Marine engines - a good living but no path to riches!

PLEASE indulge the writer here, dear reader, as we again briefly revisit - but be emphatically assured that this is for the very last time - the subject which can be counted on to whip everyone (seller and punter alike) into a frenetic flurry of comment, opinion and ire: the selling price of marine engines. The main focus in recent weeks has been, of course, outboards, but inboards and sterndrives deserve a mention too.

Firstly, let’s have an overview of the OBM industry. The Skipper suggests that any company engaged purely in the manufacture and sale of outboard motors as a sole proposition is on a long-term business trajectory equal to that of the 8-track cassette. What company manufactures outboards and nothing else? Bet you can’t name one. Even a major Japanese brand, as near a stand-alone outboard manufacturer as you’re likely to find, builds huge quantities of fire pumps. As for the others, they build, respectively, further forms of motorized transport, additional types of marine engines (petrol and diesel) and unrelated sports equipment. There is also a single European company, supposedly purely an OBM manufacturer, but dependent on a Japanese giant for virtually its entire 4-stroke range.

The world’s previous largest builder of outboard motors – which, uniquely, had the word “outboard” in its company name and the catchy, jaunty tagline of “We take the World boating” emblazoned across the front of its annual reports (morbidly depressing reading in later years) – foundered and sank cataclysmically in its then incarnation almost ten years ago. And then there’s the “roll of honour” of those blue-chip players that were in the sector and deserted with an alacrity that would do a Sydney -Hobart maxi proud: Scott-Atwater, Homelite/Fisher Pierce (who built superb, lightweight 4-stroke motors way back in the ‘60s), Gale (part of OMC), McCulloch, Carniti, Chrysler, Volvo Penta, British Seagull (don’t laugh – they had sales volumes that were mind-blowing).

So whilst the outboard motor industry is a delightful, entertaining, quirky, almost “clubby” little milieu, you won’t see Bill Gates, Steve Jobs, Twiggy Forrest or Rupert Murdoch vying for entry any time soon – there’s just not enough money there. Sure, if you had an opportunity to sneak a surreptitious glance at the hypothetical margins, theoretical GP and landed costs, you’d think that the distributors are rapaciously, rampantly and unashamedly ripping off the punters, but don’t forget that if their businesses are being run professionally, correctly and accountably, then most discounts, rebates, bonuses and “cost of sale” outlay will come from these seemingly high margins – which are now diminishing more rapidly than a weekly Centre Link payment in a rigged pokie. Not looking so rosy now, is it? Furthermore, the more discount some dealers get, the more they feel it should be maintained (but that’s a subject for another day).

In The Skipper’s opinion, there is no product that is as difficult to set up for, carry stock of and distribute effectively as outboard motors. In terms of required infrastructure, storage, logistics and commissioning of the finished item, they are a nightmare! Completely intractable, bulky, warehoused products which cannot be moved without a pallet truck, a forklift or, ultimately, a boat! You have to get the stock mix right (shaft length, electric/manual starting, remote/tiller-control variants, standard- and counter-rotation, side-mount/binnacle control boxes etc, etc) or the Sales/Marketing dept will have to keep the “Stock Blowout”-type ads in a constant state of panicked readiness. If the cynics, snipers, smug bloggers and smart-ass private importers had any idea of what is involved, they wouldn’t begrudge the importer or distributor one cent of their profit – profit that requires more toil, frustration and headaches than would be involved in trying to elect Wilson Tuckey to a key humanitarian role at the UN.

As for the inboard engine sphere, and the sterndrive sector in particular, this jaded, cynical, scoffing, sceptic believes – maybe perversely – that this is an area where it may be possible to actually make money. The power plants which excited The Skipper at the recent SCIBs weren’t OBMs at all; they were new, lightweight, high-speed diesel engines – especially one common-rail V6 unit delivering 250ps and weighing in at under 350kg (minus sterndrive). With low-sulphur, Euro-type diesel now powering some of the most sophisticated cars on our roads, only a fool would rule out a flow-on effect into the marine arena. And this – believe it or not – is where a further, insidious threat may lurk for outboard distributors.

Say you were the owner of an older sterndrive-powered boat with a tired, clackety, thirsty, increasingly temperamental iron-block petrol engine (or, even worse, two of them) and you had the choice of buying a dazzling new outboard-powered stunner or re-powering something that has maybe been a much-loved part of your family’s life for years with one of these new-generation, lightweight diesels (in most cases, smaller, lighter, faster and safer than your old gas swiggers), what way would you roll? The Skipper reckons there will be more of this unique, discerning new breed of punter in the years ahead – those with the money to buy a whole new package but who could just as easily decide to tip up to a six-figure sum into the re-powering (even though it would be over-capitalization) of a trusty family member. Go ahead and laugh if you must, but this scenario has played out in every other developed market in which these new high-tech diesels have become available – why should we be any different here?

By all means keep OBMs as a core product but never be afraid to consider previously uncharted territory. One thing’s for sure: the power and re-power industries are constantly evolving and there is no place for conservatism in this day and age.