Brunswick Corporation (NYSE:BC) announced on Jan. 6 that it will mothball its Riverview boat manufacturing facility near Knoxville, Tenn., and take additional actions aimed at reducing its work force, production and expenses. One of three manufacturing facilities in the Knoxville area, Riverview makes Sea Ray boats and will wind down production during the first quarter of the year. To better utilize Brunswick's overall boat making capacity, production at Riverview will be moved to nearby plants in Knoxville and Vonore, Tenn., which will remain in operation. In addition, production of certain models will be transferred to Brunswick's Palm Coast manufacturing facility in Florida, and a Brunswick plant in Reynosa, Mexico. The final impact of these production shifts on staff levels at those locations, if any, is still being determined.
At year-end 2008, Brunswick employed about 1,500 people in the Knoxville area. Approximately 300 production and support positions at Riverview will be idled by this action over the coming months. The company said it will work diligently to transfer as many Riverview employees as possible to the nearby Knoxville and Vonore manufacturing facilities. By mothballing this facility, Brunswick retains the option of restoring production should market conditions reverse and improve.
In addition, Brunswick plans to reduce up to 275 additional positions throughout Sea Ray manufacturing and product development facilities as well as at Sea Ray's Knoxville headquarters by Friday, Jan. 9. Further, all Sea Ray manufacturing facilities in Tennessee and Florida have scheduled at least a week of production furloughs each month through the end of June to reduce production rates. To be observed generally during the third week of each month, these furloughs will also provide the flexibility needed to integrate the models moving between facilities throughout early 2009. The company said it has the option to cancel or modify furlough periods, should marine market demand improve or pipeline inventory be depleted quicker than anticipated.
"We have taken a number of actions over the past few years in an effort to mitigate persistent difficult conditions in the global marine market and economy," said Brunswick Chairman and Chief Executive Officer Dustan E. McCoy. "These actions have included reduced production rates, as well as virtually halting production during periodic furloughs. The three plants near Knoxville have recently completed a production furlough, which has helped reduce our overall marine pipeline, but the global marine market remains in a severe downturn because of the weakening economies here and abroad and anxious consumer sentiment.
These conditions have led to the difficult decision to mothball the Riverview facility.
"This decision does not reflect upon the Riverview work force or product, but is the result of our need to develop a more efficient manufacturing footprint that is appropriate to the marketplace," McCoy added. "In addition to Riverview, we have closed, mothballed or sold 14 other North American boat plants since 2006 in response to these difficult economic conditions."