Larson Boats still afloat

LITTLE FALLS, MINN. - Minnesota's fishing opener may still be four months away, but production is humming at Larson Boats' sprawling manufacturing complex 100 miles northwest of the Twin Cities.

In one building, workers methodically roll fiberglass onto the inside of molds for cruisers. In another, lab-coated employees monitor computers that control most steps to produce fishing boats with Larson's state-of-the-art Virtual Engineered Composites (VEC) technology. A VEC robotic arm first uses a diamond saw to trim the outer edge of one hull, puts the tool away and grabs another to drill an intricate hole for the engine.

"This is our peak production period, and the activity that's going on here now is worlds away from what it was two years ago," said Larson's owner, Minneapolis businessman Irwin Jacobs.

At the time Larson was emerging from the 2009 bankruptcy of Genmar Holdings Inc., which was Jacobs' business that owned Larson and an array of other boat assets. A California private equity firm bought Genmar in January 2010, then sold Larson and two other boat brands made in Little Falls to Jacobs and a partner, along with two additional brands made in Pulaski, Wis. The purchase of the Little Falls plant wasn't completed until February 2010, when a group of community and state lenders provided the partners $1.85 million of the $7.4 million purchase price.

Manufacturing at Larson had come to a near-standstill while Jacobs negotiated the deal to buy the business back. The workforce had fallen to 125, a sharp decline from more than 800 just a few years earlier.

Now the boat company is getting ready for the Minneapolis Boat Show, which begins its four-day run Thursday, and Jacobs says Larson will have its biggest presence there ever. Larson isn't the only one increasing its exhibit space, said Bonnie Harris, a spokeswoman for the show. An increased number of exhibitors -- 189 vs. 171 in 2011 -- will occupy 25 percent more space than last year at the Minneapolis Convention Center.

Larson's workforce has increased to about 255, and Jacobs says he expects to rehire more former employees in the coming year. All manufacturing of Larson, Triumph and Striper boats now takes place in Little Falls, where founder Paul Larson began making boats almost 100 years ago.

Production of the Triumph line recently was transferred from North Carolina to a newly built plant at the Little Falls complex, part of about $12 million Jacobs says the partners have invested since buying back the business. Larson, which Jacobs originally acquired in 1977, is so vertically integrated it even has a huge sewing room for making boat seat covers and curtains.

The revival has been welcome news for Little Falls, population 8,500, where Larson has been a major employer. "A big company like that is almost like a mother hen, you get little chicks, other smaller businesses, that rely on it," said Carol Anderson, executive director of Community Development of Morrison County, a nonprofit that contributed to the loan Jacobs used to buy back the plant. "We were very concerned about Larson but also some of those smaller businesses that supply it."

Jacobs says he expects Larson's revenue this year to increase from about $70 million to $100 million. The business lost money last year but Jacobs said he expects it to turn a profit in 2012.

Larson's 50 models include 22 developed within the past 12 months. The company says that's fewer models than in the past, but "our goal changed from having an ego to be the biggest and taking care of everyone to taking care of 80 percent ... simplifying business and reducing our costs," said Chief Operating Officer Mike O'Connell.

"We understood that as the economy would begin to improve, the market would move to 'sensible' purchases -- like a smaller Chevy versus a Range Rover," O'Connell said. Some models are fish-and-ski combinations, with trolling and outboard motors. The largest cruiser is 31 feet long, down from 37 feet. In addition to appealing to a broader range of customers, the smaller boats also trim dealers' costs for cranes and trailers, he said.

Larson has added more than 100 new dealers in the last two years, bringing the total to 217 with more than 300 locations worldwide. The largest, Breakwater Marine, has expanded from two to four locations in Seattle and Vancouver since becoming a Larson dealer in 2009.

Aaron Fell, a Breakwater partner, said he believes customers will be drawn to Larson's nearly 100-year heritage and its cutting-edge technology. Larson's patented VEC process produces fiberglass boats that are lighter and stronger than competitors' fiberglass models. Triumph boats are made with another proprietary process that produces molded polymer hulls that are impact-resistant and impervious to damage from saltwater.

With the boating industry stilling struggling to rebound from the recession, it might not seem like the best time to be investing in new models. Unit sales of powerboats were up for the first nine months of 2011 vs. 2010 but are still dramatically below sales in the mid-2000s, according to the National Marine Manufacturers Association.

"I wanted to get up and running on new models before people started shopping again," Jacobs said. "Everybody else was hunkering down. I wanted to be ahead of the competition."

Susan Feyder • 612-673-1723