A jet-powered takeoff - Marine Power - Company Profile

Nation's Business, March, 1996 by Michael Barrier

Marine Power, a company based in Ponchatoula, La., "marine-izes" engine blocks. As Marine Power buys them from General Motors, the engine blocks are similar to standard automotive engines but come with some fittings that are specific to marine use; Marine Power modifies the engines further, to make them completely suitable for use in boats.

That modification is a "tricky process," says W.E. "Eddie" Allbright Jr., the firm's principal owner. Marine Power transforms the half-dozen sizes of engine block that it buys from GM into perhaps 500 marine models. They vary on such points as whether they're for use in fresh water or salt, are fuel-injected or carbureted, and so on.

Marine Power's 40 employees build about 3,000 engines a year, up from 200 when Allbright bought the business a dozen years ago, and its revenues in 1995 were around $12 million. Allbright thinks those revenues will more than double in the next five years--if a new product takes off the way he expects it to.

Allbright was a mechanical engineer, working for a large company in the New Orleans area, when he ran across a "business opportunities" ad in The Wall Street Journal that led to his buying Marine Power. "When I bought the business in '84," he recalls, "we were building engines for shrimpers. The shrimpers would come in the front door, and leave at the back door, with an engine in their pickup. It was like a retail business, with three or four college kids in the back, putting engines together."

Allbright was sure that continuing the business in that manner was not an option, given the ongoing changes in engine technology and the growing environmental restraints. "I didn't think I could stay small forever," he says. He decided to enter the recreational market.

He began marketing his first recreational engine through trade shows. "In the beginning," he says, "I couldn't even afford to exhibit." Instead, he talked about the engine to "distributors of some of the well-known names" among recreational engines. He used as a wedge his willingness to customize his engines for the aftermarket, so that someone who already had a boat, and needed a replacemerit engine, could get exactly what he wanted. Allbright went beyond what the other, much larger marine-engine manufacturers were willing to do--and his prices were lower, too.

By the time those other manufacturers decided to be more flexible themselves, Marine Power was "a player," Allbright says, and he was seeking customers among boat companies that would use his engines as original equipment. That market "is extremely tough to get into," Allbright says, and he used price as his entree, sacrificing profit at first to establish himself.

Around the same time, in 1992-93, Marine Power put close to $1 million into research and development, for a diesel engine and a jet drive, and about $600,000 into tools and equipment needed to build the jet. That combination--high expenses for R&D, plus lower margins on sales to original-equipment manufacturers--"just about sent us down the tubes," says Richard Clemens, the firm's chief financial officer/controller.

It took "a good hard look in the mirror"--plus a recovering economy--to transform Marine Power's fortunes, Allbright says. The company cut overhead sharply, laying off about 10 people. Allbright also took in $1 million in venture capital early in 1995, although he still has a controlling interest in the company.

Marine Power's revenues have been rising again, and now Allbright thinks that the jet drive, called the X-Stream, will give the company the distinctive product it needs. The differences between Marine Power's engines and those of its competitors are not that great, Allbright acknowledges, but, he adds, "with the jet drive we really have a unique product."

Jets for pleasure boats are not new, but the advantage Marine Power's jet drive offers, Allbright says, "is that we have an extremely large [water] intake, and we can handle a lot of trash. The Achilles' heel of jets is trash; if you take one of the high-speed jets and get a couple of leaves in the intake, you've just killed the pump."

Says Clemens: "A lot of people can do the engines; nobody else can do the two [engine and drive] together. We think this is what's going to take us into the stratosphere."

They expect a boat and trailer with the new jet drive to sell for around $11,000--and to appeal to fishermen in particular. "It'll replace the $20,000 bass boats, and let people get into some very shallow water," Allbright says.

Looking back, Allbright has no regrets about staking so much on the jet drive. "The strategic reasons for doing it were right, and they're still in place," he says. "I could have stayed in the engine marine-ization business and not had to go through what I went through--but we wouldn't be poised for the growth that we're poised for."