Like the mythical messenger, Mercury Marine races. It is the world's #1 recreational marine-engine maker and marketer (by sales volume). The company builds sterndrive propulsion systems, including inboard and outboard engines under the Mercury MerCruiser, Mercury Racing, Zeus, and other brand names. It also makes a slew of marine parts and accessories under brands like Quicksilver and Kellogg Marine Supply. A remanufacturing arm offers replacement engines and service parts. Mercury Marine operates mainly in North America and the Asia/Pacific region. Its lineup is sold to boat builders, domestic and foreign governments, and the boat business of its corporate parent, Brunswick, as well as indirectly to end-users.
Since 2005 retail sales of boats and the engines that power them have slowly sunk. For Mercury Marine, the associated decline in boat-engine wholesale sales accelerated in 2009, fueled by the economic recession and limited access to credit markets. The engine maker suffered a loss. The tide turned in 2010; sales increased more than 25%, attributable primarily to recovering international demand, notably for sterndrive engines and marine service, parts, and accessories. Higher wholesales coupled with reduced bad debt, restructuring charges, and other expenses buoyed Mercury Marine's earnings.
The engine maker has weathered a perfect storm of restructuring, exit, and impairment charges. In 2010, Mercury Marine sold off its recreational boat marina in China, and, subsequently, its MotorGuide facility in Tulsa, Oklahoma. The exit followed a decision to reduce North American production by more than 40% in 2009 from 2008, and slash its workforce by more than 30%.
In the meantime, its corporate parent has signaled a consolidation of Mercury Marine's sterndrive engine production. Work from its Stillwater, Oklahoma plant is being transferred to a plant in Fond du Lac, Wisconsin. The move, initiated in 2009, is anticipated to continue through 2011. The costs, however, will be offset. Mercury Marine is receiving an incentive package from Wisconsin officials of up to $70 million in state tax credits and a $50 million loan, funded by an increase in county sales taxes, for creating or retaining jobs in Wisconsin.
Mercury Marine's outlook benefits, as well, from a joint venture with Cummins Marine (a division of Cummins). The JV, Cummins MerCruiser Diesel Marine, manufactures diesel propulsion products worldwide to recreational and commercial marine markets. Mercury Marine also partners with Tohatsu Corporation in producing small outboard engines in Japan.
Mercury Marine was founded in 1939 as the Kiekhaefer Corporation. The company was acquired by Brunswick in 1961. The Mercury Remanufacturing segment was created in 2004. – less