Lund CFO may face larger charges

[Hans]

According to an article on the front page of the STrib, Gary Schultz may have his fingers in $12-million, not only $1.8 as first reported. The article also suggests that some of the Lund loss may be covered by insurance.

Hans

[Hawgeye]

I heard the same. Gary Schultz is being investigated for additional 12 million bucks allegedly used for personal use. One of the most extensive embezzlement cases in Minnesota State history.

Just a side note. Lets not get into the LUND "crap" discussion please. Hans is providing us with factual news that has nothing to do with the quality of Lund boats. I am stating this in advance because with all of the Lund bashers out there it is bound to happen. Insurance is said to be covering the losses for now but it remains to be seen if the money can be recovered. Maybe there will be a credit for us who just purchased a new Lund? :)

[cisco]

What's a little white-collar crime among friends. And, if insurance covers losses, I guess that means "no one" pays.

P.S. I'm not bashing Lund. I own one (which happens to be my fifth since 1969).

[Mattman]

It was in the Fergus Falls Daily Journal today. As soon as the story is on-line I'll post it. Sounds as though Lund is sueing him for $12 million. He stole more than they thought. The paper said the suit was for 3 times the amout embezzled.

[Hawgeye]

Cisco,

I wasn't defending anything, just trying to curb the bashing. I know you said it tongue-in-cheek and yes, we all pay for the losses when insurance is involved. Unfortunately it is passed on to the consumer as well.

If guilty, I hope he goes away for a long long time. The guy probably made a good solid 6 figures anyway. In this neck of the woods, he was a wealthy person without the embezzling. I don't get it, I guess you can never have enough money according to some.

[JasonMN]

Here is the Star Tribune URL:
http://www.startribune.com/viewers/qview/cgi/qview.cgi?template=biz_a_cache&slug=lund17

[AquaMan]

You know the sad thing is that the family and all the people of New York Mills and Lund are hurting from this. I've been to both his stores (Not knowing they were his) and they are nice family opperations and by all accounts doing well, Lund should just aquire them by default and keep them running....just a poor thought.

Shame, Shame, Shame.

AquaMan~~~~~~~~~~~~~

.·´¯° --- "It all begins and ends at the water's edge"

Eric@crowncomputerinc.com

[ANXIOUS]

YOU KNOW I THINK THE WHOLE PROBLEM IS THAT THERE ARE JUST SOME PEOPLE ON THE GRAVY TRAIN WHO TAKE IT FOR GRANTED. I THINK THEY COME TO BELIEVE THAT THEY DEXERVE MORE THAT WHAT THEY ALREADY HAVE! IN A WAY THEY COME TO EXPECT IT. JUST LIKE THIS ALLINA SITUATION,AND I'M SURE THINGS LIKE THIS HAPPEN ALL THE TIME. AND INSURANCE COMPANIES ARE RIGHT IN THERE WITH THE WHOLE PADDING THING... THAT AND GOVERNMENT CONTRACTS AT MANUFACTURING PLANTS THAT SINCE THE PARTICULAR JOB THEY ARE DOING IS FOR THE GOVERNMENT THEY CAN CHARGE 4 TIMES WHAT THEY WOULD FOR SOME OTHER BUSINESS. OUR COUNTRY IS SUPPOSED TO BE SO GREAT. IT'S RUN BY A BUNCH OF CANIVING THEIVES!! DEMOCRACY.. HUH?

[Paid Too Much]

As Lund's CFO, he has an obligation to the company , dealers, customers and community, to protect all of their best interest. My question is "where was the President of Lund" (who holds a higher office)? He is unquestionably responsible for all the duties and responsibilities of all the employees and officers of the Lund Corp. For one individual to steal this much money, over this period of time, a flag is thrown. Maybe there is more than one individual involved. Again, the President of Lund needs to answer to Erwin Jacobs. Will the President of Lund survive TO KEEP HIS job. My best guess is that Jacobs cannot permit the current president to continue in his current position. We all paid too much for these Lund boats over the years - because manufacuters base their costs on profitibilty. Clearly the profitibality over the last few years has been adjusted, internally, so that the Lund Co. can remain profitable. If Jacobs is to recover these losses, this will be another windfall for Jacobs. And again, we all paid too much.

[James Morris]

No one paid too much, per se. The only difference economically speaking is that Lund would have priced the boats lower if the demand was elastic (if price had a very large impact on the # of boats sold), but if the demand for their product is inelastic, (not highly influenced by price variations) then Lund might have priced the boats the same, they would have just kept more profits. Also, we need to be mindful of the middlemen involved, as I understand it Lund sells boats to their dealers and the dealer then markes them up and sells them to us. Most likely, if there was a price difference from lund, at least some of this difference was eaten up by reducing the profit margin of the dealers. Essentially, the point is the only people who really lost out are the ones who didn't buy a boat b/c it was priced out of their range (the most elastic consumers), everyone else would have paid the price they paid no matter what the reason for the increase was. Any dead weight loss involved was shared between the dealers and the consumers, so it's not like any one group got the shaft, everybody loses in a case like this- now it's the CFO's turn.

Everyone who bought a Lund- you'll just have to have that much more fun out of your boat this year to make it worthwhile- catch some fish :)

James

[Frank from TBay]

I ordered a new Lund this year and delivery was held up for about a week longer than it should of........my dealer advises that their whole operation was gone over top to bottom and an extensive audit done. I hope the guy or guys involved in this scam do some very serious time and are held accountable.

[cisco]

When I bought my first Lund in the 60s, they were all alone as the best quality aluminum boat on the market. I bought a Pike model (16 ft w 40 Merc) in the first year they came out (I think that was 1974) -- and, no one had anything like the Pike model, flat floor, storage, side console, the works.

HOWEVER, this is 2001. Lund is no better than a whole raft of other aluminums. Yet, their price stays high. Check quality control today and try to recall what things were like in the early 80s. Lund is living on a reputation. They are good boats, but they are not the best.

[Fishingdog]

Lets not get back into that mature arguement Cisco. Obviously you do not own a Lund and therefore have decided for the world that they are not the best. Guess what, the best boat is the one I own whether it is a Lund, Alumacraft or whatever. What evidence do you have that Lund makes less of a boat than some other mfgr? I agree that there are very good aluminum boats out there and also would say that Lund is more expensive, but I have looked at the boats that are 2-3k less and frankly, typically are less quality. I guess whatever YOU own is no longer the best.

[Mr T]

Cisco,
You make some good points. I was wondering, who do you think makes the best aluminum boat out there today? Lund is very good, but who do you think is better.

[Yankee]

The reason your boat took longer than it should of is because your dealer told you it would come earlier than he should have.
I do not know about the Canadian plant, but the US plant is running on "overtime" trying to keep up with demand.
Perhaps your trailer or motor was the part that came later than expected.
At anyrate, the pace on the production line has nothing to do with the audit.
There was no down-time associated with the audit.
Only "hard time" for a THIEF!!!

[Pauncho]

OK Cisco, what is better?
Prove it.

[Geno]

Cisco...you own a Lund.
You want to sell it?

[James Morris]

I'm not gonna argue here, but check out Princecraft. I rode in one last year and it was pretty sweet for an aluminum boat. Still- gotta love Ranger Boats.

James Morris

[cisco]

Yes, I do own a Lund. It happens to be my 4th since the 60s. I also own a Targa 18 (90 Merc & 9.9 kicker). I've owned both MirroCraft and Crestliner.

All I'm saying is that the days when Lund was the standard of the Aluminum boat industry are over. Just as good aluminums are made by other Genmar companies, Brunswick companies, the former OMC companies, and Tracker. Price is NOT the index. A $25K Lund is not necessarily better than an $18K Tracker.

When speaking of "profitability," remember that Lund does not have to show financial statements because of the "private" nature of that Genmar holding. In the current flack, all you will hear from Genmar is that Lund has shown "very good profits."

I had no screws to tighten or adjustments to make on my first Lund. The quality of my most recent (1999 model) would make old time Lund owners weep.

[Fishingdog]

You had no screws to tighten or adjustments to make on your first lund because there were only about 10 screws in the entire boat. Today there are so many more. Too bad that you got a lemon on your last one. The last two that I have had including my latest (2001), nothing but minor stuff. I had an 88 pro-v that I sold after 10 years and never had a leak, only had to replace the seats and the pedestals because they wore out. Everything else was like the day it was new and sold it for not much less than it went for when new.

Crestliner is a nice boat and so is a Tracker but I definately would not say either are "Better for the money" than a Lund. I suppose if they fix their layout for fishing I might change my mind but for now, I'll keep my overpriced, underquality Lund.

[cisco]

Why must folks put words in other folks' mouths? I did not get a lemon. Read what I wrote. Lund is a good boat. My '99 Lund is a good boat. What I have sought to say is that the days of a significant difference are over. My early 70s model Pike was superior to any other aluminums on the market at that time -- All I'm saying is that time is over, although Lund prices remain inordinately high. It take time to build a reputation, but once built it remains high in spite of competitor quality.

Why is this so distateful to Lund disciples? It's a good boat, just no longer the best.

[Al]

Comparing a 69 lund to a present day lund is like comparing a 69 ranger to today's rangers. The 69's didn't have near the bells and whistles, the extensive trim, nor the complex livewells. If it's like the one I had, it was a glorified, oversized row boat that like todays Alaskans, can take a pounding for years and not show it. Youdidn't have a 15 or 115 in 69 on your lund either. Probably didn't run as big of water (at least I didn't) and couldn't do it as fast. There are a lot more variables today than what you had in the past. Now, as far as princecraft goes, it is one heck of a boat. But in the US, I found that option for option, horespower for horsepower, they price the same as Lund. I even had a rep for Princecraft tell me that. Sure, they have some nice features that others don't, but then again, each has it's own delectible qualities. I don't think either would be a bad choice.

As far as 12 million adding to your costs...over those years....I'll bet it's the preverbial fart in a windstorm in the overall picture of Lund. Not defending what the crook did, but the price is obviously what the market would bare. The only ones who got ripped are the shareholders. You can bet they'll get some answers, and roll some heads.

[Jerry]

Its unbeliveable you dont get it a mfg. sets there pricing based on labor meterals and overhead, this CFO had all the control of reporting and adjusting the books to allow his activity to go on. He alone set the price of these over priced lunds and we paided for it when we bought the lund, we paid for lunds insurence overhead and labor, we are entilleted to the insurance check of 12 mill. Where were these two Presidents of lund in the last 13 years? Clearly they weren,t doing there job. The pres. has to answer to this.

[Al]

If boat companies priced their boats on that alone as you say, then you wouldn't of had boat companies go out of business, or show a loss, especially the little guys who build to order. Boat prices and motors keep skyrocketing for a couple of reasons other than what you say....EPA regs, a market of consumers who are the ultimate "I must keep up with the Joneses". That last one dictates that the price will be the highest the market will bare. In some cases and markets, you are correct, but not in boating and specifically in walleye and bass boating.

[Ken]

Al, Jerry is right boat companies. are fair in there pricing and are competative based on quility built into the boat. Lund charged to much Lund needs a fair profit, but Lunds CFO built in to lund boats a fictuisch cost, and we paid for it. Who checked on this guy Schultz.

[Hans]

Few manufacturing companies use that price model. I manufacture a line of products (not boats), and pricing is based on "supply and demand", the behaviour of competitors, channel costs, whether I can diferentiate my product from the competition, and the skill of my brand manager. Ultimately, my selling price is based on what I can convince my customer the product is worth to him.

My "build cost" obviously determines how much money I make (DGM) on the deal, but my sell price is almost *never* determined by what it costs to manufacture the product. If this fellow had not pocketed company money, your new Lund would have cost exactly the same amount and Genmar would have taken more money to the bank.

Hans

[Al]

Ken, I maintain that he isn't and Hans is right on. Lund is positioned in the market at the high end of aluminum boats. In fact, in the industrial markets, something I know something about from firsthand, they would be considered the price leader. If they dropped their prices tomorrow, others in the chain would do the same. If lund suddenly dropped their price due to this revelation, as you seem to think would have happend if he hadn't been on the take, the nearest copetitors would drop their prices. So does that mean they have a CFO who is taking too? Or does it mean they set their price based on the market and what it will bare? It's the later and it goes exactly with what Hans said.

[Ken]

Hans are you saying that the lund boats are marketed on preceived value I can tell you I wanta see the BEEF if I spend my hard earned money on another Lund, Your right lund will profit another WIND FALL from all this when they cash our 12 MILLION DOLLAR CHECK Where was there president?

[Geno]

Wow!
Thanks for the reply,but, do you want to sell it?

[cisco]

And we call it a "market system"?? Hans, what you describe (and I happen to believe is the case) is price fixing.

[James Morris]

Cisco, I'm pretty sure price leadership is not price fixing, b/c price fixing takes place between multiple firms that collude to keep prices artificially high. In this case, that is not what is going on, what is happening is that Lund dealers have found that customers are not going to stop buying their boats if the prices are high, at least- they make more profits when the prices are higher and they sell slightly fewer boats than they would if prices were lower and they sold a few more.

The other firms follow price drops if Lund drops price b/c they don't want to lose market share to Lund.

James Morris

[Hans]

>And we call it a "market system"?? Hans, what you
>describe (and I happen to believe is the case) is
>price fixing.

No, that's not price fixing. Price fixing is when the leading vendors in a particular product category enter into an agreement to hold prices artificially high regardless of "supply and demand" forces.

This tactic is seldom successful (even if it were legal) because it gives profitable "headroom" to other vendors to capture market share, and becomes self-defeating. In order for this tactic to ever work, there must be a very small number of existing vendors, and there must be a high "cost of entry" for new competitors. Neither of these conditions exist in the recreational boat market, since there is a glut of suppliers.

Hans

[Hans]

> Hans are you saying that the lund boats are
> marketed on preceived value ....

Almost every product you buy, with the possible exception of commodity items like bread, milk, and regulated products (like phone service and electricity used to be) are marketed on perceived value.

It costs a lot more to build a Chev 3/4-ton truck than to build a Corvette. The price of a new 'Vette is pegged to "perceived value", while the pickup truck must sell in a market with 2 or 3 other strong competitors, so the price is more controlled by supply and demand.

Hans

[Al]

It's far from price fixing. It is no secret that SUV's and Pickemup trucks have the highest markups by the big three. In fact, it has saved their berries in tougher times. They get a higher dollar percentage mark up on them than say Chevy Luminas,Ford Tauruses....because the market bares it. That is a free market. How do you think dealers were getting full list on PT cruisers (some higher), yet have to discount the heck out of Neons? The market allowed it on the cruisers. There are tons of gas mizers out there so the Neons didn't.

Price fixing would be just like what Hans said with commodities. Boats, especially specialty fishing boats are about as far from commodities as one can get.

[Flagmanonice]

i cant wait till next year, and they come out with a new boat called the Embezzerler (sp).

[Jerry]

We are talking about accountabley would you like to work for a Co. where the Pres. didnt have safe gards with in the Co. AND SELF DISPLINE only to jerpodize YOUR JOB. IF so join the demecratic party you REMBER BILL CLINTON. Was the Pres. of Lund doing his job?