REFINING THE REVOLUTION
“Advice to those who would like to be in the boat business: If you want to end up with a million dollars – start with three million.” Charlie Underwood
A prerequisite for any successful company is the need to deliver a positive bottom line. Whittaker invested substantial capital to develop the new International series, and in order to remain a viable operation, Trojan had to become profitable. Making matters worse in 1979 and 1980 there was a decrease in the sales and market share for Trojans’ F Series line concurrent with increased expense for the development and roll out of the new International 10 Meter. All of this occurring simultaneously during a steep economic recession created a difficult financial situation for the Trojan organization. Aside from the recession, the loss in market share was due to the aging F Series line and the relatively unsuccessful introductions of the last two F Series models that had been developed including the 28 Sedan and the 40 Motor Yacht.
The Trojan International – More Than Just a New Model:
The International was a remarkable undertaking in many ways. Hard costs for startup aside, there was a need for additional talent to implement the new design and set up production for all the components and a system of assembling them into a boat. This was not as simple as starting another F Series line in Lancaster. It required new tooling and production processes that Trojan had never used before. Higher production costs resulted in a higher retail pricing for the new International Series. With respect to the pricing levels, a greater emphasis was required on product quality to reinforce upward positioning of the product in the marketplace. It was starting from the ground up, with an entirely new and different kind of build. Like nothing ever seen before in Lancaster, Pennsylvania.
Of course, sustainable success would be dependent on management’s ability to meet the operational budget on both the cost and revenue side of the business equation.
Charlie Underwood Joins The Team:
While studying mechanical engineering at San Diego State University, Charlie Underwood began his career in the boat building business working as an apprentice Naval Architect under his father, Charles Underwood, and his partner, Paul Kettenburg, at Kettenburg Boat Works http://www.kettenburgboats.com/, which at the time was also owned by The Whittaker Corporation. As a third generation boat builder, Charlie moved on to Islander Yachts in 1970 as Chief Engineer and was later promoted to Vice President of Manufacturing. In 1976 Charlie was appointed as Executive Vice President of Islander’s sister company, Pacemaker Yachts, where he eventually became responsible for engineering and manufacturing for both Pacemaker and Egg Harbor Yachts.
The 36 year old Underwood interviewed with Don Seith in late 1980. While the two did not initially discuss the cloaked International project, with a sly smile, Seith did relate to Underwood “I do have a tremendous surprise for you.” Underwood was subsequently hired as Vice-President of Manufacturing.
Having competed against Trojan, Underwood was aware of the company’s reputation, its product and its customer base. When Seith finally did bring Underwood into the development shop on his first day on the job, Charlie was shocked to see this radical, groundbreaking design which was entirely new to the industry and a complete and total departure from what Trojan had been doing for over thirty years. While Charlie was very impressed with the design, his concern was that the revolutionary new product would need to be marketed to an entirely new group of customers from the existing traditional Tri-Cabin, Motor Yacht and F Series models. Charlie’s apprehension was that it would take years for Trojan, which had essentially been producing sturdy, practical, well made value boats, to re-invent itself in order to market and profitably sell such an avant-garde, head-turning product at a very significantly higher price point.
The rollout of the International was an expensive proposition. The hard costs were significant for the design, new tooling, equipment and product development. Equally expensive were the costs of assembling the new talent required for implementation of the project. On top of all those capital expenditures and fixed costs, the Trojan International was an expensive boat to build.
So many aspects of the avant-garde 10 Meter International were such a momentous departure from the current industry norm that the new model’s introduction garnered tremendous media attention. Boat magazines clamored for information and the opportunity to perform a sea trial. After a bit of a slow start, orders began to flow in and boats were built and delivered to retail customers through Trojan’s Dealer network. The Lancaster Pennsylvania plant began to hum with activity as the 10 Meters Internationals began to roll off the production line.
Perhaps there wasn’t any time, or a budget for it, but there had been a lack of true market research. While the 10 meter express was the hottest product at Trojan, all of the aft cabin models, the first sedans and the 9 meter found very limited acceptance, leaving the company saddled with all substantial additional development costs and very little additional revenue. Another very significant issue was the price point. The Trojan’s International had a selling price significantly higher than the competition, which included ChrisCraft, SeaRay and Wellcraft. Market perception was that Trojan was an old line brand, firmly entrenched in value boats, appealing primarily to price conscious middle class families. Justifying the more than substantial cost difference for the new Trojan proved difficult. It was not easy for the company to quickly make the jump from a value oriented clientele and appeal to a totally different demographic – the upscale high end buyer. Justification for the significantly higher pricing was a challenge and not surprisingly, the Trojan name initially proved not to be an asset in appealing to the upper end market.
However, the late 1983 release of the new 11 Meter Express saw much improved initial market acceptance. This was the first International to feature a cored balsa hull. The lamination process was developed with collaboration between Trojan Engineering, Schoell Marine and Baltek Balsa Core Products using vinylester resins and conventional fiberglass materials. The new balsa cored hull achieved a 20% weight savings over solid laminate with the added benefit of increased stiffness. All International models 11 Meters and larger, including the introduction of the 13 Meter Express in early 1984, would feature the new, robust Trojan balsa cored hull, which has proven over the years to be tough and durable.
In another effort to increase sales and profitability Seith, made the decision in late 1983 to acquire tooling from a defunct company to produce a new line of outboard center console models under the name “Trojan American”. This would take an entirely new investment in marketing to create sales for the new line. However, it was determined after about a year and a half after introduction of the Trojan Americans that the potential for an increased sales and profitability was not worth the continued investment. The tooling was ultimately sold to Greg Krueger, the principal of Jefferson Beach Yacht Sales, Trojan’s Dealer in Michigan.
Despite Trojan’s heavy investment in the development of the International line, building great boats, tremendous media attention, customer raves and a busy assembly line, in the end, the bottom line for Don Seith was in fact the bottom line. Given production costs and the pricing challenge, the critical volume needed to be profitable at the existing margins was simply not achieved during the Seith years.
It took General Motors a decade to create the Corvette mystique from the Chevrolet nameplate. Trojan didn’t have the GM’s public relations budget nor the ability to wait a decade for results. Don Seith left the company in 1984 and Bob Smith, who was then President of the Whittaker Marine Group, subsequently hired Chuck Younger as President of Trojan.
Six months after Don Seith left Trojan, Vice President Ron Pickle elected to follow to join Seith and Greg Krueger in the development of their own company building center console boats utilizing the Trojan American Tooling.
Chuck Younger had come from SeaRay where he managed a plant in Arizona, producing boats that competed with Trojan at a lower price point. During the two years that Chuck was president of Trojan, development of the International line continued with the introduction of the 11 and 13 Meter Sedan models. Chuck’s strategy for increasing sales and profitability for the International line was to repackage the product by reducing standard features and by lowering the profit margin in order to reduce the selling price. While the plan was successful in increasing sales there was not enough incremental volume to improve the overall profitability of the International line. Chuck Younger departed from Trojan in early 1986.
Don Seith’s background and his talents were on the marketing side of the business. As President of Trojan he created the team, developed the product and delivered the goods; albeit, minus the bottom line. His successor Chuck Younger was also unable to achieve an acceptable level of profitability for Trojan with his strategy of lowering the price of the International Line in order to increase sales volume even with the improvement in efficiency that was developed by the manufacturing team. While Shoell’s outstanding designs were exciting unique and trendsetting, what was needed was to increase the products’ overall market appeal toward a wider customer base, moving more toward the mainstream market. Exciting and unique is a great way to attract attention to the Brand and all of its product line. However the prerequisite to profitability is sales at a price point sufficient to cover development and production costs as well as fixed and variable expenses and return a profit to the risk taker – namely Whittaker. Increasing the sales volume can yield the ability to better price compete since the fixed costs can then be spread out over more built vessels. A tremendous challenge was ahead if the company was to become financially viable. Otherwise no matter how good, hot or exciting the product, corporate sustainability would not be realized and Trojan would be doomed.
While the originally released 9, 10, 11 and 13 meter boats were essentially complete Schoell designs inside and out and developed by Ron Pickle and his team at Trojan, changes needed to be made for the firm to broaden product appeal to better compete in the marketplace in order for Trojan to continue as a business.
Refining the Product Line:
Unfortunately, the 10 meter aft cabin express and aft cabin sedan saw little market acceptance and were discontinued along with the American line of center consoles. With limited sales success, the 10, 11 and 13 Meter Sedans as originally developed had a very tight cockpit with not enough usable space as Lee Dana, VP of Engineering at Bertram Yacht, pointed out in a Marine Group meeting between Bertram and Trojan. In response during the meeting Charlie Underwood suggested and it was agreed that Trojan would stretch the hulls of each of the sedan models so that they would become more attractive to customers who were interested in both cruising and fishing. Stretching the 10 Meter Sedan created the new 10.8 Meter Convertible, providing about the same cockpit space as the express, resulting in a Convertible with tremendous versatility and far more appeal. The Convertibles also saw the addition of wood trim in the interiors, and layouts that were designed to be more functional and practical. With sales of more than 40 new 10.8 Meter Convertibles at the 1985 Miami Boat Show, between retail sales and Dealer orders, it became clear that stretching 11 Meter Sedan to create the 12 Meter Convertible and the 13 Meter Sedan to 14 Convertible would be the right direction to take.
Not long after the introduction of the 12 Meter Convertible the Trojan design team came up with a concept for the development of a 12 Meter Motor Yacht, which had the stylish look and functionality of the Convertible but included an aft owner’s stateroom. While the 12 Meter Motor Yacht was not as popular as the 12 Meter Convertible, it still enabled Trojan to pick up incremental sales to the customer who was more interested in cruising or simply wanted more accommodations.
A New Bread & Butter Boat:
The 10 Meter Mid-Cabin Model was introduced in 1985 with tremendous success. Gone were the curved interiors, fiberglass liner construction with built in freshwater and waste tanks and side exhaust systems. Other features disappeared including the bold hull graphics, sliding tambour doors, HVAC ducts built into the ceiling and curved electric doors. The cockpit, gunnels and transom were raised, the engines slid aft and the fuel tank split into two saddle tanks moved toward the gunnels, resulting in a tremendous increase in usable space, and a far more versatile cabin with no sacrifice to the deck layout or the exterior look, as the forward deck, windshield and helm remained at the same level. The makeover was an astounding success. The new layout appealed to far more buyers and combined with an improving mid 1980’s economy allowed the 10 meter mid cabin to become the most popular Trojan International of all time. As a result, production increased on the combined 10 Meter Mid Cabin and 10 Meter Express lines to the rate of one a day. This increased production enabled the firm to distribute the fixed costs over a greater number of vessels, enabling Trojan to compete at a better price point with the competition, who by that time were already adopting and copying many of the styling features found on the International Series.
While the originally introduced 9 meter with straight inboards did not sell well, in 1987 the 8.6 Meter Express was released, this time with a twin I/O configuration. This fast little boat proved to be a good seller.
Engineering in Lancaster:
During the second half of the 1980’s it was the multiple talents of the Trojan’s Engineering Department that helped make a tremendous difference in the marketability of the Trojan International line.
Under the guidance of Charlie Underwood and the leadership of Larry Warner, (Ernie Warner’s son) the Trojan Design,
Engineering and Development team provided for a complete evolution of the product line, which broadened market appeal and helped increase sales and profitability.
By the end of the 1980’s the Trojan International line included:
- 6 Meter Express
- 10 Meter Express
- 10 Meter Mid Cabin Express
- 11 Meter Express
- 13 Meter Express
- 8 Meter Convertible
- 12 Meter Convertible
- 12 Meter Motor Yacht
- 12 Meter Motor Yacht
- 14 Meter Convertible
The Revolution Continued:
Change is constant in the dynamic arena of boat building. In fact, other firms didn’t waste too much time in copying the design flairs and style of the Internationals. Take a look at the Sea Rays before and after the International’s rollout or the Wellcraft Portofino. The influence of the Trojan International is obvious and striking. This realization motivated Underwood and his team to develop a new 12 Meter Express that would leap frog the competition with a combination of leading edge style and functional design. While the 12 Meter delta conic hull was utilized, the Trojan design team developed an entirely new Express Model taking the best of the International Series and incorporating a revolutionary new interior and cockpit design with sophisticated new features that had not been seen before. Also apparent in the design was the influence of the European market where Trojan had begun to successfully compete in the late 1980’s further increasing sales. Aside from the delta conic hull the 12 Meter Express was the result of 100% pure Lancaster design engineering.
This time around, the market research had been done. The goal was to develop a vessel capable of attracting a much broader market, a vessel that could stand on its own and win over buyers in a global market, with a network of dealers throughout the world. The 12 Meter Express was truly an “international” International.
The “World Design” concept of the entirely new 12 Meter Express was an instant success both domestically and internationally. The new 12 Meter garnered design awards and recognition, including a national design award from the Society of Industrial Designers and a World Wide award from ID Magazine of Industrial Design. So unique was the helm console, it was selected to become a part of the permanent collection of the Die Nuesammlung Museum of Modern Art in Munich, Germany. Variations of the same helm console, which was designed by the industrial design firm of Richardson Smith were installed on each of the Express Models enhancing the appearance and functionality of the helm. So successful was the new Trojan International that the company at its peak produced a new 12 Meter Express every two and one half days. This was a boat that, with it’s healthy profit margin, was priced well above the competition.
The 15 Meter Prototype:
Harry Schoell designed and developed a 15 Meter Aft Cabin Model at his facility in Miami for Trojan. By the time that it completed it was determined that the product would not be competitive in the market and the project was discontinued in 1985 after the prototype was sold.
While the 12 Meter Express was being developed it had become clear that European boat designers and manufacturers were making major strides in producing uniquely attractive looking new cruising boats. As Underwood and his sales team had been spending a good deal of time at European boat shows marketing and selling Trojan product, they became much more familiar with international industry trends, which were more often being created in Italy and in the UK. A decision was made to search for an Italian naval architect who was producing new designs that were considered leading edge. Fulvio de Simoni was ultimately selected, who had been deigning yachts for Pershing, which at the time was a relatively new company. De Simoni was commissioned to first design a new 10.8 Meter Express for the domestic and international markets. It was a new model that was full of quality design features and a layout that was functional, roomy and very attractive. Hull efficiency and fuel consumption were becoming more of an issue and it became clear in comparing notes that the Bertram deep V hulls were not only great rough water designs but they were also somewhat more efficient than the delta conic hull. Therefore, Lee Dana of Bertram was contracted to design the hull bottom for the new 10.8 Meter Express. While the design of the 10.8 Meter Express was not as quite as revolutionary as the first 10 Meter Express it was definitely a leading edge sophisticated high quality product, which appealed to a broader market of upscale buyers. In fact, there was nothing like it on the market at the time anywhere in the world. The boat utilized V-Drives in order to make room for the largest possible mid cabin state room design. This was the last new product developed by Trojan just before the disastrous Federal Luxury Tax was implemented in 1991.
It is important to understand that simply designing and efficiently building the right Trojan International product for the market place was not the total solution for Trojan. When Charlie Underwood became President of Trojan he immediately hired David Drescher as Vice President of Marketing and Jim Krueger as Vice President of Sales. Between the two of them they did an outstanding job of creating and implementing an effective marketing plan and in revitalizing and expanding the Trojan Dealer organization to increase sales. In addition, the Customer Service team at Trojan headed by Don Weiksner added real value to the product in providing a very high degree of customer satisfaction. At the end of the day it was all of these achievements that led Trojan to succeed to the point, which helped enable both Whittaker Corporation and Invest Corp. to sell Trojan’s parent company, Bertram-Trojan, Inc., for a significant profit.
Events of the mid to late 1980s significantly changed Whittaker’s business orientation as a conglomerate. Whittaker’s Marine Group consisting of Bertram Yacht, Trojan Yachts, Riva, Desco Marine, Kettenburg Marine, Balboa Marine, Columbia Yachts and Coronado Yachts reported a $5.6 million loss. While many criticized Joe Alibrandi for investing in an area of business that did not fit well with Whittaker’s other operations, the President defended the division as a future profit maker. Stockholders accused the company of lacking stable product lines. The hospital supply business reported new, disappointing figures, the chemical division continued to suffer from cyclical markets, and aerospace operations remained subject to trends in defense spending.
In 1985 Whittaker began the painful task of divesting itself of the marine division. Bertram and Trojan were sold together to Invest Corp, an Arabian Investment firm, for approximately $35 million dollars, which was significantly more than their combined book value. Bertram and Trojan continued under separate management within a newly created company by the name of Bertram–Trojan, Inc., which was managed by Bob Smith, who had been President of the Whittaker Marine Group. Charlie Underwood and Pat Cunningham continued respectively as Presidents of Trojan and Bertram.
Investcorp’s early other investments during that period included root beer maker A&W Brands, Mueller, a manufacturer of plumbing equipment, and the world’s leading producer of fire hydrants. Perhaps Investcorp’s most publicized acquisition of the period came in 1984, when the company paid some $200 million to acquire Tiffany, the famed jeweler, from Avon Corporation. Less than three years later, after restoring Tiffany’s lost luster, Investcorp spun it off in a public offering that nearly doubled its initial investment.
As sales and profitability for both Trojan and Bertram continued to improve, Invest Corp. began to look for a buyer for Bertram-Trojan Inc. in order to cash in on its initial investment. In early 1989 Bertram-Trojan, Inc. was sold in a leveraged buyout to Bertrex Corp, a company formed for the purpose of the acquisition by the G.L. Ohrstrom Group for $85 million dollars, leaving the company saddled with far too much debt.
The Boating Industry circa 1990:
The boating industry was in dire straits as the 1990’s started. A crippling luxury tax was passed by Congress in 1990, levying a 10-percent federal tax on boats costing more than $100,000. The early-1990s recession provided a one-two punch that resulted in 24 boat builders going out of business and thousands of employees losing their jobs before the tax was finally repealed in 1993. The industry’s giants were especially hard hit. In 1990, Brunswick closed five plants and laid off nearly 1,000 employees, while Genmar closed two factories. OMC closed more than a dozen plants in the early 1990s. Carolina Skiff, Carver, Ranger, Bertram-Trojan, Inc. and Sabre were just some of the brands that went into Chapter 11 Bankruptcy. There was absolutely no way that Bertram- Trojan, Inc. could service its $85 million in debt during that period. Overall, the industry went from employing 600,000 in 1988 to 400,000 in 1992. It was estimated that the average boat price dropped by as much as 50 percent. Sales of boats more than $100,000 dropped by a whopping 85 percent, estimated the National Marine Manufacturers Association. Overall, boat sales dropped nationally by more than 40 percent from $17 billion in 1989 to $10 billion in 1992. All of the American boat builders that survived had suffered severe financial loss, which in almost all cases limited their future investment into new product development. During this period healthy European manufacturers of cruising boats continued with their investment into their companies and their product lines and were ready to take advantage of the US market when the luxury tax was repealed and the economy was on the rebound.
The End of Trojan and the Carver Acquisition of the Name:
During the bankruptcy proceedings the Trojan assets of Bertram-Trojan, Inc. were sold to Carver (owned by Miramar) in 1992 for approximately $800,000. Carver only took the name, trademark and the 10.8, 11, 12 and 13 Meter fiberglass boat molds. They never produced any other 10, 11, 12 or 13 Meter boats, nor did they produce any F series models. All of the fiberglass molds for these models were later destroyed. Carver did not produce any Trojan boats in Lancaster, Pennsylvania. Instead Carver produced its own version of Trojan in Carver factories in Pulaski, Wisconsin from modified Trojan fiberglass molds for the 10.8 Meter, thereafter known as the Trojan 360 Express by Carver. Carver changed the 10.8 Meter fiberglass molds and construction to simplify and reduce the cost, so the new 360 was not the same boat in terms of design detail or functionality as the original Trojan 10.8. The Carver 360 model was produced until 2005.
All other “Trojan Boats” that were eventually developed and produced at Carver were essentially a high end Carver product with the Trojan name and logo, sharing nothing else with the Brand except the designer of the Trojan 10.8 Meter Express, Fulvio de Simoni.
After producing quality boats for 43 years, the end did come for Trojan that no name plate Pulaski Wisconsin revival would ever successfully supplant.
The Trojan International Series had a successful production run of eleven years. Those hands on factory employees, the dealers who represented the products and the idea people who shaped it, and made it all happen are together responsible for creating a valuable legacy that changed the landscape of recreational boating forever.
These are the people who, decades later are proud of the products they imagined and brought forth as reality, for those vessels continue to be enjoyed by owners who recognize and appreciate the valuable forward thinking design, engineering concepts and the risks taken to put it all together.
“It’s true that people get into this business because they like boats. Yes we’re building big “toys” and yes, we do help people realize their dreams, but at the end of the day, it’s still a business, and it has to make money to be viable. Because our industry is dependent upon economic conditions each boat builder must maintain a strong balance sheet to weather the lean years, otherwise the business will not survive” Charlie Underwood
In 1992 Charlie Underwood moved on to become President of Egg Harbor Yachts until the company was sold in 1996 and then joined Viking Sport Cruisers as its Senior Vice President, retiring after 15 years with that firm in 2011. Charlie assisted author Mark Allen his writing of the book Building Kettenburgs.