BRP under water

[krixxer]

I didin't see anyone mention this around here so it goes....

 

 

 

Globe and Mail sept 14, 2012

 

 

 

 

 

 

 

The U.S. recession is still making waves at Bombardier Recreational Products Inc. The Quebec manufacturer will exit the sport boat business and shut down its plant in Illinois, eliminating 350 jobs.

 

“This is a difficult but necessary decision for BRP,” José Boisjoli, president and CEO of the Valcourt-based company, said in a statement.

 

The company invented the snowmobile and made a killing with its Sea-Doo watercraft. It started producing sport boats 18 years ago. But sales of the jet-driven boats, often used to water ski, never bounced back after the recession as cautious American consumers continue to put off non-essential spending.

 

BRP tried to sell the plant in Benton, Ill., that it inherited through its 1995 acquisition of Celebrity. It couldn’t find a buyer.

 

The sport boat business represents 3 per cent of the company’s sales, said Pierre Pichette, BRP’s public affairs vice-president. The company stopped disclosing its revenue after the Bombardier Inc. unit was bought out in 2003 by a consortium led by U.S. private equity fund Bain Capital. Bain partnered with the family of Laurent Beaudoin, who transformed Bombardier into a transportation multinational, and the Caisse de dépôt et placement du Québec, Quebec’s biggest pension fund manager.

 

In a 2011 interview, Mr. Boisjoli was hopeful that annual sales would recover all the ground lost during the recession by 2013, and reach the $2.8-billion mark again. BRP’s revenues crashed 40 per cent within six months of Lehman Brothers Inc.’s collapse.

 

The difficult days are clearly not behind BRP, whose plans to return to the stock market after a five-year restructuring have been delayed. It is now pinning its future on the design of high-end power-sports vehicles such as the Spyder, a three-wheeled roadster that it launched in 2007.

 

This is the second decision that BRP has taken as part of the strategic review of its marine products. Last May, the company announced that it will transfer the assembly line of its watercraft from Valcourt to a new plant to be built in Mexico. It will also stop producing its own accessories and clothes and contract out the distribution of spare parts.

 

After the layoffs are taken into account, BRP employs 6,500 people, 3,000 based in Quebec, according to Mr. Pichette.

 

 

[craigdritchie]

BRP is nowhere near under water.

 

As the article notes, the sport boats represented less than three percent of BRP's sales. With the cost of maintaining a dedicated factory and 350 staff to building them, they were probably losing money on every one they sold. Better off to shut it down and focus on the products they do very well with - Sea-Doo personal watercraft, Ski-Doos, Can Am ATVs and Spyder bikes.

 

Moving their personal watercraft production to Mexico was overdue. Everyone else builds stuff in Mexico, so why not them too? I have no idea what a unionized factory worker in Quebec makes, but I will guaranteed his counterpart in Mexico costs a lot, lot less. By moving production south, they've put the company back on a level playing field.

 

Same deal with the clothing. Everyone else in the world outsources this. Why on earth would they make their own? Their business is building PWCs and snowmobiles and ATVs - not making t-shirts.

Edited September 26, 2012 by Craig_Ritchie

[UglyBug]

Maybe it has to do with the politcal climate in Quebec "just saying"

 

 

 

 

 

BRP is nowhere near under water.

 

As the article notes, the sport boats represented less than three percent of BRP's sales. With the cost of maintaining a dedicated factory and 350 staff to building them, they were probably losing money on every one they sold. Better off to shut it down and focus on the products they do very well with - Sea-Doo personal watercraft, Ski-Doos, Can Am ATVs and Spyder bikes.

 

Moving their personal watercraft production to Mexico was overdue. Everyone else builds stuff in Mexico, so why not them too? I have no idea what a unionized factory worker in Quebec makes, but I will guaranteed his counterpart in Mexico costs a lot, lot less. By moving production south, they've put the company back on a level playing field.

 

Same deal with the clothing. Everyone else in the world outsources this. Why on earth would they make their own? Their business is building PWCs and snowmobiles and ATVs - not making t-shirts.

[kickingfrog]

Bain Capital, sound familiar?

[mercman]

Maybe it has to do with the politcal climate in Quebec "just saying"

 

 

 

 

 

 

 

 

Nah.....More like the political climate in the rest of the world. Its bussiness as usual here in La Belle Province. We have become de-sensitized to the seperatist movement, and anyway, the present regime will be over in a year, if my intuition is right.

[Bernie]

It's too bad.

We sold a lot of them. Very popular around here.

 

But underwater? Hardly.

Edited September 26, 2012 by Bernie

[krixxer]

"But underwater? Hardly."

 

true! I said that wrong.