Skipper's blog: Will you still be here when times get better?

IT goes without saying that the recent terminal demise of a veritable industry institution like Andrew Short Marine, after a few desperate weeks of straw-clutching and unrequited hopes of last-minute salvation through restructuring, will have given many a reason for deep reflection and soul-searching regarding the ultimate survival and viability of huge swathes of the marine business as a whole.

Forums were full of comments and opinions about what everyone thinks happened, or how the business was about Andrew and how those who vainly attempted to carry on his legacy were trying to fill shoes that couldn’t be filled etc. Others thought the rapid expansion, premises-wise, was too much too soon, whilst others blamed banks and financial institutions - probably a large contributory factor in the downfall but not the sole one.

My occasional automotive industry analogies probably irritate many of you but, really, what happened to Andrew Short Marine is the marine industry’s equivalent of the fall of Sydney’s Rick Damelian Group. For those of you not familiar with the automotive industry, Rick Damelian, known as “The king of Taverners Hill” because of the huge area of the Parramatta Road bordered by his multiple showrooms, was probably one of the largest Honda car retailers anywhere in the world. And although most of his other brands were marginal volume-wise, they were quite desirable and had cachet and image – just like Andrew Short’s Boston Whaler and Sea Ray brands.

However, where there have long been rumours and conjecture surrounding Rick Damelian’s past, nothing could be further from the truth when it comes to Andrew Short and his family. For my money, any manufacturer fortunate enough to have forged a business relationship with a family of the calibre of the Shorts is uncannily fortunate. Association with dealerships of this type will automatically bestow respectability upon a product and greatly lift its image, purely by virtue of the relationship alone. When a poor or mediocre dealer goes under, the distributor will cop it resignedly and stoically (maybe even with some relief and delight), then immediately look for a more worthy and professional business partner. But the collapse of Andrew Short Marine must surely be a debilitating, traumatic blow for Brunswick.

But Andrew Short Marine has not been the only casualty. Capalaba, in Brisbane’s Bayside, used to boast three marine dealerships along the same 500-metre stretch of road. Between them, these three dealers had five of the six outboard brands and an excellent selection of name-brand, quality boats in aluminium, GRP and even moulded plastic. Two of these dealerships folded in the last couple of years, whilst the remaining, seemingly unscathed survivor, Leisure Marine, went under about a month ago. Anybody driving past one day would have seen enough boats to form an armada then would have been greeted by the starkly contrasting sight of acres of bare gravel and pebbles the very next morning. Rockhampton also lost an industry icon with the closing of Terry’s Marine.

It is not for me to ponder upon the circumstances, internal issues and factors surrounding these failures, and there are probably facts which will never be fully known, but one thing is certain: unless we completely change the way we now do business, this alarming trend will continue. It is patently obvious that banks, finance companies and lending institutions have little familiarity with, and scant respect or regard for, our industry. In fact, I’d go as far as to say that their involvement is ruthlessly, coldly and dispassionately calculating. They are inflexible, inhumanely reactionary and sweepingly, terminally brutal. Like pay-day lenders, the true colours of these companies become vividly and glaringly apparent the minute a dealer shows signs of impending doom.

In the interests of short-term viability and long-term survival, any dealers currently being pressured by boat or motor companies to add stock to already bloated inventories, or to apply for a floorplan extension or override to avail of deals that just “cannot be repeated”, should utilise a two-word response, with the second word being “off”.

We need to completely review all our methods, practices and business processes. Whilst large numbers of wholesales (i.e. units leaving their inventory) are what manufacturers and distributors live for, in many cases all these wholesales do is load up dealers’ floorplans and clog their premises.

Commencing immediately, we need to embark upon an industry-wide, national programme of retail campaigns and promotions – possibly backed, advertised, publicised and co-sponsored by suppliers and/or the state BIAs - where stock is “pulled” through the system into the hands of customers. Only when this one-off, purpose-specific, retail “pull-through” is complete, and floorplan levels reduced, should more wholesale stock be “pushed” into the dealer network. I knew a marine dealer many years ago who was continually on his bank overdraft limit. The overdraft never, ever went over the threshold, thereby keeping the ire of the bank somewhat in check, but it was never reduced for very long, either – no sooner had he paid it down to a theoretically acceptable level than he trolled the classifieds and finance auctions for more prime stock. This man died very, very wealthy because he was redirecting and stashing vast amounts of money and also taking the p+++ out of the bank manager. But as friendly local bank managers no longer exist (assuming such a specimen ever did), you wouldn’t get away with this now in this era of floorplanning. Finance companies are scrutinising marine dealers in the same way an East Berlin border guard would have watched an errant comrade lurking too close to Checkpoint Charlie.

To have a finance provider tied in to, or aligned with, a distributor or importer (such as Yamaha’s own finance arm, to take one example) is probably a slightly better proposition, as finance entities affiliated to a supplier should theoretically have more nous, insight and a better idea of how much debt you, their business partner, can safely take on. Such conscientious empathy will be absent with the more recognised, long-standing finance players, one of whom has been in the industry several times before under different names but has always bailed and hung dealers out to dry at the first sign of a downturn. So…..if you have ever considered revising or reviewing the size of your inventory or your floorplan commitments, now is the time to do it. By the time you get around to even thinking about trimming your business model to suit current and future conditions, your financiers may already have made a unilateral decision on their behalf. You have been warned.