Irv the Boat Maker

In 1989, Jacobs says, “we sold off everything but the boat group,” dropped the Minstar name, and took Genmar private for $435 million, again with financing help from Pohlad. The bottom promptly dropped out of the recreational boat market, as “we went right into the recession of the early ’90s.”

Jacobs remembers those years as the darkest time in his business career. “We had $400 million in debt in the company. And we had about $400 million in revenue, so we were leveraged to our total sales.” From 1990 to 1993, Genmar lost $100 million. However, Jacobs and his backers continued to invest for the long term. “Now we’re two and a half times that size, and we have no leverage,” he says. “So we’ve accomplished a lot.”

Gone Fishing

Jacobs’s boat business got a major boost in 1995, when he bought Operation Bass, a Kentucky-based marketer of fishing tournaments that was later renamed FLW Outdoors. The following year, Jacobs launched the FLW Tour, a series of televised fishing tournaments with Wal-Mart as the title sponsor.

Jacobs speaks with more pride and passion about the FLW Tour than about the boat company it serves as a marketing tool. This is the franchise he didn’t buy; this one, he built from scratch. “It’s our baby from the ground up, and now it’s the largest in the world,” he says. “I love going to the tournaments.”

The tour began as an effort to promote Genmar’s Ranger fishing boats. “I felt that fishermen loved tournaments, loved to compete, and loved television,” Jacobs says. “I said, ‘Let’s fulfill that need, and our boat business will grow.’ It took off like a rocket. Fishermen said, ‘Oh, my God, we’ve been waiting for this forever.’” The tour’s 260 tournaments now give out $40 million a year in prize money. In addition to the U.S. market, Jacobs says they are televised “in 300 million households outside the United States. We’re in Russia, China, Spain—more households than NASCAR.”

And the sponsors! As if Wal-Mart weren’t a big enough catch, the list now also includes Procter & Gamble, Unilever, Kellogg’s, Land ’O Lakes, Castrol, and as of July, BP. “Our salvage company does business with some of them, and Watkins has interworkings with some of them, so we have synergies,” he says.

In 1999, Jacobs tried to take Genmar public with a $100 million initial public offering of stock. The IPO failed, the market turning up its nose at the company’s $130 million in debt. Undaunted, Jacobs went back into acquisition mode, paying $28 million in 2000 for the boat business of Illinois’s bankrupt Outdoor Marine Corporation. “That was one of the best acquisitions I’ve ever done, relatively speaking,” he says. “It doubled the size of our company. We got eight or nine brands. Most we kept, some we got rid of.” Thanks in part to the Outdoor Marine deal, Genmar’s sales had nearly doubled from $500 million in 2000 to just short of $1 billion by 2004.

Also in 2000, Genmar bought a fledgling Pennsylvania company called VEC Technology. It had developed a revolutionary composite-molding technology that could stamp out boat hulls much faster than existing methods could, with lower labor costs and greatly reduced emissions of noxious styrene.

Or rather, Jacobs believed it could. “We thought they were further along than they were at the time with 21st-century boat-building technology,” he says. “We thought they were on the goal line. They were, but it was the wrong one; they were on their own goal line [the acquisition]. We spent the next five years and more than $100 million to develop that technology.”

But that investment finally appears to be paying off. A 100,000-square-foot VEC Technology plant in Little Falls, opened in 2002, now uses the VEC process to produce boat hulls. Another plant in Pennsylvania makes covers for golf carts and John Deere construction equipment, components for truck cabs, and more. In 2004, Genmar spun off VEC Technology into a standalone enterprise, valued at $350 million, with Jacobs estimating an $11 billion potential market for its molding process.

His deals haven’t all been acquisitions. Jacobs hasn’t hesitated to sell off boat brands to willing buyers, including rival Brunswick, based in Illinois. He says he has sold four companies to Brunswick over the past four years, beginning with high-end Hatteras Yachts. In 2004, Brunswick bought Genmar’s aluminum boat division, including the Lund, Lowe, and Crestliner brands, for $191 million in cash. “They’re my archrival enemy, but they were willing to pay what we thought was a fair price,” Jacobs says. “Altogether, they paid us over $300 million.”

But Jacobs and his backers have invested about $300 million in the boat business since 1975, as well. Now the consummate company builder, he says that Genmar’s success, and VEC’s, would have been impossible if they were public corporations. Here, he suggests, is an example to illustrate the quarter-to-quarter problem he was talking about with regard to public companies.

“If we had to live that way, I’d be out of business,” he says. “I couldn’t fulfill stockholders’ expectations every 90 days. What we’ve been doing was all long term. Spend all that money to develop the VEC technology? We could never have done that as a public company.”

He does not add that a long-term investment strategy also would have been tough to pursue had corporate raiders been circling his company, demanding actions that would boost shareholder returns immediately.