Marine Products Corporation Business Information, Profile, and History

Company Perspectives:

Every day you see companies displaying awards and touting their accom plishments. How do you sort out the claims and counterclaims? At Chap arral, 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 recor d speak for itself. For almost a quarter-century, Powerboat Magaz ine's team of experts have tested our boats against the leading na mes on the water. The fact that we've won 27 awards including nine Bo at of the Year trophies shows an unmatched level of consistency. And if that's not enough, turn to the International Standards Organizatio n. Two years ago Chaparral earned ISO 9001:2000 certification for con sistent 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 des ign innovation, manufacturing process excellence, and dealer network support.

History of Marine Products Corporation

Marine Products Corporation is a manufacturer of fiberglass, motorize d boats, selling Chaparral stern-drive and inboard pleasure boats and Robalo outboard fishing boats. Marine Products' boats are marketed t hrough its independent dealer network domestically and internationall y. Chaparral boats are manufactured at the company's production plant in Nashville, Georgia. Robalo fishing boats are manufactured in Vald osta, Georgia. The Rollins family in Atlanta, Georgia, who spun off M arine Products from one of its holdings, RPC, Inc., controls 67 perce nt of Marine Products' stock.

Origins

For the first four decades of its existence, the company known as Mar ine 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, Michiga n, where each spring thaw presented Pegg with abandoned rowboats rele ased 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, Flor ida.

Although he had retired, Pegg's father kept busy by opening a shop ca lled Fiberglass Fabricators in 1961. Pegg, meanwhile, made a half-hea rted attempt at becoming a dentist, spending a couple of years at Tro y State and Florida State University before joining his father's busi ness in 1964. Sitting in a classroom, Pegg explained years later, did not suit him. By the time Pegg joined his father, Fiberglass Fabrica tors had blossomed into a manufacturer of custom fiberglass parts, pr oducing marine mufflers, swimming pool panels, planters and fountains , and parts to repair cars and boat hulls. The same year father and s on 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, introduci ng his first model in 1965, the 15-foot, tri-hull Chaparral 15. The n ame Chaparral, taken from the Chevy Chaparral, was suggested by a Fib erglass Fabricators employee who was an auto-racing enthusiast. The C haparral 15, like other Pegg designs to follow, was purposely simplis tic, made without upholstery, rugs, or other creature comforts. Pegg liked boats that could be washed with a hose: bare-boned boats that e xuded 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 bo at-builder that underpinned the success of his company.

Not long after establishing his credentials with the Chaparral 15, Pe gg stopped making custom fiberglass parts and focused Fiberglass Fabr icators' efforts exclusively on boat manufacture. In 1968, after Fibe rglass Fabricators introduced an 18-foot Chaparral, one of the most i mportant events in the company's history occurred: the day Buck Pegg met Jim Lane, a Wauchula, Florida, native who earned an accounting de gree at the University of Florida. The pair met on the city paddlebal l courts in Hollywood, Florida. Lane, who was the chief financial off icer of a mobile home financing company in Miami at the time, recalle d 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 t he Hollywood city championship, and their friendship grew. Lane, who had owned several boats before meeting Pegg, purchased a boat from Fi berglass Fabricators, the first twin-engine Chaparral made by Pegg, b ut for nearly a decade each pursued his occupation separately. They e ventually joined forces in 1976, a significant year in Pegg's boat-bu ilding career.

Chaparral Moving to Georgia in 1976

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

The decade-long friendship between Pegg and Lane developed into an ef fective business partnership. Their contrasting skills and desires fo rmed the basis of a complementary working relationship. "It works out real well," Pegg explained in a July 1990 interview with Powerboa t Magazine. "I didn't want to be in the office, so Jim said, 'Goo d. 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 h is time designing new boats and improving manufacturing methods. Lane threw himself into managing Chaparral Boats' public relations effort s and controlling the company's costs, focusing his attention on prof its and efficiency. With Lane's contributions, Chaparral Boats became a perennial profit maker, among the first boat companies to use comp uter-controlled inventory tracking. With Pegg cloistered in the Nashv ille plant, production quality took center stage, yielding a slew of Chaparral boat models that withstood the rigors of use and won the bu siness of boating enthusiasts throughout the country.

Soon after Pegg and Lane assumed their respective managerial roles, P egg relented to the pressure of consumer demand. Despite his belief t hat accoutrements such as rugs and upholstery were destined to rot, P egg 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 power boat community. The Cruiser line was introduced in 1984, the high-per formance Villain in 1986, and the wide-beam Cruiser and the SX line i n 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, a fter the company had settled into its new facilities in Nashville, an nual sales reached $4 million. During the 1980s, annual sales lea ped upward, reaching nearly $100 million by the end of the decade . The exponential growth in business required the company to signific antly expand its manufacturing plant, resulting in a facility that wa s 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 ens ure 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 R ollins family in Atlanta. In his July 1990 interview with Powerboa t Magazine, Lane explained the reasoning behind the deal. "By 198 6," 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 br other to protect us." The big brother came in the form of a deep-pock eted parent company, but Chaparral Boats' acquisition by RPC did noth ing to lessen the control or influence of Pegg and Lane over the comp any. The Rollins family expressed no interest in interfering in the m anagement of the company, ceding virtually all authority to the prove n partnership of Pegg and Lane.

Spinoff in 2001

Chaparral Boats operated as a component of RPC's business for 15 year s, years that saw the company earn dozens of industry awards for the quality of its powerboats while recording steady financial growth. Th e next major corporate event that had a significant effect on Chaparr al Boats involved the creation of Marine Products Corporation. At the close of the century, members of the Rollins family and senior execu tives at RPC decided it was in the best interests of both RPC and Cha parral Boats to separate the two companies. News of the separation fi rst emerged in early 2000, by which point Chaparral Boats' annual sal es totaled nearly $150 million, ranking it as the third largest m anufacturer of stern-drive, fiberglass boats in the United States. In an interview with the Oil Daily on January 18, 2000, R. Randa ll Rollins, RPC's chairman and chief executive officer, commented on the proposed spinoff of Chaparral Boats. "This is a major step in str ategically positioning our oil-field service companies and our leisur e boat manufacturing company to successfully grow and compete in the 21st century," he said. Roughly a year later, the spinoff was complet ed, 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 Produ cts began with one of the most significant events in the company's hi story. 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 fish ing boat that was among the first to feature a so-called unsinkable h ull. As its business grew, the company attracted the attention of a c orporate suitor and major competitor of Chaparral Boats, Brunswick Co rporation, 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 ex ecutive officer, Richard Hubbell, remarked in a May 23, 2004 intervie w with the Atlanta Journal-Constitution. "We had to build it f rom scratch." When Marine Products acquired Robalo, it moved its head quarters to Valdosta, Georgia, where the task of rebuilding the compa ny began. Under Marine Products' guidance, the company began producin g two 23-foot models, recording its first sales at the end of 2001. E xpansion of the company's product lines followed, resulting in a tota l 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 c ontribute to the financial health of Marine Products, although the li ne 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 s ales. Robalo was estimated to control less than 1 percent of the outb oard fishing market. The strength of Marine Products was found in Cha parral Boats, which spent the first years of the new century displayi ng its signature traits: production excellence and financial health. Thanks largely to Chaparral Boats' contribution, Marine Products' sal es increased from $134 million in 2001 to $252 million in 200 4. 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 gro wth, but much of Marine Products' success in the years ahead depended on its line of Chaparral boats. In 2005, the subsidiary celebrated t he 40th year since the introduction of the Chaparral 15 in quarters f ar more elaborate than the fiberglass parts shop where Buck Pegg made his first boat. Chaparral Boats occupied nearly one million square f eet of manufacturing space on 57 acres in Nashville, producing 150 sp ort boats, deck boats, and cruisers each week. As the Chaparral name headed toward its first half-century of existence, there was every in dication that its legacy of success would continue into the future.

Principal Subsidiaries: Chaparral Boats, Inc.; Chaparral Marin e Inc.; Robalo Acquisition Company, LLC; Marine Products Investment C ompany, LLC.

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

Chronology

• Key Dates:
• 1965: A year after joining his father's fiberglass parts busin ess, William "Buck" Pegg introduces the Chaparral 15.
• 1976: Pegg is joined by Jim Lane; the company moves to Nashvil le, 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 manufa cturer Robalo.
• 2005: The Chaparral brand name celebrates its 40th anniversary .