Winnebago President and CEO Michael Happe

Monday’s (June 4) announcement that Iowa-based Winnebago Industries Inc. had acquired 300-employee Florida recreational boat builder Chris-Craft from Stellican Ltd. came as a surprise to most industry watchers including those gathered this week at the Mayflower Hotel in Washington, D.C., for the RV Industry Association’s 2018 RV Committee Week.

Along with a heralded brand that dates back to 1874, the acquisition, Winnebago’s first in the marine market, includes its Sarasota campus management offices, a 170,000-square-foot production facility and a small lake for testing every boat. Chris-Craft premium-priced boats range from 21 to 38 feet long, and retail in the $175,000-$200,000 range.

Winnebago President and CEO Michael Happe told RVBUSINESS.com last night that Winnebago, during his 2 1/2-year tenure, has openly expressed its interest in growth opportunities not only outside the RV industry, but also outside North America. Currently, Chris-Craft does about 25% business in several markets overseas.

“I’ve been very open with our employees and even externally that we’re interested in someday potentially pursuing some global business in the industries that we compete in,” the former Toro executive stated Monday night. “But it has to be right and it has to make sense. We have to know that we can be successful.”

Happe said Winnebago would operate Chris-Craft, for which no purchase price was released, as a separate division in much the same way that it manages Grand Design RV, the Middlebury, Ind.-towable RV manufacturer it acquired in August of 2016.

“We’re going to run this in many ways like we run Grand Design. It’ll be set up as a separate business unit; we’ll call it a subsidiary,” said Happe, who agreed to answer a few questions regarding Winnebago’s latest acquisiton. “I think the Chris-Craft team will look for some more collaboration or help than Grand Design has needed. So, we’ll work carefully with the Chris-Craft team where it makes sense to collaborate and offer knowledge and new ideas and, obviously, capital and financial support. But this is a standalone business today. It’s healthy. It’s just been constrained to the size that it is in the market and we’re ready to take it and hopefully grow it materially over the next many years.”

RVB: So, how long has this acquisition been in the works?

Happe: Our discussions with Chris-Craft had been underway for many months. Our desire to look at other outdoor lifestyle segments has been with us for the last couple of years now. We’ve been very intentional with an aspiration to build a premier outdoor lifestyle company, which certainly is focused on the RV industry that our legacy is in. But, again, we’ve been very straightforward with our intentions to look at other opportunities outside of the RV space – but they had to make sense with the business model that we want to build and run.

RVB: It was your intent, then, to acquire not only a company that makes boats, but one that makes an legendary brand?

Happe: Well, brands are important to us. We’re very fortunate in the RV industry to have, we believe, the iconic brand of all brands in Winnebago. We added what probably is the RV industry’s hottest young brand in Grand Design a year and a half ago. And so now we get to add a third brand, which is the premier iconic brand in the marine industry in Chris-Craft. So, brands are important. They mean something to channel partners. They especially mean something to end customers. And so as we look for opportunities to grow — we want to grow around strong brands that we can build a future on.

RVB: And you also look to an extent toward diversification?

Happe: The majority of our revenue when I had the privilege of joining the company was in the motorized space. It was a good business, and it’s really where the legacy of our brand resides. But in the towable space, we’ve made two very important plays. We’ve made a very concerted effort to focus on Winnebago-branded towables with leadership changes, with product lineup changes and with a capacity expansion investment in Middlebury, Ind.

But, obviously, we added a transformative acquisition in Grand Design. So our RV portfolio looks much different today than it did several years ago, and the balance of the line across motorized and towables is much better, we believe, in relation to the broader market.

But we always had aspirations to pursue smart, profitable diversification opportunities outside of the RV industry – if the right opportunities presented themselves. And what we like about the Chris-Craft opportunity is it comes with the best brand in marine and they have a very similar approach to their dealer partnerships and relationships in that they’re very strategic; they want to partner with the dealers to make sure the dealers make money and that they take care of their customers.

They build some of the very best products in the marine industry. They have a commitment to craftsmanship, to design, to innovation. We’re starting at the high end of the marine space and we’ll make the brand a little bit more accessible over time, but we’ll do that very carefully so that we don’t damage the brand. We’ll do that in a very disciplined way.

RVB: We understand that Chris-Craft President Stephen Heese will continue to lead the company?

Happe: Like Grand Design, talent comes with this acquisition. The entire Chris-Craft leadership team is staying with the business including Steve, who will report to me. Talent is important because we don’t have a lot of marine knowledge formally within Winnebago industries, but we’ve now acquired a tremendous team.

We’re excited about this first step into a new outdoor lifestyle industry and we’ll see where it goes. We’re very focused on making sure Chris-Craft integrates well into our portfolio before we consider any other opportunities in that space.

RVB: You were saying earlier you see the RV and marine industries as being similar, and not just because both are in growth mode?

Happe: I think the marine industry and the RV industry are strong adjacent markets. There are many RVers who boat, and there are many boaters who RV and camp. And one of the things that I think is especially relevant between the two industries is that these are recreational activities that you spend with your family and your friends. These are not individual sports or individual activities. When you go RVing, you’re with your family and your friends. When you go boating, you go boating with your family and your friends. There are a number of different cases within each industry in terms of how the product is being used.

And we believe the long-term demand characteristics of the marine industry are in many ways similar to the RV industry. People want to be outside, be active, and be with family and friends. They want to create memories.

There are new boaters coming into the boating lifestyle just as there are new campers and new RVers coming into the camping and RV lifestyle. We believe that the long-term demand characteristics are very positive in marine as well.

RVB: And there are similarities – to an extent – in the products themselves, are there not?

Chris-Craft builds great products. They take an extremely refined approach to design. These things have cockpits. They have chairs and furniture and navigation systems and kitchens and stereo systems. In many ways, boats have some similar characteristics to the RV platforms that we build. And so we look forward to trying to share knowledge carefully across the enterprise so that the businesses can borrow good ideas.

The business models are very similar as well: a manufacturing and supply chain, and very similar in terms of the type of activities you do in a manufacturing plant to build a boat versus building an RV. Some of the supply segments are very similar. There’s appliances and electronics and fiberglass and resin and wire and wood. Companies like Patrick and Lippert as suppliers and Forest River as an OEM all have a presence in marine and it seems to make sense to them. And as we further looked at the space, it seemed to make sense to us as well

RVB: Can you provide a snapshot of Chris-Craft as it exists today, and what do you see as its potential for growth?

Happe: We hope to take Chris-Craft it to its next multiple stages of growth. They have been capacity constrained. They have been capital constrained in terms of some new product development. So we will work carefully with them to expand their capacity. We will look to extend their current lineups into new models and to strengthen the dealer channel, and we will look to enter new segments within the marine industry.

With the Chris-Craft brand, the brand stands on its own. But we will look to carefully create even stronger visibility and, ultimately, accessibility to the brand. It is the brand that people aspire to own some day in the marine industry, but we’d like to make it slightly more accessible without degrading it in any way, shape or form.