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A solid economy and consumer confidence has resulted in a strong Canadian boating market worth C$11.5 billion, but the strength of the Canadian dollar against the US dollar has created a boom in US imports and is forcing local manufacturers to deal with low margins.
According to industry statistics, boat sales were up in 2005 compared to 2004, and news from this year’s boat shows has also been positive, leading to predictions for another good year for the marine industry. Furthermore, boat and accessory manufacturers are almost universally reporting top-line growth, with many expecting double-digit sales increases in 2006.
However the strong Canadian dollar has resulted in a record wave of US boat and engine imports, forcing prices down both at wholesale and retail levels.
“Consumers have been the greatest beneficiaries of this trend,” said Sandy Currie, executive director of the Canadian Marine Manufacturer’s Association (CMMA).
“They think it’s terrific and have been buying boats at a steady pace.”
The Canadian dollar has strengthened by nearly 30 per cent against its US counterpart. This exchange rate has forced Canadian manufacturers to lower their wholesale prices to stay competitive both at home and in the US, slashing deep into their profit margins.
In response Canadian builders have had to find other avenues to increase margins. High-volume builders like Campion are relying increasingly on exports to western and eastern European markets, as well as expanding their distribution network in the US. Its main competitor Doral has, in addition to this strategy, also streamlined its operations for increased efficiency.
Smaller builders like Saga Yachts have relocated production to the US, since most of its customers are based there. PDQ Yachts, which had considered this, chose instead to reinvent itself with powerboats and higher-end sailboats.
Some manufacturers did get caught in the crossfire, however, the greatest casualty being British Columbia yacht builder Westbay Sonship – which filed for bankruptcy protection last December.
Recent NMMA statistics illustrate this reversal of trade over the last seven years. In 1997, according to US government figures, boat and engine imports from the US to Canada totalled US $240.3 million, while exports from Canada to the US were US $447.3 million. Last year US exports virtually doubled to US $428.2 million, while Canadian exports declined to US $392.6 million.
Canada’s outboard market is also healthy, according to different manufacturers. Most outboards in Canada are still sold individually to dealers, including 20 per cent of the total market share that is sold to “fish camps’ servicing tourist anglers. This tourist market has been somewhat dampened by the strong Canadian dollar, which in turn has led to a slight but noticeable impact on outboard sales over the last three years.
According to CMMA statistics, the number of loose outboards shipped in 2005 seems to be trending upwards again, and the CMMA predicts they will top 2004’s number of units.
With the new wave of imported packaged boats arriving from the US, however, outboard manufacturers have noted a transition away from traditional distribution. In 2003, 50,351 loose outboards were shipped to Canadian dealers, and a year later this had dropped to 44,049 units. Adrian Rushford of Mercury Canada notes that the Brunswick acquisition of US brands like Lund, Crestliner and HarrisKayot have meant that more boats are shipped into Canada with engines. Again, the exchange rate has made boat/engine packages significantly less expensive for dealers than buying loose engines in Canada.
Reports from Canadian manufacturers of components, electronics and accessories are much the same as from boatbuilders – sustained growth that has been tempered by tighter margins because of the strong Canadian dollar.
To counter this, Fugawi has diversified into land-based tracking software as well as pc-based navigation software for the recreational marine market, maintaining a steady growth into different markets. Kobelt Manufacturing has also looked to enter other markets while simultaneously expanding its product line, as has ComNav, which is further expanding its geographical reach with three new acquisitions. AutoNav is also in serious growth mode, and has lowered prices as a result of the high Canadian dollar in a bid to become more competitive.
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Summarised from the Canadian Business Report in IBI's April/May 2006
issue. The full report can be purchased from International Boat Industry
- Back Issues Department, PO Box 772, Peterborough PE2 6WJ, UK Tel: +44 (0)
1733 385 170. Fax: +44 (0) 1733 239 356 mailto:backissues@johndentonservices.com Copies are
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