Offshoreonly.com - The latest news from Reggie Fountain

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Reggie Fountain is now the planet’s largest builder of high performance boats.

According to Reggie Fountain, he has been in negotiations with Brunswick Corp., owner of Baja Marine, for almost a year. “This transaction was not forced on me,” Fountain said in an interview yesterday. “All of my lawyers, bankers, and advisors have said this is a good deal for Fountain Powerboats and I’m very happy with it,” he said.

Fountain says that the $5 million loss reported for last year wasn’t as bad as it sounds as a significant portion of it was for “book write-offs.” He said that last month the company bought back $1 million worth of its own stock, and he said that neither he nor Brunswick were any longer guarantors of the company’s debt.

“They [Brunswick] wanted Fountain to have it and now I’ll be the largest exclusive user for Mercury Racing engines,” Fountain said.

Future Plans

“We’re planning on only one sales and marketing staff so this acquisition will allow me to spread our overhead over many more units,” Fountain said. Baja Marine has 86 dealers and Fountain has 26, giving the combined company over 100 dealers, all specializing in high performance boats. That will undoubtedly be the largest dealer network in the category and with boats at all price points it may provide tough competition for the few remaining high performance builders.

Keeping 10 Baja Models

“We will let the best Baja dealers sell Fountains, and the best Fountain dealers sell Bajas, so long as there is not a conflict in territories,” he said. Reggie went on to say they he would discontinue the smallest Bajas and start with the 23 and go up from there, keeping in production about 10 of the company's existing 18 models.

In their best years Fountain booked $80 million in sales and Baja Marine booked $70 million, according to Fountain. The last several years, however, have been difficult for both companies. In fiscal 2007 Baja Marine was down 19% in annual sales to about 711 units, 84% of which were under 30’. Fountain was down 7% to about 350 units for the same period.

Two Different Ends of the Market

Fountain’s smallest sport boat is 33’ and its smallest fishboat is a 31’ center console. The company reported sales of $68 million in 2007, of which $28 million was from the fishboat product line.

The merger of these two quite different high performance product lines has many industry observers scratching their heads because Fountain has avoided low price-point boats, and that has been Baja’s market niche. Also, long ago Fountain gave up the small boat market where Baja has most of its business. Nevertheless, Reggie Fountain is unfazed by this apparent contradiction in market strategy saying that he looks forward to moving Baja owners up into larger, more expensive Fountains.

“People have been saying for years that we were going out of business, but we’re still here,” Fountain said. “In the meantime Cigarette, Wellcraft, Chris-Craft and other high performance builders have all undergone restructuring and ownership changes.”

Baja Marine employs about 285 people at its plant in Bucyrus, Ohio. Brunswick has announced that production will wind up there in May, 2008. Fountain said that he is currently considering incentive offers from a number of different cities and states and that he will make a decision in a few months as to where he will end up building the Bajas. “We have 250,000 square feet of manufacturing space in Washington, NC, and I can always put on a second shift,” Fountain said.

Fountain said he will change the name of the company to “Baja by Fountain.”