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Sunday, 15 May 2016 11:18

Genualdi pilots turnaround at S2 Yachts

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Genualdi pilots turnaround at  S2 Yachts Photo by Katy Batdorff

John Genualdi has spent the bulk of his career solving complex financial problems and turning around closely-held family businesses. 

After working for companies in a handful of manufacturing, food processing and mining industries, Genualdi decided to try his hand in the luxury boat business after being introduced to S2 Yachts Inc. in 2013. 

The Holland-based manufacturer of the Tiara Yachts brand had fallen on hard financial times in the wake of the economic downturn. Having lost 80 percent of its market, the company was losing money and struggling to set its course for the future, Genualdi said. 

Beyond dealing with financial troubles, Genualdi was entering the company during a time of shifting family leadership as Tom Slikkers, son of S2 Yachts founder Leon Slikkers, had taken over the reigns from his brother, Robert Slikkers. 

Genualdi stepped into the manufacturer as the first non-family member of S2’s executive team.

“They had just gone through a real hellacious downturn,” Genualdi said. “The approach that Tom took was that he wanted to put together a professional management team to help run that business. They were primed for it. Personality-wise, I was coming in as someone who has knowledge and experience, but I don’t need to put my fingerprint on anything, I have no agenda other than ‘let’s make this business work.’”

To begin to navigate the intricacies of the closely-held family company, Genualdi committed to learning S2 Yachts’ business and culture before making any significant changes to its operations. 

Specifically, Genualdi focused on the events and practices that led S2 Yachts to its financial hardship. 

“You’re in a (financial) downturn — why? What caused it? That opens up a whole can of worms and a lot of introspective thoughts and emotions,” he said. “By not having the baggage of needing to make a mark, you can cut through the emotions to what’s going on.”

For example: Faced with sluggish sales for its products, S2 Yachts had agreed to serve as a contract manufacturer for a Dutch boat maker in an attempt to drive some revenue, Genualdi said. At the time, it appeared as though the program would be profitable, but it quickly became apparent that it was not. 

Genualdi helped demonstrate to the rest of the executive team that the business was not profitable, after which he successfully negotiated an exit from the contract to focus on rebuilding S2’s core Tiara brand of luxury yachts. 

“As the losses mounted, now it was decision time,” Genualdi said. “You can’t keep doing this because you’re going to shut the doors if you do. Let’s bring some products that people want to buy and use. That was really the turning point to unwind that (contract manufacturing business) and start new products.”

In the past, S2 Yachts had focused on manufacturing vessels for extended use, but the company noticed that its customers had less available time to spend on the water following the economic downturn. Therefore, the company refocused its products to offer vessels more suited to customers spending a night or weekend on the water, Genualdi said. 

Shortly after beginning at S2 Yachts, Genualdi also retooled the company’s financial reporting to reflect generally accepted accounting principles (GAAP), improved reporting times from three weeks to three days following the close of a period, and built a strong relationship with Chicago-based The PrivateBank, which operates a branch in Grand Rapids. 

Beyond that, Genualdi integrated strategic planning into S2 Yachts’ processes. While the company had attempted to adopt strategic planning in the past, it had always been implemented by a consultant and never took root in the organization, he said. 

Genualdi started by separately interviewing Tom Slikkers and his father to learn where both executives saw the business going, and then shared each of their responses with the other. 

“It was very tenuous at first,” Genualdi said. “Both of them said ‘no one has ever asked me these questions before.’ They were surprised they had more common threads than uncommon threads. That was a big eye opener. It was like, ‘We don’t have to butt heads to see where we want to go.’”

S2 Yachts currently is implementing the information gleaned from the strategic planning process on an operational level, Genualdi added. 

While the luxury boat maker has increased its earnings into the eight-figure range and generated revenues of nearly $150 million in 2015, the transition has been far from easy, Genualdi said. 

“When I’ve taken on these different companies, one of my first questions is, “What is your tolerance for pain,’ because there are some tough things that you have to talk about, and it’s not for everybody,” he said. “You want to get from Point A to Point B. I’ll help you define Point B, then I’ll help you find the path to Point B — but there’s going to be some hard work to make it happen.”  

 

Sidebar: John Genualdi, S2 Yachts Inc.

  • Gross revenues for 2015: Nearly $150 million
  • Total employees: 340 in Grand Rapids, 340 in Florida 
  • Important moment: A Chicago native, Genualdi characterizes the most critical moment in his career as his decision to move to Midland, Mich., as he never thought he’d leave the Windy City. 
  • Mission critical: “I tell my team that as their leader, my job is to get rid of the obstacles that keep them from doing their jobs — whether it’s computers, lighting or people,” Genualdi said. In addition, Genualdi also tries to get out on the plant floor every day. “When I’m locked in my cave, that’s the worst thing,” he said. 
  • Academic degrees: Bachelor’s in accounting from the University of Illinois at Chicago; CPA certificate in Michigan and Illinois 
  • Community involvement: Previously served on the board of the Can-Do Kitchen
  • Company advisers: The PrivateBank (financial); Varnum LLP (legal); BDO Seidman (accountant)
Read 4081 times Last modified on Monday, 16 May 2016 10:01
John Wiegand

Staff writer

jwiegand@mibiz.com

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