MPTC partnership part of Mercury Marine success

July 8, 2013

From insightonbusiness.com: “Steering their own course – Innovation drives Mercury Marine’s growth” — Sitting back and relaxing on the water this summer, chances are you’ll see the name “Mercury Marine” zip by.

Headquartered in Fond du Lac, Mercury Marine is the world’s largest developer and manufacturer of marine propulsion systems – the technical name for the motors powering the fishing boats, speed boats and pontoons seen on bodies around the world.

While Mercury Marine is now moving in the right direction, the company – Fond du Lac County’s largest employer with more than 2,000 workers – was admittedly hit hard by the recession. “What’s more discretionary spending than a boat?” says Mercury Marine President Mark Schwabero.

But today, as Mercury Marine engines power boats everywhere from Lake Winnebago and the Great Lakes to the Amazon River and expanding markets in China, its sales are increasing and the company is in expansion mode, building a $20 million testing facility visible to people driving by its massive manufacturing facility along U.S. 41. The new facility will allow the company to test a wider variety of engines, allowing it to develop new products more quickly.

“The expansion going on now is directly related from overall market growth,” Schwabero says. “In the U.S. market, we are seeing a recovery in some segments, such as engines for fishing boats and pontoons.”

With nearly $2 billion in sales, Mercury Marine is not only Fond du Lac’s largest manufacturer with more than 1 million square feet of space, it’s also a global manufacturing powerhouse.

“Their presence in our community is almost immeasurable,” says Joe Reitemeier, president of the Fond du Lac Association of Commerce. “Not only do they have a large employment base, there are several hundred companies that provide services or supplies to Mercury. They’re also active in the community and looking for ways to make a difference.”

Innovation drives growth

Although Mercury Marine plans to celebrate its 75th anniversary next year, there was a time not so long ago that some wondered if the engine maker would maintain its significant Wisconsin footprint.

In 2009 as sales fell, the company decided to consolidate its engine making in either Fond du Lac or Stillwater, Okla., to help save money and right the company’s financial ship. Stillwater leaders brought considerable incentives to the table. It wasn’t until the company’s union agreed to concessions and the city, county and state brought their own incentives to the table that Mercury Marine decided to stay in Fond du Lac. Mercury Marine’s financial package included $70 million from the state in refundable tax credits, a $50 million loan from the county paid for by a 0.5 percent sales tax, and $3 million in financial aid from the city.

At the time, the saga dominated state headlines, especially after union workers voted initially to reject any changes. There was a lot of intensive negotiation before the second vote and the company reversed its decision to consolidate operations in Oklahoma.

Schwabero admits it was a difficult time, “but just as when you have emotional decisions in your personal life, they bring you closer to those around you. The experience left us with closer relationships with the city, county and state. I can’t forget about our employees either. Their hard work has allowed us to get where we are today. They are really great and have a passion for what we’re all about.”

Today, that difficult time is past and the company is adding jobs.

In the past three years, Mercury Marine officials estimate the company has brought an additional 950 jobs to the community – many of them by bringing work from Stillwater to the Fond du Lac plants. Other hiring has come from company growth. Most of the positions created and filled are related to engineering and product development.

“Innovation is an essential component to our company’s growth,” says Schwabero, who has been Mercury’s president since 2008. “We have a lot of technical capabilities that set us apart. Innovation is a fundamental strength.”

In the past few years, Mercury Marine’s greatest success was with its 150-horsepower engine. “It’s been a home run for us. There’s been a lot of acceptance for it in the market,” Schwabero says. “The downturn allowed us to put some focus on it so it hit the market just at the right time as things were starting to come back.”

The new $20 million testing facility will be finished by the end of the year, but engineers and technicians will start some testing this summer, says David Foulkes, vice president of engineering. The facility complements existing on site testing facilities as well as outdoor sites in Oshkosh along the Fox River and in Florida.

“There are several testing stages you go through when developing a new product and this new facility will allow us to do a wider variety of testing, which will help us increase our product development,” he says.

Foulkes says the company needs to keep innovating and developing new products to stay ahead of its competition, namely Yamaha in Asia and Volvo in Europe. “We offer such a broad range of products, including diesel and gasoline engines as well as outboards and stern drives. We need to keep up in all of those areas,” he says. “Engines are also getting more powerful.”

Construction on the 16,000-square-foot facility began last year and includes two 18,000-gallon tanks where engines can be tested, says Dave Kahlow, who is heading up the engineering construction project. “They’re very imposing,” he says.
The building also includes special air exchange systems since the engines emit exhaust during the testing process.

Mercury Marine’s engineering and product development center has about 450 engineers on staff. With so many high-tech employees, Mercury Marine is active with other Fond du Lac County businesses seeking to attract and retain talent in the area. The company has robust co-op programs in place with engineering programs and is a strong supporter of programs at Moraine Park Technical College.

Dropping its focus a bit younger, Mercury Marine is also a sponsor of the Fond du Lac STEM Academy, which currently serves students in grades 3 to 5 this year, but will expand next fall to grades 3 to 8. The students study a full range of subjects, but there’s an extra focus on science and technology. In addition, students do a lot of hands-on, project-based assignments.

Mercury Marine provides the school with technical expertise and technological resources as well as having employees serve as role models, who can talk about real-world science applications of what they’re learning in school.

“We employ a lot of engineers and people with technical expertise, so it’s great we can share some of that knowledge with the community,” Schwabero says.

Students also have access to some of the company’s technical equipment. For example, they were able to use an expensive electron microscope that few schools can afford.

“We really helped the local school district bring that program to reality,” Schwabero says. “We have such a significant product development presence here and anything we can do to help students realize the career opportunities related to the sciences, the better.”

Before the recession hit and Mercury Marine was posting big sales numbers, Schwabero says it was common to “just write a check, but now it’s not as easy to do that. Instead, we’ve become more personally involved with various community organizations and programs through our employees’ time and talent. Today, we have a much more personal relationship with the community.”

That’s something that Reitemeier from the Association of Commerce echoes. “They have senior leader executives involved and active in multiple organizations. They are in there and getting involved with an organization, whether it’s the United Way or the local Red Cross, he says.

Schwabero says that one of the company’s pillars of success outlined in its sustainability report is its relationship with the community. Twenty-five percent of the company’s employees in Fond du Lac volunteer 20 hours or more each year with a local organization, whether it’s a business organization, a non-profit like the United Way or local schools.

Global scale, local impact

Mercury Marine, a division of Illinois-based Brunswick Corp., is truly a global company. With 43 percent of its sales coming from outside of the United States, Schwabero jokes he puts on too many miles to count each year visiting the company’s facilities around the world as well as meeting with salespeople and distributors.

The company is the world’s largest developer and manufacturer of marine propulsion systems for both commercial and residential activities. While Mercury’s main business in the United States is related to engines built for recreational boats, in other places the engines are more focused on the commercial sector, such as engines for water taxis.

While Mercury Marine’s overall market share in Asia is small compared to other regions, that segment is growing, Schwabero says. With people and plants around the world, the company can react more quickly to what’s happening in local markets, he adds. “Those locations help us better meet the needs of our customers.”

In addition to the manufacturing facilities in Fond du Lac, there are facilities in St. Cloud, Fla.; Juarez, Mexico; Belgium; and China. The company has a joint venture in Komagane, Japan.

At all of its locations around the world, sustainability remains a core value – not only being a responsible consumer of energy and caring for the environment, but also quality of life and product stewardship initiatives.

“Much of our marine-engine business is reliant on clean water and a healthy environment,” Schwabero says. “Mercury Marine has been and will remain a leader in the development of marine technologies that minimize the effects on the environment. Sustainable growth is our mission.”

And with Mercury engines powering boats around the globe, it’s something the company is committed to.

“We are cautiously optimistic about Mercury Marine’s future growth,” Schwabero says. “For so many people, being on the water – whether it’s fishing or other recreational activities – is a part of their life and you want to get out there and enjoy it, no matter what.”

DIFFERENCES ON THE WATER

A boat engine is a boat engine, right? Wrong. Just as there are multiple engine types for vehicles, the same goes for marine vessels. The two main categories are outboards and stern drives – both of which are made by Mercury Marine.

Outboard engines are the most common way to power small watercraft vessels such as pontoon boats and fishing boats. Outboard engines consist of a self-contained unit that includes the engine, gear box and propeller and is affixed to the outside of the vessel.

Stern drives consist of an engine and drive connected to one another through the transom, or the flat area at the back of a boat. Stern drives are designed so that the engine is inside and enclosed by the boat, while the propulsion system (out drive) is outside of the boat and in the water.

Mercury designs and manufactures engines that run on gas and diesel. The engines also vary in speed from 2 horsepower to 300 horsepower.

 

 

 

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