy."

McCoy said the aggressive destocking comes at the expense of sales and profit growth for Brunswick as its boat plants and boat docks mostly remain idle.

The company lost $788 million in 2008 as sales plunged 17% from 2007 to $4.7 billion. Brunswick also makes fitness equipment, bowling equipment and billiards tables.

Brunswick's boating business has been weighed down in recent years by soaring fuel prices and more recently by the downturn in the economy that's prompted consumers to eliminate discretionary purchases such as aluminum boat docks.

McCoy said Brunswick will be able to ride out the slump. He said the company is reviewing its boat brands for additional reductions and is conserving cash and avoiding debt.

When orders do return, McCoy predicted the company will be able to ramp up production quickly, even after reducing the company's manufacturing capacity.

"We think we can double production in the footprint we have today," he said.

He said the company is moving ahead with new product introductions, including a new Boston Whaler brand fishing boat.