Genmar’s Mega Conquest
Genmar’s HelmsmanIrwin Jacobs
Genmar’s Chairman Irwin Jacobs is a self-proclaimed optimist. During his career, which includes 30 years in the boating industry alone, the Minneapolis entrepreneur has fundamentally changed the companies he has touched. With a few ups and downs along the way he finds himself at the head of a boating empire encompassing 13 brands that together produce an estimated $1 billion in annual revenues. This alone may account for his optimism… or is it the other way around?
Story Cecile Gauert Photos Matthieu Carlin
Thanks in part to its new star attraction, the Italian-styled 50’ Marquis Sport Coupe, Genmar fared well at the Miami boat shows, where, during a record-setting opening day, Jacobs unveiled plans for a new state-of-the-art plant in Wisconsin and a sporty-looking 88’ yacht to become, temporarily at least, Marquis’ new flagship. Small wonder that, when we met with Jacobs on a sunny afternoon later that week, he brimmed with optimism, and the future seemed clear.“We have to be in the megayacht business,”Jacobs said.
Clearly belonging in the yacht category, although by today’s standards perhaps not quite a mega yacht, the first hull in the new Marquis series will likely be closer to 92’ than the 88’ Jacobs initally announced.The next step after that may expand the range to 100’. And beyond that?
Jacobs sees the brand contending with Italian builder Azimut in short order, including on their own turf. The international market, currently buying 20% of the company’s aggregate production, is showing encouraging signs. “The U.S.-built Marquis, with its European styling, is doing great in the U.S. but is also making strides across the ocean. Eleven Marquis 42s sold at the Cannes boat show last year, and eight to 11 more Marquis Yachts will be heading for Russia soon, Jacobs said. “We are going global.”
Jacobs acknowledged that the months ahead may prove challenging, given the current state of the economy, but he added “I have always excelled in these kind of times. I will write checks when people put the money away.”
Forbes Magazine’s included Jacobs in its list of 400 richest Americans in the late 1980s. In 1988 a year after Genmar, then a public company, made record profits, Jacobs bought back the holding company, made it private and refocused on its core boat business. Although Jacobs became a boating enthusiast early on in life, it was a bit by chance that pleasure also became business. In 1978. Minnesota-based Larson Boats, a company that had been in operation since 1913, was on the brink of bankruptcy. Jacobs was approached on a Friday with an intriguing query: Would he buy the company? He would, and he took over Larson, sight unseen, for a bit over a half million dollars (the amount of the company’s outstanding loan). It was a great deal, except that over the next three years he proceeded to lose $5.5 million. “People thought I was crazy…Everyone thought I would sell.” But he stuck with it, until one year the company earned $9.5 million. At that point, Larson’s management told Jacobs he had reached a crossroads. “They told me either we had to really get into the business or get out of it,” he said. So he started buying more boat companies. He wanted Wellcraft, a Florida-based manufacturer of fiberglass fishing boats, and bought the entire conglomerate that owned it, a tactic he would use again to acquire the North Carolina-based Hatteras company a few months later.
Jacobs was at the Miami boat show to introduce a new 40’ sportfisher built by the recently acquired Wellcraft under the brand name California Yacht, a boat he did not like, when it occurred to him, by looking at a nearby Hatteras, that it was the kind of boat he wanted to build. On his return to Minnesota, he researched the builder of sturdy fiberglass sportfishers, discovered that it was part of a group called AMF and started buying company stock. He called AMF several times but says he never got past voice mail. As he tells the story, since no one acknowledged the messages he left, he continued buying more stock until he owned enough of it to garner some attention. When he finally got a return call, he told AMF’s president at the time that he was going to buy the company. “They tried to fight it off,” he said. The corporate arm wrestling made national headlines, but in the end Jacobs prevailed. “I bought it all because I wanted Hatteras.” Having secured Hatteras, he sold off 60 percent of AMF in the 15 to 16 months that followed, in the process making back nearly the entire amount he paid for the company. He kept Hatteras for 20 years until, he says, the Brunswick boating group came to him with an offer he could not refuse.
In the late 1980s and early 1990s a severe credit crunch sorely damaged the boating sector, and nearly everyone in the industry suffered substantial losses. This again appeared to be an opportune time to invest, and Jacobs added Wisconsin’s Carver boats, part of a larger group in bankruptcy, to his company’s portfolio. It turned out to be an important move for Genmar’s future, Jacobs says, because it was in order to hold on to Carver that he decided to form a new company. “We didn’t have the global market,” he said, and he felt they needed it to thrive. He embarked on a search for “the best designers in the world, and there was Nuvolari-Lenard.”
When the Venitian design duo presented their initial concept for what was to become the first Marquis, Jacobs was thoroughly impressed. “They designed a boat that was spacious, comfortable and looked very futuristic. Most companies that build futuristic boats build very uncomfortable boats,” Jacobs said. Since Marquis Yachts was launched five years ago, they have developed a line that today ranges from 40’ to the 88-footer now under development. Even if success seems to have come easy for the brand, Jacobs did worry for a while. “It was such a sharp turn…We realized we had to develop a whole new clientele.”
Marquis Yachts appears to have found that clientele, although the range’s latest Sport Coupe seems to have exceeded Jacobs’ own expectations in terms of its appeal. He happened to be on the boat (during the Miami boat show) when a woman was coming off and he heard her lamenting the boat had been sold. Her husband wanted it, but wanted it now. “It was an impulse buy.” The prospective owner was 79 years old. Jacobs had envisioned the sleek-looking boat to appeal to a young audience. “That was a very important experience for me,” said Jacobs, who also found a solution that made the buyer happy.
Today the Genmar organization has more than 1,000 dealers, 5,000 employees, 13 different brands and eight manufacturing centers, four of these currently undergoing expansion. Perhaps this should not come as much of a surprise when the chairman is such an optimist. But as it turns out, he’s also a pragmatist. “The expansion is not because we are optimistic,” he says, “it is because we need the capacity right now.”