KONRAD MARINE company history
INTRODUCTION
The company is a privately held entity, founded by husband and wife team Ken and Kathy Konrad in 1991. They have self-funded all research and development, engineering, manufacturing, testing, and product rollouts.
Last year, the company launched its second generation of stern drives, the 600 Series, which included their first-of-its-kind Konrad 680-B. This unit stands alone in the market officially handling engines 550 diesel horsepower; unofficially even a little more. This technology enables Konrad to deliver robust stern drives with exceptional longevity to high speed, mission critical, commercial and military applications - something no other stern drive manufacturer has ever done.
The B Series unique capabilities, combined with Konrad's recent partnership with Cummins engines, were highly instrumental in 2015's success. Global channel initiatives with Cummins' worldwide distribution network, contributed to a rise in sales of over 57%.
This impressive growth is projected to continue and Konrad is fully prepared to support it. The numbers are a testament to the strength of Konrad’s current leadership, their product line and strategy, and are a strong indicator of what lies ahead for the company.
With the 680-B successfully tested for well over 100 hours running full power at 580 hp, 925 lb-ft (1,254 Nm) of diesel engine torque, the Cummins partnership flourishing, the infrastructure of the company solidly in place, an exceptional direct sales force with incredible momentum, and a strategically minded management team, Konrad Marine is primed and poised for continued growth.
THE EARLY YEARS
In 1991, Konrad Marine, Inc. entered the marine propulsion industry as an after market supplier of Mercury* Alpha* compatible stern drive components. With this successful entry into the marine propulsion market, within several years, Konrad was manufacturing the entire drive. It was sold under the name of Omega. The pleasure boating industry embraced its reliability. Revenues were modest, but Konrad Marine, Inc. continued to gain a presence in the industry.
Over the next few years, name recognition grew and Konrad's reputation for producing dependable, durable, long life stern drives became well known. Konrad Marine, Inc. was approached by the marine industry to create a new stern drive capable of handling the torque of diesel engines.
KONRAD 520 STERN DRIVE
In 1997, after several years in development, Konrad answered these requests by launching their first stern drive in the 500 Series, the Konrad 520. It was specifically designed for hard-working, continuously run applications with diesel engines. The Konrad 520 was designed to perform for up to 2,000 hours between major overhauls and to handle diesel engine torque up to 600 lb-ft (813 Nm). This stern drive appealed to commercial fishermen, military patrol boats, water taxis, etc.
The Konrad 520 stern drive was, and continues to be, extremely successful. Revenue growth averaged just over 26% per year between 1991 and 2001. The companies earnings were used for continuous new product development, which required considerable investment.
The horrific event of the bombing of the USS Cole in Yemen in 2000, prompted the US Navy to seek a propulsion system which could be run with superior durability to continually patrol US ships, ports and shores. To meet this need, the Navy began purchasing Konrad's 520 stern drives as quickly as they could be made, putting the factory at capacity. As a result, in 2002, sales and profits soared growing more than 200% and putting the company in a very solid position.
Some Navy vessels reported more than 10,000 hours logged on single units which were designed to deliver 2,000 hours. Over 300 Konrad Model 520s were installed on 24 foot RIBs and more than 200 units on the Navy's PB34 vessels. The 520 stern drive remains installed on thousands of military and commercial vessels worldwide and continues to be offered for applications requiring horsepower at this level.
ADDITIONAL 500 SERIES STERN DRIVES
Demand for stern drive units with the dependability, durability and performance of the Konrad 520, were quickly requested by other markets. However, other markets that were in need of these same attributes, also required speed, like military, law enforcement, pursuit and intercept vessels. It wasn't long before the marine racing industry contacted Konrad seeking a drive that would deliver speeds in excess of 100 mph and last well beyond the race.
New models were put in development to pursue these opportunities. Fueled by a request from the Hong Kong Police, the Konrad 540 was introduced in 2001. It also initiated the entrance into the high performance propulsion market.
When Mercury* announced that parts production would cease for their aging TRS* stern drives, Konrad recognized an opportunity and developed a compatible replacement product. Based on the Model 540, a PRS (Performance Replacement System), was designed and introduced as a bolt-on retrofit in 2004.
Two years later, at the 2006 Miami International Boat Show, the ACE was introduced to the high performance racing industry. The Konrad ACE Propulsion System consists of a 540 lower with a nose cone and an extension box that houses the transmission. External steering is easily mounted on the box. It was designed and manufactured for the performance boaters as a complete package.
KONRAD 560 STERN DRIVE / DUAL PROP
With a vision of staying ahead of the competition, Ken Konrad developed a dual prop for the 500 product lineup. A dual prop adds considerable blade area increasing speed and fuel efficiency, both crucial for commercial operators. In addition, this dual prop would be the foundation for the next generation stern drive on the product roadmap.
In 2008, Konrad installed several beta units of the Model 560 Dual Prop. Issues with the carrier design and revisions to the castings resulted in five significant changes to the lower unit between 2009 and 2012. The direct sales force hesitated to aggressively market the unit until all design changes were complete. This, coupled with the initial cuts in military spending, caused Konrad to experience a drop in sales during this time frame. There was a substantial financial outlay to finalize the Konrad 560 Dual Prop to release it into general availability, which caused the first loss since 2001 to be recorded in 2012.
Costs to research, develop, manufacture, test, launch, and refine these follow-on products to the Konrad 520 - 540, PRS, ACE, and 560 - caused profits to ebb and flow between 2002 and 2012, but the company remained profitable throughout this decade. Sales grew from a modest $15,801 in 1991 to over $4MM in 2007 where they remained relatively steady for another 5 years.
GLEASON PHOENIX 600HC BEVEL GEAR CUTTING MACHINE
The heart of every Konrad stern drive is the gears. If the drive is assembled with gears that are not critically precise, the stern drive is subject to failure. Konrad Marine, Inc. purchased cut gears from a local vendor for the 500 Series and experienced more and more failures as time progressed. The root cause of the failures was difficult to diagnose as they were erratic, a result of production inconsistencies and poor quality control. This resulted in expensive warranty claims. Corrective action was required. To ensure the quality and integrity of future Konrad drives, the Konrads made the decision to purchase a Gleason Phoenix 600HC Bevel Gear Cutting Machine. The purchase of the Gleason Phoenix was only the second machine of its kind in the world. The $1.3MM purchase was costly, but necessary. With the installation of this unique, world-class machine, the staggering warranty costs due to gear failures rapidly diminished and are non-existent today.
KONRAD 600 SERIES STERN DRIVES
As demand for additional marine propulsion power continued to grow and diesel engines climbed to exceed 700 lb-ft (949 Nm) of torque, it became evident that an entirely new design was needed to stay ahead of the diesel (military and commercial) niche Konrad uniquely serves. Horsepower would continue to rise; longevity and efficiency would continue to be demanded, while ease of maintenance and cost of ownership would be carefully scrutinized by potential users.
After funding the Omega and 500 Series, Ken and Kathy Konrad anticipated the cost of the next generation, named the 600 Series, would be several million dollars and take a number of years to conclude. To avoid a massive accumulation of debt, and to spread the cost over time, they made the decision to divide the 600 Series into three main design/manufacturing phases:
1. Refine the dual prop lower to gain speed, efficiency, and carrying capacity.
2. Design a new upper with larger gears to handle more torque.
3. Create a new gimbal assembly with a larger footprint to spread the load across the transom and to integrate and standardize steering.
Work continued on the 600 Series throughout 2010. The first unit with the new upper was installed as a beta very early in 2011. By June of 2011, several beta units had been installed in widely diverse applications and environments. For these early release installations, any issues which were identified, were addressed. Engineering was dispatched, and solutions created, tested, and integrated.
All three projects that collectively made the 600 Series were initially planned for completion and rollout in October of 2013. However, all were well behind schedule, due to problems rooted within the leadership of the engineering department. After semi-retiring in 2009, owner Ken Konrad stepped in to once again direct engineering's day to day operations in January 2015.
Under his leadership, the team implemented the last remaining solutions necessary to complete the 600 Series in just a few short months. All remaining issues with phase one and two of the 600 Series were resolved and the final third phase, the new transom with integrated steering was completed and the stern drive was officially launched.
600-A and 600-B designations were given to the drives to alleviate confusion. 600 Series drives with the new larger upper gears, but with the original transom were named 600-A units. 600 Series drives with the new larger upper gears and with the new larger transom with integrated steering, were named 600-B units.
Just as there is an array of 500 Series models, there is an array of 600 Series drives designed for varying applications. The 620 is a single prop workhorse, the 660 is a dual prop designed for speed, and the 680 offers a unique combination of strength and speed in a dual prop configuration. It has the bigger upper gears as well as new bigger, lower gears that can handle diesel engine power tested up to 580hp. There is no similar stern drive on the market. The Konrad 680-B is the company's top selling stern drive.
CONCLUSION
Konrad's one-of-a-kind product stands alone in the commercial and military markets.
With the 680-B successfully launched, the Cummins partnership flourishing, the infrastructure of the company solidly in place, an exceptional direct sales force with incredible momentum, and a strategically minded management team, Konrad Marine is primed and poised for revenues and profits to continue to soar.
* Original equipment manufacturer's names (Mercury, Alpha, TRS, Volvo, DPH) are used for identification purposes only and are acknowledged trademarks of their respective companies.
