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1.
UMMA (United Marine Manufacturers Association, Inc.) is an association
of independent boat-builders who, while operating autonomously, have joined
together to enhance their collective ability to address important industry
issues which effect their survival and continued prosperity. 2. WHY IS AN ORGANIZATION NEEDED? The marine industry has changed dramatically since the consolidation of boat building by power providers began in 1986. Since that time, conglomerates with direct or indirect ties to marine power production have secured control of more than fifty percent of the total domestic recreational boat-building market. This has resulted in a challenging position for the remaining independent builders. It would be similar to Chrysler having to buy engines and transmissions from Ford and Chevy. As this consolidation and the resulting "have" and "have not" disparity continues through acquisition and attrition, both the individual and collective industry strength of the remaining independent builders is diminished. UMMA believes that slowing and/or reversing this trend is vital to the continued viability of the independent boat-builder. Founding
in 1995, UMMA has grown to become the largest organization of boat-builders
in the marine industry. More than ninety Member companies build more than
70,000 boats per year and work in close partnership with more than one-hundred
and thirty supplier Members of its sister organization - United Marine
Suppliers Association (UMSA). By pooling their collective efforts within
a unique, semi-cooperative structure, UMMA Members have improved their
operational efficiency, while making great strides toward leveling the
playing field in relation to the largest companies in the industry.
The organization was initiated through the combined efforts of four major
aluminum boat-builders, which, along with the group's founder, Kent Wooldridge,
shared in a common belief that if the independent builder is to compete
and survive, they must strive to improve their operational efficiencies
and level the purchasing playing field. In addressing this goal, it was
agreed that as a semi-cooperative consortium, collective benefits could
be achieved which would exceed the individual capabilities of any single
Member. 4. CAN'T A LONG ESTABLISHED, INNOVATIVE, OR NICHE COMPANY SURVIVE?
It will be challenging. Just as few could have foreseen the degree of
industry change since 1986, there is little reason to believe that the
pace of such change will slacken. In addition to the boat-building operations
of Brunswick and Yamaha, the newly expanded Genmar, with favorable ties
to the power companies, will further flex its muscles. Other major independents
such as Tracker have long-standing ties with power companies, which place
smaller companies at a competitive disadvantage, while adding to the collective
industry control by the power companies. Perhaps, even more of a challenge will be the emerging relationships between Brunswick, Genmar, and Tracker and major retailers in which they have a monetary or preferential relationship. If access to the buying public becomes restricted to the independent builder, production competitiveness may be somewhat irrelevant. In order to combat this, UMMA has launched its own initiative in the form of United Marine Retailers Association (UMRA), which will work with dealers to enhance their competitiveness, while building ties to the UMMA builders and the UMSA suppliers. There
is, however, some reason for optimism. In addition to the empowering impact
of the "United" companies, since their split from the former
OMC, Volvo has reorganized and made great strides as an independent supplier
of both inboard and I/O power. More recently, Bombardier, having acquired
the assets of the former OMC outboard group, has displayed a potentially
formidable presence as a partner and non-competitor to the independent
builder. The emergence of OEM programs from Suzuki and Honda may add to
this counter-balance, but the battle will be a long and difficult one
with many skirmishes. Each of the major conglomerates is committed to
future growth and such growth can only come from one of two places, expansion
of the total industry, or the capture of market share from independent
builders. Based upon all realistic industry projection data, only the
latter is reasonably foreseeable in the current market. 5. THE POWER COMPANIES HAVE SLOWED THEIR EXPANSION; SURELY THEY'VE LEARNED THEIR LESSONS?
OMC never did learn. Nevertheless, the aftermath of their demise will
almost certainly result in more powerful alternatives. Brunswick, and
Yamaha are enormous companies, each arguably larger than all of the non-engine
sales of all of the independent builders combined. For a long time, the
challenges created by their learning curves have kept them from being
able to fully flex their muscles. It is likely that they will do whatever
is necessary to protect their existing market shares and, in order to
grow, they have the ability to subsidize their boat building enterprises
from the profits they make by selling high priced power to the dealers
and independent builders.
Not only have they not learned their lessons, but also recent acquisitions
and policy and program changes indicate that the battle may be preparing
to be renewed. While OMC endured a lot of problems of their own making,
the final result has been their bargain acquisition by even larger more
aggressive companies. The giants may change faces, but they will not likely
be the real fatalities. 6. MY DEALERS AND CUSTOMERS LIKE MY PRODUCTS, AND ME WON'T THEY KEEP BUYING THEM?
In an oligarchy, the companies, which are in a position to control the
supply can and probably will exercise that control. Since dealers must
have access to power to survive and since thirty-five to sixty percent
of the cost of outboard or I/O boat products is represented by the power,
in many cases, the major power companies actually make more off the boat
sale than the independent builder itself. At the same time, because there
are many boat companies, but few power companies, these companies exercise
tremendous influence over the dealers. Ultimately, it would be a relatively
simple matter to manipulate engine and/or package programs so that the
dealers favor boats built by the power companies, or their favored affiliates. 7. WHAT ABOUT INDEPENDENT INBOARD POWER BUILDERS WHO DON'T PURCHASE POWER FROM THOSE COMPANIES?
The realities are still the same. The Brunswick and Genmar companies and
their special affiliates all produce larger inboard powered boats. Their
collective volume is substantial and it can be assumed that they enjoy
pricing advantages in all key areas. Furthermore, Brunswick now has a
joint venture with Yanmar and a direct relationship with Cummins diesel.
However, exclusive of power, we know some of the prices these companies
pay for key components. In many cases, the differential is huge for primary
construction materials. When companies are forced to compete for the same
end consumer, such a differential is not only untenable, but, during a
market downturn, such differential and its impact on profitability can
be fatal. 8. WHAT IS UMMA DOING FOR ITS MEMBERS?
The independent boat-builder is an endangered species. While there is
no magic, UMMA encourages a philosophy of independence, innovation, mutual
cooperation, and business professionalism. For far too long, independent
builders have suffered because they had no alternative but to do business
the way they always have. 9. CAN AN INDEPENDENT BUILDER EXIST WITHOUT THE MAJOR POWER COMPANIES? For many years life without these companies has been nearly unimaginable. While we are not insisting or even recommending that Members do without these companies, we are suggesting that money spent with companies, which also produce competing boats, can work against the long-term interest of the independent builder. When this premise is combined with the fact that real profitability of these products has diminished for both the builder and the dealer, there has been a desperate need for profitable alternatives. Recently,
this formula has changed with Bombardier's acquisition of the former OMC
outboard companies. Now, UMMA Members enjoy a special marketing partnership
with Bombardier, which is committed to helping our Members grow and prosper. 10. WHAT ABOUT THE COST OF INBOARD POWER FOR LARGER BOATS?
Again, there is no magic. While the marine market is not that large, its
collective sales are meaningful to the power companies. Given the current
distribution structure, variety of power sources and limited sales to
a particular builder it is hard for any one company to effectively address
such a problem. However, just as UMMA has pooled sufficient volume to
gain the attention of the outboard and I/O suppliers, so too can uniting
the collective purchasing power of both diesel and gas inboard users have
an impact on pricing, service and enhanced technical support. Our expansion
into the larger boat categories is a natural extension of our current
efforts and all companies benefit from the collective purchasing power
in categories of common usage. 11. CAN A UMMA MEMBER REALLY SAVE MONEY ON PURCHASES?
Absolutely, positively yes, regardless of a company's size or market position.
No individual Member has more influence than the combined purchasing power
of the group. This applies to virtually every component utilized in the
boat-building process, plus the indirect costs such as insurance, travel,
long distance, and floor planning. 12. WHY WOULD SUPPLIERS THAT A BUILDER ALREADY DOES BUSINESS WITH GIVE BETTER PRICING JUST BECAUSE IT BECOMES A UMMA MEMBER? There are several reasons. Fundamentally, because the suppliers have an agreement with UMMA that provides that all Members will share in the group programs. More specifically, suppliers are becoming increasingly aware that the independent builder is, as previously stated, an endangered species and their survival is vital to the health of the industry. Suppliers
have begun to recognize that further industry consolidation works to their
ultimate disadvantage. In fact, if the business were reduced to a small
handful of giant customers, the suppliers would not only be squeezed to
the point of unprofitability, but would be completely vulnerable to a
loss of such a controlling customer. A perfect example of this was the
withdrawal from the marine industry by the carpet giant, Carriage, a large
percentage of whose business was controlled by OMC, Brunswick and Tracker.
By pooling our Members' collective requirements, UMMA represents sufficient
collective purchasing volume that no supplier wants to lose access to
our substantial and growing sales potential and market share. 13. IS THIS JUST AN IDEA OR IS IT ACTUALLY WORKING? UMMA and UMSA work! The concept is not new. Consolidation has impacted virtually every industry and the trend continues. Without "True Value" and "Ace" it is unlikely that there would even be such a thing as an independent hardware store. "Medicine Shoppe" and others serve the same function in the pharmaceutical industry, as does "NAPA" in auto parts. The list goes on and on. Since its inception in 1995, UMMA has grown to more than ninety boat-builder companies, producing more than 70,000 boats per year, the single segment in the industry. Other than Brunswick, UMMA also represents the largest block of boat-building material and hardware usage in the marine industry. As UMMA has gained in stature and as its Member cohesion has increased, more suppliers have realized that its goals are just as important to their long-range needs as to our Members. The suppliers have been formalized as a parallel organization, United Marine Suppliers Association (UMSA), which includes most of the major names of the industry and continues to grow. UMSA includes more than one-hundred-and-thirty suppliers of most of the goods and service products utilized by the UMMA Members. Participation by UMMA Members in UMSA supplier programs has increased steadily and a significant portion of the Membership will only consider new suppliers who are approved by UMMA. More recently, UMMA builders and suppliers have begun sharing programs in areas of common interest such as insurance, workers' compensation, freight, etc. We have remained consistent in our commitment that what is good for the suppliers must be good for the builders and vice versa. This bond is fundamental to the slogan which we have maintained since our founding - "Sharing in the Partnership of Success."
As evidence that our mission is a two-way street, each year UMMA and UMSA
sponsor our hugely successful "Partnership" conference, which
brings all of our builder and supplier partners together. Not only do
the suppliers come to a better understanding of the needs and mission
of the builders, but also the builders are exposed to new products and
processes, while gaining an opportunity to interface between the decision
makers of both parties. 14. DOES A MEMBER HAVE TO PURCHASE UMMA PRODUCTS AND PROGRAMS?
In most cases, no. With the exception of certain FRP products, while participation
in programs is encouraged, Members are free to purchase any product, any
time, from any supplier of goods or services. 15. HOW DOES UMMA AFFECT A MEMBER'S PURCHASING DEPARTMENT?
It is a natural concern, but UMMA is nothing more than a tool. Our relationships
with Member purchasing professionals are one of our most important resources
since they, as a network, provide a national set of eyes and ears in the
field. UMMA's role is simply to accumulate data from all sources and negotiate
and continually refine Master Purchase Agreements with suppliers, on behalf
of our Membership. This is a continuing process and reduces the burdensome
amount of time spent by purchasing departments to source items and allows
them to focus on improved material handling and inventory control. Since,
as a group, we can often secure more favorable terms, processing times,
and return policies, the timesavings can be utilized to improve inventory
turns. At the same time, since UMMA the cumulative Membership of UMMA
represents such a significant portion of UMSA suppliers' business, we
demand and our Members receive the highest possible level of service.
We are now a mature organization and are not aggressively looking for
new Members. However, we continue to be interested in good boat-builders,
which complement our efforts and are willing to support our initiatives.
While there are no clear standards for company size in terms of production
units or dollar volume, UMMA is structured with seven tiers of Membership,
making it is possible to include companies from a few million dollars
in sales to nearly one-hundred million. Perhaps the more important issues
are a builder's reputation for quality, innovation, and integrity. Credit
worthiness and willingness to work within a group cooperative spirit are
essential. Belief that the changing industry requires companies to objectively
evaluate and support alternative directions is also important. Simply,
if a profitable company, regardless of size, wants to help lead the industry
instead of follow, they stand a good chance of being considered for Membership. 17. HOW CAN A BOAT BUILDER JOIN UMMA?
The process is simple. It begins with three events. The first is a physical
plant visit by UMMA management to see facilities, meet principals and
management and to discuss Association and builder philosophies. Assuming
there is a sense of compatibility, the second step is the completion of
a non-binding Membership Pre-Application. If these steps are satisfactorily
completed and if an initial credit check is acceptable, the candidate
is reviewed by Association Management. If there is no objection, the applicant
is provided with an opportunity to complete a formal application. 18. WHAT IF A COMPANY DOESN'T WANT TO SHARE ITS INSIDE INFORMATION?
Everyone is deservedly concerned about his business information being
treated in confidence and this confidence must be preserved. However,
it is critical that UMMA have a close relationship and working understanding
of its Members and their needs. This is why there cannot be exceptions
made to UMMA's access to reasonable information about a prospective or
existing Member. We don't ask for a lot, but we do have to establish the
viability of the company and we do have to monitor material usage, once
a company is a Member.
Since it is critical that UMMA has access to confidential information
regarding all of its Members, the actual operation of the Association
has been established as completely autonomous from its Membership. UMMA
is a for profit company, and all confidential information is received
through the Association President and operational contracting party, Kent
Wooldridge, who, in his representational capacity as UMMA's attorney,
treats all such information as privileged. 20. HOW MUCH DOES IT COST TO JOIN UMMA?
Charges vary depending upon the tier of Membership and the choice of payment
term, which can be spread over as long as three years, the actual cost
varies considerably. Suffice it to say that after full implementation,
if UMMA management does not believe that a Member cannot recoup its Membership
charges in the first three months of Membership, such a company is not
likely to be approved. 21. WHAT ARE THE CHARGES AFTER THE INITIAL MEMBERSHIP FEE?
None, except for small annual dues charged to the smaller Members to help
offset the higher pro rata of the group's operational expense. These companies
have the most to gain and the charge is small relative to the benefits
received. UMMA's revenue derives from a small commission on all Association
Member purchases. 22. UMMA DOES NOT HAVE ALL OF THE ANSWERS!?
The industry is changing very quickly and the collective knowledge and
wisdom of our Membership and its supplier partners is clearly our most
valuable resource. We need and seek the input of our Members, their dealers,
and our suppliers in order to help address the challenges, which lie ahead.
We are fast on our feet and not afraid to explore and to try new things,
but, despite our success, we are not complacent. We continue to look for
new and better ways to help our partners succeed. United
Marine Manufacturers Association. Inc. |
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