Avalon & Tahoe Manufacturing Inc.
Not many manufacturers can complain about a backlog of 500 boats, but the Alma, Mich.-based manufacturer is in the enviable position of just trying to keep up with demand for its products.
“It is a nice bounce back [from the recession], but at times the rapid growth becomes hard to manage,” says Jim Wolf, CEO and president and part of the family ownership that purchased the company in 2000. “We’re just trying to find capable people and getting them trained up to help increase our output.”
Avalon & Tahoe Manufacturing Inc. was originally founded in 1981 under the name Associated Recreational Products Inc. When the original owner sold one half of the business to an associate in 1986 the name was changed to Playbuoy Pontoon Manufacturing Inc. Due to the death of one of the two owners, the company was sold Nov. 1, 2000, to two Saginaw businessmen – John Wolf and Jon Sawyer – along with their families and four key executives of Playbuoy.
James Wagar remained president and CEO until he retired in 2004 when Jim Wolf took the helm. Since that time, the name of the company changed its name again Avalon & Tahoe Manufacturing Inc. to distance the company from what had become a beleaguered brand known for low costs and sub-par construction.
Staying Afloat
Like most manufacturers, Avalon & Tahoe suffered through the recent downturn in the economy, but the company has returned stronger than ever. In 2009, the company sold only 1,000 boats. That number rose to 1,700 in 2010 and is expected to reach 2,200 by the end of 2011. In fact, the company has had to ramp up its work force, growing to 140 employees from 70 after slower sales during the recession forced previous cuts.
Avalon & Tahoe’s product line ranges from 14 to up to 29 feet in length with a variety of styles and customized options. The company sells its boats through a network of more than 110 dealers throughout the United States.
In-house Capabilities
Over the last several years, Avalon & Tahoe has concentrated on vertically integrating its operations. The company’s three buildings together have 120,000 square feet of manufacturing space on a 25-acre campus in Alma, where it fabricates the bulk of the components for its boats.
“We made some acquisitions during the downturn to become more vertically integrated so we could have more control over the product,” Wolf says. “We maintain high quality and self sufficiency this way. If something goes wrong, it’s not our suppliers fault – it’s our fault.”
Vertical integration is a key factor in Avalon & Tahoe’s never-ending pursuit of improved quality. Wolf says the company has undergone significant changes to its product line over the last 10 years, and bringing capabilities like furniture and foam fabrication in-house has helped it push the level of quality beyond that of the competition.
“Right now, we’re perceived to be a very high-end, quality boat with a lot of appeal,” Wolf says. “The competition is pretty tough, but we feel we’re offering consumers innovative designs and giving them the best bang for their purchasing dollar. We’ve seen a lot of growth over the last several years, even through the downturn.”
Vertical integration played a pivotal role for Avalon & Tahoe during the economic downturn. Responding to pricing competition before the recession took its hold, the company launched its Tahoe LT and Avalon LS models to target price-conscious consumers. Featuring a 75-horsepower motor and priced between $12,000 and $14,000, these products were instrumental in getting customers to visit dealers in a slow economy.
“A big part of our business nowadays is the lower-end boat,” Wolf says. “A lot of low-price companies have come and gone out of business, but people know we are strong and will be around to support our products for many years to come.”
Keeping Up
Now that the recession is easing its grip on the economy and credit has thawed, Avalon & Tahoe is just trying to keep up with the demand for its products. With its backlog of 500 boats, the company has focused on cutting its lead times from 10 to 12 weeks to a more reasonable four to six weeks.
Oftentimes, when customers are told their boats won’t be available until about halfway into summer or later, those orders are cancelled. However, Wolf says that isn’t the case for Avalon & Tahoe, and he credits the company’s commitment to producing the best boats possible.
“With a good, high-quality, high-end product, sometimes people will wait for it,” he says. “We’re not losing sales because people have come to understand what Avalon represents and are willing to wait for it.”