In the battle for dominance in the US stern drive market, or for that matter the world, Volvo Penta of the Americas (VPA) has quietly conceded market leadership to its US-based rival, the Mercury Marine division of Brunswick Corp. That's not to imply that the Chesapeake, Va.-based unit of Volvo Group's Volvo Penta has given up the war, or contented itself to sit quietly as the second largest stern drive supplier and take the scraps.

That becomes obvious when VPA chief executive officer, Clint Moore, is asked to disclose the company's stern drive market share.

"I'd rather not say," he said politely. "My strategy has been to stay off Brunswick's radar screen."

The fact is, VPA has waged an aggressive and fairly successful fight to win the hearts of independent boat builders and their many transoms through aggressive product innovation, a dedication to quality - often at the expense of being the less costly propulsion alternative - and by improving its after-sale service.

The strategy appears to be working. VPA has increased its US and worldwide recreational marine engine market share to undisclosed numbers, and has won industry recognition for some innovative product designs, bolstering its already strong image as a quality leader in the minds of OEMs and, more importantly, boating consumers.

However you say it, VPA's aim is clear: to strengthen its ties with independents by giving them and the boating consumer another choice in marine power. And to offer the market innovative products, such as the Ocean Series XDP composite drive, that through ongoing competition with Mercury and other marine propulsion suppliers, might help move engine design and engineering even further ahead.

"The forefront of (VPA's) strengths have always been, and hopefully will always be, good products, and products that are leading edge from a technology perspective," said Moore in
summarizing the company's strategic niche. "We've always had a reputation for great products, and we've built on that over time."

Great products, however, don't necessarily define market success. Even with its solid reputation on the product front, Volvo has long been criticized by independents for weak after-sale support and an unwillingness to supply their needs. Moore, who has spent much of his career in boat building, said that was one of the chief charges against the company when he took over as CEO in 1996.

"The external weakness...was that VPA was a difficult company to do business with for a boat builder or an end-user," Moore admitted. "It had a questionable reputation around
after-market support."

Those were among the first issues Moore tackled after accepting the job at VPA. "We have demonstrated over the years that we are easy to do business with and we do, in fact, take excellent care of our customers, whether they are boat builders or end users."

Moore speaks with the kind of authority that comes from more than 30 years working in roughly every major sector of the recreational marine business; from engine manufacturing where he spent 15 years at Mercury and left in 1989 as vice president of sales and marketing, to boat building and even marine retailing. Prior to joining VPA, Moore spent one year as president of retailer Bassett Boats. He came to Bassett from Genmar Holdings, where he was president of the Larson and Glastron powerboat operations.

Those varied views of the recreational marine business, and of Volvo Penta, served him well when he joined the company.

"I had the unique perspective...of having competed against (VPA) for many years and then to have been its largest customer as a boat builder," said Moore. "As a result of that, I thought I had a very good sense of (VPA's) strengths and weaknesses."

As noted earlier, its strengths were the quality of its products and a leadership position as an innovator. Its major weakness was poor after-market support and a general impression that VPA was difficult to work with. But, again, the perspective changed once Moore had a chance to view the company from the inside.

Overcoming the negatives and strengthening the positives required a deep understanding of how the company operated. In any new assignment, Moore's first task has been to get a handle on what he calls a company's "operating expense prioritization." 

"Where are they spending their money?" Moore said. "What I very quickly learned after joining the company was that the operating expenses were disproportionately around getting sales; not taking care of or supporting the customer." 

For example, roughly two-thirds of VPA's operating expenses covered sales and marketing operations, such as field sales personnel and advertising. "Maybe a third went toward service reps in the field and service reps here at the office to support the business and applications people in the field," he said.

So Moore reprioritized.

"I took the very difficult but
necessary step of eliminating a lot of the "get the sale" positions," he said. "We used the resources that were freed up... to beef up and add service reps and applications people and those sorts of things."

At the same time, Moore gave the company a renewed focus.
If you're not trying to be the biggest, why try to be all things to all people?

"There are just too many activities out there to take them all on," he said. "And so we really had to sit down and decide who were the customers around whom our future could be built, including dealers and boat builders."

So VPA strengthened its relationships, it's partnerships, with independent boat builders.

"Once we made that decision, it became relatively straight-forward," Moore said.

The first step was to reduce the size of its dealer network. Moore won't disclose how many dealers VPA had or the current number. But he said his strategy was to focus on the best dealers and hope the others would come along.

"It's the old 80/20 rule that 20 percent of your dealers constitute 80 percent of our future possibilities," he said. "So we've tried to circle the wagons around those, and what we've learned is that if the 20 percent come on board...and you earn their trust, the remaining 80
percent see that...and start coming along as well."

VPA also consolidated its efforts with OEMs.

"We don't have the resources to support every boat builder the same way," Moore said. "So we said our future will be built around 15 boat builders, and we should give them everything we've got."

VPA always had a strong foot in the door with independents through its tight relationship with Genmar Holdings Inc., in Minneapolis, the world's largest independent boat manufacturer. But over the years, the company has built solid business partnerships with other major independents, including Regal Marine Industries, in Orlando, and Cobalt Boats, in Neodesha, Kan.

This strategy naturally begs the question: Will VPA abandon its long held policy of not buying boat companies?

"I'm one that says, never say never, but I can say that Volvo will never get into the boat business," Moore said. "Our future is our independent boat builder's future."

So, VPA's formula for growth remains tied to building strong partnerships, down to basing VPA personnel full time on site at partner boat builder companies. "They are there to assist in application and engineering work, but more to insure that the boats that leave that key customer's plant are as close to delivery ready as they can possibly be," Moore said.

VPA launched this program about six years ago, according
to Moore, as part of another initiative to offer more integrated propulsions systems to the
market.

In fact, Moore sees this as one of the major trends driving the marine engine market in the early 21st century. As consumers demand boats with integrated components and features, similar to the systems found in automobiles, boat builders are being forced to develop integrated engine and component systems that "talk" to each other and are easier to service. In addition to major performance enhancements, these systems offer opportunities for improvements in interior design, since things like GPS units and engine monitoring systems will be designed into the helm station.

Obviously, the trend is driving major changes in powerboat design. But it's also affecting how engine builders do business with boat builders, especially the independents. And, that requires a change in mindset.

"Volvo Penta can't think of itself as a propulsion system provider anymore," said Moore. "We have to be much more integrated into our boat builders' operations than we have been in the past."

VPA is reaching beyond the gasoline stern drive and inboard market and offering more diesels in the US. In fact, if you ask Moore where he sees the greatest opportunity for growth for VPA down the road, he'll tell you it's in the diesel business. Consider that VPA's share of the diesel market was next to nothing when Moore came on board in 1996. Today it constitutes between 25-30 percent the
company's business, according to Moore.

He sees diesel opportunities not only in the traditional inboard market but in stern drives, as well. VPA has launched what Moore says is the company's largest scale introduction of new diesels in its history. As part of that, VPA has introduced its D-3 line, which targets of all things the sport fishing boat market.

Moore calls the line "a generation ahead of what's been out there." Bold words, indeed, but he is serious in his focus on challenging outboard makers 
for a share of the saltwater fishing boat market. "What we're seeing with the new product is that it's now for the first time quite possible to present an attractive alternative to the big four stroke outboards in fish boats," Moore said.

Given the limited size of that market, VPA's vision has to extend well beyond fish boats if it wants to make a solid foray into the stern drive market with its new diesels. But, says Moore, it's a start. While diesels lack the "top speed" offered by outboards that anglers prize, they offer something Moore believes they'll find even more attractive - extended range and better fuel economy. 

Moore harbors no illusions about dominating fish boats.

"I don't mean to suggest for a minute that overnight the light bulbs are going to go off and the market is going to move in a dramatic way," he said. "But I think we're patient, and the merits of the system will build its credibility over time. So we'll see what happens."

VPA also is hanging its hopes for sales and market share growth on innovations like the Ocean Series XDP composite drive, which was introduced to the market about three years ago. The drive won the NMMA Innovation Award at the Miami International Boat Show in 2002 and a Composite Fabricators Association ACE Award prior to market launch in 2000.
Moore claims the drive has proven popular again in the saltwater fish boat segment where corrosion problems often plague traditional drives. VPA has produced the line in limited quantities to allow for user testing and refinements. Now, Moore said, VPA is preparing a full scale launch of the drive.



"We've become comfortable enough with our systems and partners that we can go to a high volume (production) scenario," Moore said. "We're seeing our Ocean Drives being integrated into family boat product lines, and we think it will enable our boat builders to significantly grow their saltwater stern drive business."

As he talks about new products and the future of the business, Moore's enthusiasm builds. With all the changes he's been through in more than 30 years in the pleasure boat business, Moore sincerely sees even more change ahead.

"I think it's one of the best times ever to be participating in the industry," he said. "We're in an upcycle now, and it's fun to be involved in that."

But the real trick, Moore said, is managing through the worst of times.

"I have over the years learned that people and companies often make their worst decisions in good times," he said. "We're being very careful not to make poor decisions during the good times. It's in the down times where you can make dramatic moves."