Marine Products Corporation

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Marine Products Corporation

2170 Piedmont Road, Northeast
Atlanta, Georgia 30324
U.S.A.
Telephone: (404) 321-7910
Fax: (404) 321-5483
Web site: http://www.chaparralboats.com

Public Company
Incorporated: 2000
Employees: 1,200
Sales: $252.4 million (2004)
Stock Exchanges: New York
Ticker Symbol: MPX
NAIC: 336612 Boat Building

Marine Products Corporation is a manufacturer of fiberglass, motorized boats, selling Chaparral stern-drive and inboard pleasure boats and Robalo outboard fishing boats. Marine Products' boats are marketed through its independent dealer network domestically and internationally. Chaparral boats are manufactured at the company's production plant in Nashville, Georgia. Robalo fishing boats are manufactured in Valdosta, Georgia. The Rollins family in Atlanta, Georgia, who spun off Marine Products from one of its holdings, RPC, Inc., controls 67 percent of Marine Products' stock.

Origins

For the first four decades of its existence, the company known as Marine Products operated as Chaparral Boats, Inc., the name given to the company by William "Buck" Pegg. Pegg's attraction to building boats was developed during his youth in his hometown of Union Lake, Michigan, where each spring thaw presented Pegg with abandoned rowboats released from the lake ice. Pegg used tar to patch the holes in the boats, an annual salvaging ritual he performed until he was 15 years old, when his father retired and moved the family to Fort Lauderdale, Florida.

Although he had retired, Pegg's father kept busy by opening a shop called Fiberglass Fabricators in 1961. Pegg, meanwhile, made a half-hearted attempt at becoming a dentist, spending a couple of years at Troy State and Florida State University before joining his father's business in 1964. Sitting in a classroom, Pegg explained years later, did not suit him. By the time Pegg joined his father, Fiberglass Fabricators had blossomed into a manufacturer of custom fiberglass parts, producing marine mufflers, swimming pool panels, planters and fountains, and parts to repair cars and boat hulls. The same year father and son began working together, a new boat company in south Florida named Fish & Ski called Fiberglass Fabricators and asked Pegg to build molds and boats. Pegg agreed and began making one or two boats a day, which were sent to Fish & Ski to be finished and rigged. Within a year, Pegg decided to begin manufacturing complete boats, introducing his first model in 1965, the 15-foot, tri-hull Chaparral 15. The name Chaparral, taken from the Chevy Chaparral, was suggested by a Fiberglass Fabricators employee who was an auto-racing enthusiast. The Chaparral 15, like other Pegg designs to follow, was purposely simplistic, made without upholstery, rugs, or other creature comforts. Pegg liked boats that could be washed with a hose: bare-boned boats that exuded substance over style. The Chaparral 15 lacked dash, but it was manufactured according to exacting standards, which attracted a loyal following. Pegg sold thousands of Chaparral 15s before the model was discontinued in the early 1980s, earning recognition as a trusted boat-builder that underpinned the success of his company.

Not long after establishing his credentials with the Chaparral 15, Pegg stopped making custom fiberglass parts and focused Fiberglass Fabricators' efforts exclusively on boat manufacture. In 1968, after Fiberglass Fabricators introduced an 18-foot Chaparral, one of the most important events in the company's history occurred: the day Buck Pegg met Jim Lane, a Wauchula, Florida, native who earned an accounting degree at the University of Florida. The pair met on the city paddleball courts in Hollywood, Florida. Lane, who was the chief financial officer of a mobile home financing company in Miami at the time, recalled his introduction to Pegg in an interview with Powerboat Magazine in July 1990. "We were the same age," he said, "and we both had a wife and kids. We talked about my business and his business." Both were competitive paddleball players, pairing up at one point to win the Hollywood city championship, and their friendship grew. Lane, who had owned several boats before meeting Pegg, purchased a boat from Fiberglass Fabricators, the first twin-engine Chaparral made by Pegg, but for nearly a decade each pursued his occupation separately. They eventually joined forces in 1976, a significant year in Pegg's boat-building career.

Chaparral Moving to Georgia in 1976

After nearly a decade focused solely on building boats, Fiberglass Fabricators was flourishing. Pegg needed to expand his manufacturing plant, and he was preparing to do so when he learned Larsen Boat Company was on the verge of declaring bankruptcy and preparing to vacate its production plant in Nashville, Georgia. Pegg wanted to move Fiberglass Fabricators to Nashville, but his financial partner had no desire to move to Georgia. Pegg asked Lane to join the business and Lane agreed, buying out Pegg's partner's interest in the business. In 1976, Pegg acquired the 37,000-square-foot Nashville plant, shuttered the Florida operations, and moved to Florida with Lane in tow, re-incorporating the company as Chaparral Boats, Inc.

The decade-long friendship between Pegg and Lane developed into an effective business partnership. Their contrasting skills and desires formed the basis of a complementary working relationship. "It works out real well," Pegg explained in a July 1990 interview with Powerboat Magazine. "I didn't want to be in the office, so Jim said, 'Good. I'll do that.' He didn't really want to be in the plant, so I said, 'Good. I'll do that.'" Pegg relished the opportunity to spend all his time designing new boats and improving manufacturing methods. Lane threw himself into managing Chaparral Boats' public relations efforts and controlling the company's costs, focusing his attention on profits and efficiency. With Lane's contributions, Chaparral Boats became a perennial profit maker, among the first boat companies to use computer-controlled inventory tracking. With Pegg cloistered in the Nashville plant, production quality took center stage, yielding a slew of Chaparral boat models that withstood the rigors of use and won the business of boating enthusiasts throughout the country.

Soon after Pegg and Lane assumed their respective managerial roles, Pegg relented to the pressure of consumer demand. Despite his belief that accoutrements such as rugs and upholstery were destined to rot, Pegg strayed from his no-frills approach to boat manufacture in 1978, introducing the Chaparral 198, the first model bearing stylish lines and a plush interior. Subsequently, Pegg began to broaden the company's selection of boats, designing models to appeal to the entire powerboat community. The Cruiser line was introduced in 1984, the high-performance Villain in 1986, and the wide-beam Cruiser and the SX line in 1988.

The 1980s proved to be a significant decade for Chaparral Boats. Pegg's willingness to broaden the selection of the company's boats helped fuel tremendous financial growth, making Chaparral Boats one of the largest powerboat builders in the country. At the end of the 1970s, after the company had settled into its new facilities in Nashville, annual sales reached $4 million. During the 1980s, annual sales leaped upward, reaching nearly $100 million by the end of the decade. The exponential growth in business required the company to significantly expand its manufacturing plant, resulting in a facility that was ten times its original size by the end of the decade. In the midst of this energetic growth, Pegg and Lane took an important step to ensure their company's financial security, despite all outward signs of a company free from any financial concerns. In 1986, they sold their company to RPC Inc., an oil and gas services firm controlled by the Rollins family in Atlanta. In his July 1990 interview with Powerboat Magazine, Lane explained the reasoning behind the deal. "By 1986," he said, "we'd had the longest upcycle the industry had ever been through. Who knew how long it would last? We wanted to have a big brother to protect us." The big brother came in the form of a deep-pocketed parent company, but Chaparral Boats' acquisition by RPC did nothing to lessen the control or influence of Pegg and Lane over the company. The Rollins family expressed no interest in interfering in the management of the company, ceding virtually all authority to the proven partnership of Pegg and Lane.

Company Perspectives:

Every day you see companies displaying awards and touting their accomplishments. How do you sort out the claims and counterclaims? At Chaparral, building award winning boats isn't a bolt out of the blue. We've been building the marine industry's finest sportboats, deckboats, and cruisers for more than four decades. We're proud to let our record speak for itself. For almost a quarter-century, Powerboat Magazine's team of experts have tested our boats against the leading names on the water. The fact that we've won 27 awards including nine Boat of the Year trophies shows an unmatched level of consistency. And if that's not enough, turn to the International Standards Organization. Two years ago Chaparral earned ISO 9001:2000 certification for consistent quality management systems. Completing the ISO certification sends a signal to customers worldwide that Chaparral is dedicated to achieving the ultimate advantage in customer satisfaction through design innovation, manufacturing process excellence, and dealer network support.

Spinoff in 2001

Chaparral Boats operated as a component of RPC's business for 15 years, years that saw the company earn dozens of industry awards for the quality of its powerboats while recording steady financial growth. The next major corporate event that had a significant effect on Chaparral Boats involved the creation of Marine Products Corporation. At the close of the century, members of the Rollins family and senior executives at RPC decided it was in the best interests of both RPC and Chaparral Boats to separate the two companies. News of the separation first emerged in early 2000, by which point Chaparral Boats' annual sales totaled nearly $150 million, ranking it as the third largest manufacturer of stern-drive, fiberglass boats in the United States. In an interview with the Oil Daily on January 18, 2000, R. Randall Rollins, RPC's chairman and chief executive officer, commented on the proposed spinoff of Chaparral Boats. "This is a major step in strategically positioning our oil-field service companies and our leisure boat manufacturing company to successfully grow and compete in the 21st century," he said. Roughly a year later, the spinoff was completed, a maneuver that necessitated the formation of Marine Products in 2000 as the parent company of Chaparral Boats. At the end of February 2001, shares in Marine Products were sold to RPC shareholders, with the Rollins family coming away from the spinoff owning 67 percent of Marine Products' stock.

Chaparral Boats' new era of existence as a subsidiary of Marine Products began with one of the most significant events in the company's history. In June 2001, Marine Products acquired Robalo, a manufacturer of fishing boats, which became a subsidiary alongside Chaparral Boats. Founded in 1969, Robalo was a company on the decline at the time it was acquired. The company's first boat was a 19-foot, saltwater fishing boat that was among the first to feature a so-called unsinkable hull. As its business grew, the company attracted the attention of a corporate suitor and major competitor of Chaparral Boats, Brunswick Corporation, which acquired Robalo in 1991, organized it within its U.S. Marine division, and relocated the company to Tallahassee, Florida. Robalo fared well for the ensuing decade, but its production of 600 boats in 2000 represented its peak production. A downturn in boating production delivered a crippling blow to Robalo, forcing it to cease production of its boats in early 2001. "Production was virtually zero when we bought the company," Marine Products' president and chief executive officer, Richard Hubbell, remarked in a May 23, 2004 interview with the Atlanta Journal-Constitution. "We had to build it from scratch." When Marine Products acquired Robalo, it moved its headquarters to Valdosta, Georgia, where the task of rebuilding the company began. Under Marine Products' guidance, the company began producing two 23-foot models, recording its first sales at the end of 2001. Expansion of the company's product lines followed, resulting in a total of eight models ranging from 19 feet to 26 feet in length by 2003.

When Robalo regained its footing as a going enterprise, it began to contribute to the financial health of Marine Products, although the line of fishing boats represented only a small percentage of the parent company's business. By the time Robalo was producing eight models of boats, its sales accounted for 6 percent of Marine Products' total sales. Robalo was estimated to control less than 1 percent of the outboard fishing market. The strength of Marine Products was found in Chaparral Boats, which spent the first years of the new century displaying its signature traits: production excellence and financial health. Thanks largely to Chaparral Boats' contribution, Marine Products' sales increased from $134 million in 2001 to $252 million in 2004. The company's profits recorded a more impressive increase, jumping from $8.5 million to $23.7 million during the period. As the company planned for the future, Robalo offered another avenue of growth, but much of Marine Products' success in the years ahead depended on its line of Chaparral boats. In 2005, the subsidiary celebrated the 40th year since the introduction of the Chaparral 15 in quarters far more elaborate than the fiberglass parts shop where Buck Pegg made his first boat. Chaparral Boats occupied nearly one million square feet of manufacturing space on 57 acres in Nashville, producing 150 sport boats, deck boats, and cruisers each week. As the Chaparral name headed toward its first half-century of existence, there was every indication that its legacy of success would continue into the future.

Principal Subsidiaries

Chaparral Boats, Inc.; Chaparral Marine Inc.; Robalo Acquisition Company, LLC; Marine Products Investment Company, LLC.

Principal Competitors

Brunswick Corporation; Genmar Holdings, Inc.; Yamaha Motor Co., Ltd.

Key Dates:

1965:: A year after joining his father's fiberglass parts business, William "Buck" Pegg introduces the Chaparral 15.
1976:: Pegg is joined by Jim Lane; the company moves to Nashville, Georgia.
1986:: Chaparral Boats is acquired by RPC, Inc.
2000:: Marine Products Corporation is formed to facilitate the spinoff of Chaparral Boats one year later.
2001:: Marine Products Corporation acquires fishing-boat manufacturer Robalo.
2005:: The Chaparral brand name celebrates its 40th anniversary.