Profile: Brunswick CEO Dustan McCoy

Presiding over the giant Brunswick Corporation, during what continues to be the biggest economic downturn since the great depression, makes chairman and CEO Dustan McCoy one of the most frequently quoted figures across the world’s boating industry. As he told Marine Business, during the recent Sanctuary Cove International Boat Show, it takes more than just a bad economy to hurt an industry. Misdirected government policy and regulation has the potential for long term harmful ramifications.  “As governments continue to regulate those of us who participate in the economy, those of us in business are thinking, maybe our biggest risk is not the economy, but government regulation that inevitably harms us or reduces our ability to conduct business,” said McCoy.

“Our view, as governments look at regulation, which may or may not be appropriate in all circumstances, we need to work against the law of unintended adverse consequences as they can be dramatic in recovery terms,” he said.

McCoy said factors in the economy, including weakness and uncertainty from European markets is still causing concern and slowing the effects of a full recovery

“We planned in 2009 to be down about 30 per cent and as it turned out, we were down about 30 per cent. Our planning for 2010 is that we build our company and cost structure around the industry being down about 10 per cent. In the first quarter, the industry was down about 20 and we were down about 17 per cent. So while the rate of decline is less, we also have to deal with the fact that the industry is in decline. That means controlling costs,” he said.

McCoy mentioned the Australian marine sector was less affected during the downturn, putting this down to proactive moves to adjust to the changing economic conditions. He also said the economy, and particularly the marine industry, was supported by the Australian mining sector during the downturn.

Brunswick reduced the number of boat brands by about a third during this time. “We did that by looking at each segment and brands that were not going to recover as well as others … when we looked at all this we made the decision to close about a third of our brands,” said McCoy.

“We also thought it was very important to have a totally different cost structure. When the economy begins to recover, and we come out, we will be living in a very different cost structure and in a much smaller marine industry. So as part of that we closed slightly over half of our boat plants and these are closed forever, except a couple. This is a great tribute to our boat manufacturing businesses, with half the boat plants, we can serve a global industry that is the equivalent of slightly over 200,000 units in America. If you remember in 2006 in Americia the number of powerboats units was over 300, 000. So with over half the facilities we can service an industry, that when it comes back, will be two thirds of the size. It’s been great work by our people – they had to tear down the walls of everything we knew,” said mcCoy.

The future

With imminent emission standards on the cards, McCoy said outboard technology will follow suit, but remained quiet on exact details surrounding technological advancements. “We’re making investments in new product platforms in Mercury as we speak. We will begin to bring the first of this new platform activity in the next couple of years and I think the product will be staggering. It will be a platform from which Mercury can work with other platforms and develop for decades to come. I think the product will be unique and different,” said McCoy.

“It’s clear that as we go forward emission regulations will become more of what we do. Our engineering facilities are as strong or stronger than its ever been, even as we’ve gone through this downturn. As we build platforms we want to be ahead of emission requirements. We’re watching it here in Australia, the first study and comment is due out here in the next couple of weeks and we’re hoping that here in Australia we adopt a view that lets us stay in line with the rest of the world. We have a general view that new emission regulations need to phase in and will begin to impact us in 2015. I’m quite hopeful that here in Australia we reach that rational conclusion also, otherwise why have entire continent and boating society that is different from the other parts of the world?”

When questioned about the split between major outboard manufacturers in Australia over emission standards, McCoy commented what he saw as inconstant emission policies between Australia and the rest of the world.

“I think its using politics for a competitive advantage and the surprising thing here is that they’re adopting a position here which is different from the position to what they’ve adopted around the world. We’ve all worked around the world to help the regulators understand what needs to be done, so it’s bit disappointing to use an environmental concern to have a competitive advantage,” said McCoy.

“We’re unworried, when it comes out, our great market share, our great product will remain competitive. But again, our view, it would be very bad for the boating society in Australia to come out and do something different at this time,” he said.