Boat and Motor Dealer May 2002 pg. 9 Sherwood on Issues Is it time to go uack to pre-rigging? In many respects, life was simpler years ago before there were boat and motor packages. I am talking about the days when dealers bought their engines from an engine manufacturer, boats from boat builders, and trailers, accessories, and so on, from other suppliers. They then had their riggers put the packages together. Almost six years ago I wrote a column entitled, "Is it time to unwrap the pack- ages?" In that column I quoted four dealers who compared their boat package margins to their margins 10 years prior when they did their own rigging. Before packages, their margins were averaging from 20 to 25 percent on the rigs they sold. But after packages came along, their mar- gins declined to an average of about 15 to 16 percent. Most of them said they needed more margin than that just to break even. Some also complained about frequently having customers who wanted a partic- ular boat but either a different horse- power or even a different brand of outboard than what was on the package from the builder. However, most dealers I talk to aren’t anxious to get back to total rigging, al- though some still prefer to custom-rig fishing boats to suit the buyers. At the same time, many dealers don’t like some of the results of the packaging era such as lower margins and the fact that nearby package dealers suddenly have the same outboard motor brand or brands that they have represented for years. I have heard countless unhappy dealers make com- ments like, "I have been a "brand X" out- board dealer for years and all of a sudden, there is a package dealer just blocks away selling the same brand outboards." It ap- pears to me that the package concept has almost caused outboard manufacturers to lose control of their distribution. Boat manufacturers are not supposed to set up a dealer with boats packaged with a particular brand of outboard motors un- less the engine manufacturer has ap- proved that dealer. But too often I hear of cases where it hasn’t happened that way. Also, boat builders aren’t supposed to sell "loose" engines to dealers. Most builders honor that agreement with engine manu- facturers. Unfortunately, I frequently am told of cases where dealers have bought loose engines from some builders at prices lower than what they would have paid their outboard manufacturers. From the boat builder’s standpoint, one big advantage to the overall package concept is that boats are generally more attractive when builders include instru- ments, controls, and so on in their overall design rather than having dealers rig these items on boats. However, one of the com- plaints that I have heard from boat builders is the ongoing problem they have forecasting their outboard inventory so they will have the right brand and horse- power at the right time to fill dealer or- ders. This forecasting takes a lot of time and effort. It also takes a lot of time and money to inventory all of the rigging com- ponents needed for all of the different out- board brands. And many builders also say that the cost of carrying a large outboard inventory can be rather high at times. Another problem facing many boat builders, except perhaps the very large volume ones, is negotiating the best prices from engine manufacturers. This means that smaller builders aren’t able to buy at prices as low as those available to the large volume builders. This puts both these builders and their dealers at a com- petitive disadvantage. Many dealers make less margin on the average package than when they rigged the boats themselves. Outboard motor manufacturers cer- tainly make less margin when they sell outboards to boat builders. Boat builders have the problem of fore- casting and carrying a large inventory of outboard motors and rigging compo- nents. . .plus the problem of being able to negotiate enough discount from outboard motor companies to be competitive. I think a "win-win" answer for all par- ties is to go back to the "pre-rigging" con- cept that was sort of a forerunner to packages. With pre-rigging, outboard motor manufacturers give incentives to boat builders to offer boats pre-rigged to accept their brand of outboard motors. The boat builders then wouldn't have to worry about forecasting the right hp out- boards and carrying a large motor inven- tory.. .or worry about whether or not they were getting the best, most competitive deals from the motor companies.. .which they probably aren’t. They would only have to forecast, inventory and install rig- ging components...and drill the holes in the transom in the right place.. .and most dealers know what I mean by this. Dealers would not have to rig boats ex- cept to hang on the outboard motor. And most of them have to do this now with their "packages" as many builders no longer ship boats with the motors mounted. What’s the point of the package if dealers still have to mount the engine? With pre-rigging, dealers could make their best deal with their outboard manu- facturers and not have to worry as much about a dealer showing up close by with the same outboards on packages. Outboard motor manufacturers would certainly make better margins, which would be healthier for the industry. And they could focus more of their time and effort on working with their dealers, and helping them to grow their businesses. I would be very interested in hearing what dealers think about these issues. Send me an e-mail at the address below and let me know your thoughts. Ben Sherwood served 15 years as Director of Sales & Marketing for OMC Genuine Parts, then was Product Group Manager for Johnson and Evinrude Outboards. He now operates Sherwood Marine Marketing in Pleasant Prairie, WI; 262/694-6636. His email address is ben@bensherwood.net and his web site is bensherwood.net.