The New Fountain
Fountain Powerboats heads into the future as one of four strong brands owned by Liberty Associates, minus its iconic founder Reggie Fountain.
February 8, 2011
For all intents and purposes, the future of the production-built high-performance powerboat world now rests in Washington, N.C. That’s because in the past two years, venture capital group Liberty Associates has acquired Fountain Powerboats and Baja by Fountain, which are headquartered in the small North Carolina town, as well as Donzi and Pro-Line. In late 2010, the latter two companies relocated to the Fountain plant in Washington.
In addition to sport boats, Donzi—like Fountain—offers center-console models, including this 38-footer.
So with the exception of Formula in Decatur, Ind., all production-built go-fast boats come from the same plant on the shores of the Pamlico River. (Think production lines and set “options packages,” as opposed to the custom realm of “whatever the buyer wants and can pay for.”) Never in its history has the high-performance powerboat industry seen such consolidation.
For those of you wondering how this happened, there are two answers. The simple one is that economy tanked and took the high-performance-boat world with it, and a savvy investment group picked up some killer deals.
For those interested in a little more details, Liberty Associates bought Donzi and Pro-Line—both struggling—in June 2009. Earlier that year, marine industry giant Brunswick (which owns Mercury Marine, Mercury Racing, Sea Ray and much more) gave
the tooling for Baja—a sport boat brand it owned at the time—to Fountain.
“It was too good of a deal to pass up,” said Reggie Fountain, the founder and former chief executive officer of Fountain Powerboats.
No doubt, it was a good deal—deals don’t get much better than “free.” But it was also one of those offers that Fountain, reportedly deep in debt to Brunswick at the time for its Mercury Racing engines, couldn’t refuse.
Unfortunately, Fountain already had too much on its plate to do much of anything with Baja. Its losses were so consistently heavy that the once publicly-traded company was de-listed from the New York Stock Exchange and eventually filed for Chapter 11 restructuring. In October 2009, Liberty acquired Fountain—and Baja by Fountain.
That brings us up to the present—almost. Last December, Reggie Fountain resigned from the company. The specific issues were his refusal to sign non-disclosure and non-compete agreements, but the conflicts between Fountain and the new owners of his company (which he guided in whatever direction he wanted to for more than 30 years) ran deeper than that.
"We had a difference of opinion on how to run the business," said Fountain. "They own it, so I thought the best thing for me to do was move on down the line and do something else."
"It's unfortunate that Reggie chose to leave," said John Walker, the new president and chief executive officer of Fountain. "That is not what we wanted. The man is an icon and he does a lot of things extremely well."
Fountain offers some of the fastest V-bottom sport boats, such as this 38 Lightning, in their class.
So where does that leave Fountain, Baja, Donzi and Pro-Line? One thing is for sure: Fountain can no longer market itself on the back of Reggie Fountain, a sort-of modern-day Don Aronow (the founder of Cigarette, Donzi, Magnum and Formula).
Fountain’s persona—some would argue ego—was so large that he appeared in all of his company’s advertisements. He didn’t just race offshore, he sponsored more offshore races than any boat builder in history. His recorded voice touting his products as “the fastest, best-handling, safest performance boats in the world” was even used as the sound loop for callers to the Fountain plant who were placed on hold.
Gone is Reggie as the brand, so Fountain will need to find another marketing angle. To this end, they recently hired Nick Miller, Donzi’s former vice president of sales and marketing, as the vice president of sales and marketing for Fountain.
The management team at Fountain is far from a bunch of MBA bean-counters, a term that Walker, who’s been building boats for more than 30 years, finds particularly offensive. On the Donzi side, the team includes marine industry veteran Craig Barrie, once the president of Cigarette. And, of course, there are Fountain’s employees—most of whom have been with the company for more than 15 years—and seasoned employees of Donzi and Pro-Line who opted to relocate from Sarasota, Fla., to their current digs in Washington.
"I came from the boat building world—I am much more comfortable on a production floor than in an office—but now I am a boatbuilder who happens to be the president of four boat companies,” said Walker. “I have a company to run, people to take care of in that company and customers who want boats. We intend to deliver on all of that."
Positioning the brands is going to be tricky. Liberty recently announced the re-launch of the Baja sport boat line in the 20- to 26-foot single-engine class. http://features.boats.com/boat-content/2011/01/betting-on-baja/ That presents a complimentary—call it entry-level if you like—line to both Donzi and Fountain . But Donzi and Fountain have several sport boat and center-console models that compete directly with one another.
“We view it very much as something like Ford and Chevrolet—there’s a marketplace for both and fierce competition and loyalty for both,” said Walker. “The Fountains are faster, but if you talk to the Donzi guys they’ll say the ride is smoother. The Fountain people will tell you the same thing about Fountain products. I’m in the position now not to tell either one of them that they’re wrong. Whatever way the customer wants to go, we’ll go. We have not really defined it as Fountain is ‘A’ and Donzi is ‘B’ and Pro-Line ‘C.’
“Right now, I’ve left Nick (Miller) and Craig (Barrie) to assess their customer bases for Fountain and Donzi,” he added. “I’ve said to them, ‘You are competitors. Now go out and compete.’”
Of course, product quality and performance cannot be allowed to decline in any of the brands, especially Fountain and Donzi. The last thing the Liberty team needs is talk that those lines have “slipped” under their stewardship. And Walker and his crew are well aware, especially with the departure of Reggie Fountain, that there are plenty of people who are eager to say just that.
What will make the biggest difference in the success or failure of all four brands? The economy. Sure, it’s obvious. But the weak economy and the persistent credit crunch aren’t hurdles that can be cleared by brand positioning, marketing and product quality. If the economy doesn’t improve, even the most focused and diligent efforts won’t amount to much.
The story is still unfolding. And to most high-performance marine industry observers, it’s a cliffhanger.
Editor’s Note: Reggie Fountain is back in the boating business.
Bi-weekly columnist Matt Trulio is the editor at large for Powerboat magazine. He has written for the magazine since 1994. Trulio’s daily blog can be found on speedonthewater.com, a site he created and maintains, which is the high-performance arm of the BoaterMouth group.
