Impact of the Depression

Poised to take on Johnson, the newly formed Outboard Motors Corporation was hit hard
by unfortunate, yet unforeseen, circumstances. The stock market crashed on October 28, 1929,
sending the US economy into the Great Depression. Sales dropped dramatically in the early
years of the depression, causing the management team at OMC to drop the Lockwood line of
products. To meet payroll, the company held factory sales of overstocks and motors assembled
from leftover parts on the weekends.

In the months preceding the crash, Johnson Motors had authorized a stock issue of
approximately $1.3 million and used nearly half of its operating capital to fund a huge
advertising campaign. The stock issue was underwritten by the New York firm of Hayden,
Stone, and Co. When the stock market crashed, Johnson looked at the disaster with optimism and
quickly launched a line of boats designed to go with the Sea Horse motors. The Johnson
“Matched Units” boat and motor program was also known as the Aquaflyer and Sealite.
Unfortunately, these boats were too far ahead of their time to survive the economic crisis of the
Great Depression. It would be nearly 60 years later before the “Matched Units” were again
introduced to the market.

The depression impacted Johnson as much as it did OMC. Profits fell from $445,613 in
1929 to $141,086 in 1930 and debts increased. In an effort to protect its investment, Hayden,
Stone, and Co. took over the management of Johnson Motor Company in 1931 and appointed
David Stratton as president. In 1932, at the height of the Great Depression and with conditions
largely unimproved, the company was placed in voluntary receivership by its current president,
H.G. Delabar. Reorganization was also initiated and the company attempted to diversify into
durable goods such as refrigerators and compressors. However, this attempt did not work and in
1935, Johnson Motor Company was sold.

As OMC was emerging from the depression, Bess Evinrude’s health deteriorated. She
died on May 13, 1933. Just a little more than a year later, on June 12, 1934, Ole Evinrude passed
away as well. It is believed that he never recovered from the loneliness of his wife’s death. A
month after his father’s passing; Ralph Evinrude was appointed President of OMC.

News of Johnson’s financial troubles spread quickly among the community and Stephen
Briggs began to make efforts to bring Johnson into the OMC family. It is reported that Briggs
went to see Charles Hayden, the head of the investment firm that owned Johnson, and asked to
purchase the struggling company. Hayden declined another offer from Stewart-Warner and
accepted Briggs’ offer to purchase Johnson at $10.35 per share. Briggs purchased 80,000 of the
102,000 outstanding shares for approximately $800,000. The money for the acquisition came
directly from the personal funds of Briggs and Ralph Evinrude. By November 1935, Briggs and
Evinrude became the owners of the strongest line of outboard motors in the industry, as well as a
factory and equipment valued at $1.5 million. In its first year of operation under new
management, Johnson sold 20,872 motors, making back their entire purchase price. On
September 30, 1936, OMC formally brought Johnson into the company’s fold.