Answers to Some of the Most Frequently Asked Questions by Boat Builders
1. What is UMMA?
2. Why is an organization needed?
3. Who is UMMA?
4. Can’t a long established, innovative, or niche company survive?
5. My dealers and customers like me and my products, won’t they keep buying them?
6. What is UMMA doing for its members?
7. Can a UMMA member really save money on purchases?
8. Why would suppliers that a builder already does business with give better pricing —–just because it becomes a UMMA member?
9. Is this just an idea or is it actually working?
10. Does a member have to purchase UMMA products and programs?
11. How does UMMA affect a member’s purchasing department?
12. Who can join UMMA?
13. How can a boat builder join UMMA?
14. What if a company doesn’t want to share its inside information?
15. How is UMMA managed?
16. How much does it cost to join UMMA?
17. What are the charges after the initial membership fee?
18. UMMA does not have all of answers!?
UMMA (United Marine Manufacturers Association, Inc.) is an association of independent boat-builders who, while operating autonomously, have joined together to enhance their collective ability to address important industry issues which effect their survival and continued prosperity.
The days of the small boat builder being the backbone of the marine industry are long gone. Today, the industry is dominated by large and mid-sized companies, which specialize in particular niche products (pontoons, ski boats, center console, etc.) that they produce in sufficient quantities to achieve marketing and production efficiencies quite different from the smaller independent builder. Part of their advantage comes from the purchasing benefits they achieve through Membership in one of the boat buying groups.
Founded in 1995, UMMA has grown to become the largest organization of boat-builders in the marine industry. Nearly 70 Member companies build more than 30,000 boats per year and work in close partnership with more than one-hundred supplier Members of its sister organization – United Marine Suppliers Association (UMSA). By pooling their collective efforts within a unique, semi-cooperative structure, UMMA Members have improved their operational efficiency, while making great strides toward leveling the playing field in relation to the largest companies in the industry.
The organization was initiated through the combined efforts of four major aluminum boat-builders, which, along with the group’s founder, Kent Wooldridge, shared in a common belief that if the independent builder is to compete and survive, they must strive to improve their operational efficiencies and level the purchasing playing field. In addressing this goal, it was agreed that as a semi-cooperative consortium, collective benefits could be achieved which would exceed the individual capabilities of any single Member.
It will be challenging. Just as few could have foreseen the degree of industry changes, there is little reason to believe that the pace of such change will slacken. The majority of boats in any category are increasingly produced by a limited number of large, growing builders. These companies have the scale to purchase materials and market their products more efficiently than most smaller companies in their respective market niches. In most cases, their purchasing strength is enhanced by pooling their resources together with other builders in one of the major buying groups
Maybe, but it’s unlikely that small builders, standing alone, can effectively stand up to the current generation of empowered builders, without being able to level the playing field. The gap between the “haves” (production and purchasing efficiency) verses the “have nots,” has become very dramatic. The “haves” purchase virtually everything they utilize in production at significantly lower prices. Most of their operational costs are spread across a broader production base, to the competitive advantage can be quite significant. It is one thing to survive, it is another thing to prosper. Increasingly, the “have nots” will continue to struggle to survive.
The independent boat-builder is an endangered species. While there is no magic, UMMA encourages a philosophy of independence, innovation, mutual cooperation, and business professionalism. For far too long, independent builders have suffered because they had no alternative but to do business the way they always have.
Unfortunately, they are now playing a game in which the rules have changed. UMMA seeks to empower the independent builder so that he can better survive in a highly competitive and changing industry. While cooperative purchasing is an important component, we believe that the greater benefits derive from the sharing between the Members of collective knowledge, experience, and pooled market share, which allows alternative programs to be developed. As a group, we are addressing pressing issues such as government relations, enhanced business training, product liability, casualty, health and workers’ compensation insurance, independently-controlled power, marketing, advertising, and innovative Member and dealer financing.
Perhaps most important is that UMMA is seeking to transcend the traditional friction between builders and suppliers. We have created UMMA for the builders and UMSA for the suppliers and the combined strength of all of the Members are pooled for mutual benefit.
Absolutely, positively yes, regardless of a company’s size or market position. No individual Member has more influence than the combined purchasing power of the group. This applies to virtually every component utilized in the boat-building process, plus the indirect costs such as insurance, travel, and floor planning.
There are several reasons. Fundamentally, because the suppliers have an agreement with UMMA that provides that all Members will share in the group programs. More specifically, suppliers are becoming increasingly aware that the independent builder is, as previously stated, an endangered species and their survival is vital to the health of the industry.
Suppliers have begun to recognize that further industry consolidation works to their ultimate disadvantage. In fact, if the business were reduced to a small handful of giant customers, the suppliers would not only be squeezed to the point of unprofitability, but would be completely vulnerable to a loss of such a controlling customer. By pooling our Members’ collective requirements, UMMA represents sufficient collective purchasing volume that no supplier wants to lose access to our substantial and growing sales potential and market share.
UMMA and UMSA work! The concept is not new. Consolidation has impacted virtually every industry and the trend continues. Without “True Value” and “Ace” it is unlikely that there would even be such a thing as an independent hardware store. “Medicine Shoppe” and others serve the same function in the pharmaceutical industry, as does “NAPA” in auto parts. The list goes on and on.
Since its inception in 1995, UMMA has grown to more than sixty boat-builder companies, producing more than 30,000 boats per year. As UMMA has gained in stature and as its Member cohesion has increased, more suppliers have realized that its goals are just as important to their long-range needs as to our Members. The suppliers have been formalized as a parallel organization, United Marine Suppliers Association (UMSA), which includes most of the major names of the industry and continues to grow. UMSA includes more than sixty suppliers of most of the goods and service products utilized by the UMMA Members. Participation by UMMA Members in UMSA supplier programs has increased steadily and a significant portion of the Membership will only consider new suppliers who are approved by UMMA. More recently, UMMA builders and suppliers have begun sharing programs in areas of common interest such as insurance, workers’ compensation, freight, etc. We have remained consistent in our commitment that what is good for the suppliers must be good for the builders and vice versa. This bond is fundamental to the slogan which we have maintained since our founding – “Sharing in the Partnership of Success.””
As evidence that our mission is a two-way street, each year UMMA and UMSA sponsor our hugely successful “Partnership” conference, which brings all of our builder and supplier partners together. Not only do the suppliers come to a better understanding of the needs and mission of the builders, but also the builders are exposed to new products and processes, while gaining an opportunity to interface between the decision makers of both parties.
In most cases, no. With the exception of certain FRP products, while participation in programs is encouraged, Members are free to purchase any product, any time, from any supplier of goods or services.
It is a natural concern, but UMMA is nothing more than a tool. Our relationships with Member purchasing professionals are one of our most important resources since they, as a network, provide a national set of eyes and ears in the field. UMMA’s role is simply to accumulate data from all sources and negotiate and continually refine Master Purchase Agreements with suppliers, on behalf of our Membership. This is a continuing process and reduces the burdensome amount of time spent by purchasing departments to source items and allows them to focus on improved material handling and inventory control. Since, as a group, we can often secure more favorable terms, processing times, and return policies, the time savings can be utilized to improve inventory turns. At the same time, since UMMA the cumulative Membership of UMMA represents such a significant portion of UMSA suppliers’ business, we demand and our Members receive the highest possible level of service.
UMMA is fairly mature organization but is always open to new Members. However, we continue to be interested in good boat-builders, which complement our efforts and are willing to support our initiatives. While there are no clear standards for company size in terms of production units or dollar volume, UMMA is structured with seven tiers of Membership, making it is possible to include companies from a few million dollars in sales to more than one-hundred million. Perhaps the more important issues are a builder’s reputation for quality, innovation, and integrity. Credit worthiness and willingness to work within a group cooperative spirit are essential. Belief that the changing industry requires companies to objectively evaluate and support alternative directions is also important. Simply, if a profitable company, regardless of size, wants to help lead the industry instead of follow, they stand a good chance of being considered for Membership.
The process is simple. It begins with three events. The first is a physical plant visit by UMMA management to see facilities, meet principals and management and to discuss Association and builder philosophies. Assuming there is a sense of compatibility, the second step is the completion of a non-binding Membership Pre-Application. If these steps are satisfactorily completed and if an initial credit check is acceptable, the candidate is reviewed by Association Management. If there is no objection, the applicant is provided with an opportunity to complete a formal application.
Everyone is deservedly concerned about his business information being treated in confidence and this confidence must be preserved. However, it is critical that UMMA have a close relationship and working understanding of its Members and their needs. This is why there cannot be exceptions made to UMMA’s access to reasonable information about a prospective or existing Member. We don’t ask for a lot, but we do have to establish the viability of the company and we do have to monitor material usage, once a company is a Member.
Since it is critical that UMMA has access to confidential information regarding all of its Members, the actual operation of the Association has been established as completely autonomous from its Membership. UMMA is a for profit company, and all confidential information is received through the Association President and operational contracting party, Kent Wooldridge, who, in his representational capacity as UMMA’s attorney, treats all such information as privileged.
Charges vary depending upon the tier of Membership and the choice of payment term, which can be spread over as long as three years, the actual cost varies considerably. Suffice it to say that after full implementation, if UMMA management does not believe that a Member cannot recoup its Membership charges in the first three months of Membership, such a company is not likely to be approved.
None, except for small annual dues charged to the smaller Members to help offset the higher pro rata of the group’s operational expense. These companies have the most to gain and the charge is small relative to the benefits received. UMMA’s revenue derives from a small commission on all Association Member purchases.
The industry is changing very quickly and the collective knowledge and wisdom of our Membership and its supplier partners is clearly our most valuable resource. We need and seek the input of our Members, their dealers, and our suppliers in order to help address the challenges, which lie ahead. We are fast on our feet and not afraid to explore and to try new things, but, despite our success, we are not complacent. We continue to look for new and better ways to help our partners succeed.
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