Polaris, Winnebago maintain Minnesota's leadership in boat industry

The electric-powered Chris-Craft boat on Prior Lake was whisper quiet, the only sounds heard on board the wind and water slapping against its hull. At cruising speed, passengers could hear each other easily without yelling.

Like car and truck makers, marine manufacturers are turning to electric motors as they craft their future — with two Minnesota companies among the leaders in the field and in developing new technologies.

The Chris-Craft Launch 25 GTe is a concept boat from Winnebago Industries, primarily a recreational vehicle manufacturer based in Eden Prairie.

Winnebago and Polaris, the Medina-based maker of ATVs and snowmobiles, are emerging as leaders in the marine industry as it consolidates, continuing a long history of Minnesota's large presence in the field dating back to the 1800s. The marine units also help as the big increases in recreational vehicle sales during the pandemic start to flatten out.

And Minnesota continues to be one of the biggest recreational boat users, with recreational building providing about $6.9 billion in economic impact in the state each year, according to the National Marine Manufacturers Association.

As with all recreational vehicles, the boat industry relies on innovation and introduction of new models to fuel repeat buyers, especially as leisure spending levels off after pandemic highs.

Still, the industry is growing. Market research firm ReportLinker said the recreational boat market in 2022 was $19.4 billion, $5.7 billion in the U.S., and projects 4.6% growth from 2022 to 2030.

Winnebago sees growth opportunity

Winnebago was just dipping its toes into the marine market in 2018 when it acquired Chris-Craft, a company founded 149 years ago in Michigan that had since become based in Florida. A relatively small producer, Chris-Craft builds 25- to 35-foot luxury powerboats with prices ranging from $200,000 to well over $800,000.

In 2021, Winnebago became a major player with the purchase of Barletta Boat Co. for $286 million. The luxury pontoon boat brand is relatively new but also came out of the RV industry, founded by Bill Fenech, who also sold his Grand Design RV company to Winnebago.

The marine division was 8.5% of Winnebago's $5 billion in sales last year. Yet while market conditions for RVs are challenging, Chief Executive Mike Happe said in the company's third quarter conference call on June 21 that the numbers for the boat unit are encouraging.

"The Barletta brand, in particular, remains a bright spot in our portfolio, delivering strong market share gains in aluminum pontoons," Happe said.

"We have our eyes on other segments of the marine industry," Happe said in an interview. He declined to elaborate on the company's plan, but its overall M&A strategy is go after higher-end brands.

Meanwhile, the company is showing off the Chris-Craft Launch 25 GTe concept at various boat shows around the country to get consumer reaction and feedback as it uses its R&D muscle to develop next-generation models.

As with other electric vehicles, either on the roads or waterways, Winnebago faces substantial sourcing and infrastructure issues to take the new electric boat to market. But company officials are confident they will figure it out.

The electric outboard engines market is expected to grow by 5% over the next several years, according to Global Market Insights, a research and consulting firm. "Shifting consumer preferences toward boating to spend quality time with family and friends will support the market growth," according to its 2021 report.

Polaris returns to the marine market

Polaris, meanwhile, is taking its own steps into the electric boat market. It introduced a Godfrey Pontoon model, the Mighty G, built from the ground up to accommodate an electric propulsion system or a standard gas motor.

The company re-entered the boat manufacturing sector in 2018 when it bought Boat Holdings, including the Bennington and Godfrey brands, for $825 million. Polaris had expanded into personal watercraft in the 1990s but exited the business in 2004.

Now, it's one of the top two brands in both pontoon and deck boats — and the marine unit is Polaris' fastest-growing segment, with 11% of Polaris' overall sales of $8.6 billion last year. The segment grew by 30%, twice that of both the company's on-road and off-road segments.

Minnesota boating history

While Minnesota's storied brands like Lund and Crestliner were made here, Winnebago and Polaris are not adding manufacturing jobs in the state for the boat units. Both companies' primary boat manufacturing is done in Indiana and Florida.

Yet there are still manufacturing jobs in the state.

Warrior Boats makes 18- to 23-foot fiberglass fishing boats in Melrose. Premier Marine, which was acquired in 2021 by the Envision Company, a family office based in Elk River, has an operation in Big Lake.

Alumacraft, founded in 1946 and purchased by the Canadian firm Bombardier Recreational Products in 2018, still makes aluminum boats in St. Peter.

Minnesota is home to some leading makers of smaller watercraft as well, Northstar Canoes in Princeton, Wenonah Canoe in Winona and Lightning Kayak in Minneapolis.

On July 7, New York Mills will be throwing Lund Mania — including a fishing contest, parade and street dance — to celebrate 75 years of Lund boats being made in the city of 1,300 about two hours northwest of Minneapolis.

"Over the decades, the business and the facility, and the New York Mills community all really have grown together," said Lenn Scholz, president of Lund Boats.

"Crestliner and Lund both play in that premium category space for aluminum fishing boats," said Jason Oakes, general manager of Crestliner boats. Production of Crestliner boats was moved from Little Falls to New York Mills in 2009, and their boats range in price from $10,000 to $90,000 while Lund boats range from $5,000 to $100,000.

Brunswick, based in Mettawa, Ill., acquired the Lund, Lowe and Crestliner brands of boats in 2004 from Genmar Holdings. Sales of Brunswick's 18 boat brands rival those of Polaris and Winnebago at $2.1 billion.

Last year, Lund expanded, opening a light manufacturing center employing about 35 people in Willmar.

"Overall the business is healthy, we are navigating the overall macroeconomic environment," said Scholz. "It's three things, inflation, interest rates and we are heading into an election year, which will generally bring some uncertainty to the market."

Yet research also points to some positives for the marine market, especially among those first-time buyers during the pandemic sales boost.

"There is a nice new dynamic that the boaters that we did get introduced to the industry are staying with it," said Ben Duke, president of Polaris' marine business. "We're watching that really closely. It's a very positive, positive fact for the marine space."