Based in Waukegan, Ill., OMC started back in 1909 when Ole Evinrude first invented the gasoline powered outboard motor on his farm in Christian, Norway. Two years after inventing it, he launched a national advertising campaign and the concept of an internal combustion engine, which led to the birth of the recreational marine industry. The company kept refining and many innovations were industry firsts, including the first V-4 outboard motor in 1958, and the first V-8 in 1985. In the late 1990's, it introduced Ficht Ram Injection on certain outboard motors which offered 35 percent better fuel economy, lower hydrocarbon exhaust emissions and up to 50 percent reduction in oil consumption. But, this revolutionary Ram Injection technology (Ficht) eventually led to the ultimate downfall and collapse of the company.
The purpose of the business research, initially demanded by the shareholders, was to pinpoint the disappointing operating performance of OMC and its unsuccessful efforts to secure additional financing to get the company beyond its financial burden.
Outboard Marine Corporation
Bolinder's Trim outboard engine
Evinrude Outboard MotorsJust as OMC had become a household word among the ranks of fishermen and recreational boaters, the company seemed to be quickly sinking without a lifeline. Just several years prior to bankruptcy, OMC had acquired several large boat manufacturing companies, 12 in total, which included Chris Craft, Four Winns, Hydra-Sports, Seaswirl, Stratos, Javelin and Lowe. This multiple acquisition gave the shareholders a false sense of security in thinking the company was growing and profitable.
The problems under investigation were focused on how OMC got into financial trouble in buying too many other companies too fast, which overextended their credit. There were also problems with many of their gas outboard motors, particularly the Ficht Ram Injection outboard and the financial burden in providing expensive warranty claim work to its loyal consumers.
One of the key parties...