Q1-How would you define Regal’s strategy- Explain?
Product Strategy Provides Competitive Advantage at Regal Marine
Regal’s naval architect’s goal is to continue to reduce the time from concept to prototype to production. The sophisticated CAD system not only has reduced product development time and cost, but also has reduced problems with tooling and production, resulting in a superior product.
All of Regal’s products, from its $14,000 19-foot boat to the $500,000 52-foot Sports yacht, follow a similar production process. Hulls and decks are separately hand-produced by spraying performed molds with three to five layers of a fiberglass laminate. The hulls and decks harden and are removed to become the lower and upper structure of the boat. As they move to the assembly line, they are joined and components added at each workstation.
Here the deck, suspended from ceiling cranes, is being finished prior to being moved to join the hull. Regal is one of the first boat builders in the world to earn the ISO 9001 quality certification.
Here the finishing touches are being put on a mold used for forming the hull.
Forty years after its founding by potato farmer Paul Kuck, Regal Marine has become a powerful force on the waters of the world. The world’s third-largest boat manufacturer (by global sales), Regal exports to 30 countries, including Russia and China. Almost one-third of its sales are overseas.
Product design is critical in the highly competitive pleasure boat business: “We keep in touch with our customers and we respond to the marketplace, “says Kuck, “We’re introducing six new models this year alone. I’d say we’re definitely on the aggressive end of the spectrum.”
With changing consumer tastes, compounded by material changes and ever-improving marine engineering, the design function is under constant pressure is the constant issue of cost competitiveness combined with the need to provide good value for customers.
Consequently, Regal Marine is a frequent user of computer-aided design (CAD). New designs come to life via Regal’s three-dimensional CAD system, borrowed from automotive technology.
CAD/CAM is used to design the rain cover of a new product. This process results in faster and more efficient design and production.
Wooden components, precut in-house by computer-driven routers, are delivered on a just-in-time basis for installation at one station. Engines – one of the few purchased components – are installed at another. Racks of electrical wiring harnesses, engineered and rigged in-house, are then installed. An in-house upholstery department delivers customized seats, beds, dashboards, or other cushioned components. Finally, chrome fixtures are put in place, and the boat is sent to Regal’s test tank for watertight, gauge, and system inspection.
Once a hull has been pulled from the mold, it ravels down a monorail assembly path. JIT inventory delivers engines, wiring, seats, flooring, and interiors when needed.
At the final stage, smaller boats, such as this one, are placed in this test tank, where a rain machine ensures watertight fits.
Strategy at Regal Marine
Regal Marine, one of the U.S.’s 10 largest power-boat manufacturers, achieves its mission – providing luxury performance boats to customers worldwide – using the strategy of differentiation. It differentiates its products through constant innovation, unique features, and high quality. Increasing sales at the Orlando, Florida, family-owned firm suggest that the strategy is working.
As a quality boat manufacturer, Regal Marine starts with continuous innovation, as reflected in computer-aided design (CAD), high-quality molds, and close tolerances that are controlled through both defect charts and rigorous visual inspection. In-house quality is not enough, however. Because a product is only as good as the parts put into it, Regal has established close ties with a large number of its suppliers to ensure both flexibility and perfect parts. With the help of these suppliers, Regal can profitably produce a product line of 22 boats, ranging from the $14,000 19-foot boat to the $500,000 44-foot Commodore yacht.
“We build boats,” says VP Tim Kuck, “but we’re really in the ‘fun’ business. Our competition includes not only 300 other boat, canoe, and yacht manufacturers in our $17 billion industry, but home theaters, the Internet, and all kinds of alternative family entertainment.” Fortunately, Regal has been paying down debt and increasing market share.
Regal has also joined with scores of other independent boat makers in the American Boat Builders Association. Through economies of scale in procurement, Regal is able to navigate against billion-dollar competitor Brunswick (makers of the Sea Ray and Bayliner brands). The Global Company Profile featuring Regal Marine provides further background on Regal and its strategy.
Product Design at Regal Marine
With hundreds of competitors in the boat business, Regal Marine must work to differentiate itself from the flock. As we saw in the Global Company Profile that opened this chapter, Regal continuously introduces innovative, high-quality new boats. Its differentiation strategy is reflected in a product line consisting of 22 models.
To maintain this stream of innovation, and with so many boats at varying stages of their life cycles, Regal constantly seeks design input from customers, dealers, and consultants. Design ideas rapidly find themselves in the styling studio, where they are placed onto CAD machines in order to speed the development process. Existing boat designs are always evolving as the company tries to stay stylish and competitive. Moreover, with life cycles as short as 3 years, a steady stream of new products is required. A few years ago, the new product was the three-passenger $11,000 Rush, a small but powerful boat capable of pulling a water-skier. This was followed with a 2-foot inboard-outboard performance boat with so many innovations that it won prize after prize in the industry. Another new boat is a redesigned 52-foot sports yacht that sleeps six in luxury staterooms. With all these models and innovations, Regal designers and production personnel are under pressure to respond quickly.
By getting key suppliers on board early and urging them to participate at the design stage, Regal improves both innovations and quality while speeding product development. Regal finds that the sooner it brings suppliers on board, the faster it can bring new boats to the market. After a development stage that constitutes concept and styling, CAD designs yield product specifications. The first stage in actual production is the creation of the “plug,” a foam-based carving used to make the molds for fiberglass hulls and decks.
Specifications from the CAD system drive the carving process. Once the plug is carved, the permanent molds for each new hull and deck design are formed. Molds take about 4 to 8 weeks to make and are all handmade. Similar molds are made for many of the other features in Regal boats.