As layoffs loom, industry takes multi-front approach to confronting tariffs

The boating industry is taking a multi-front approach to confronting tariffs in the U.S., Europe and Canada that have already impacted the industry. Association heads are writing letters to heads of state, while boat builders are contacting government officials about the effect of tariffs on the industry. Some are warning about impending layoffs if the tariffs are not reversed.

Smoker Craft president Doug Smoker and National Marine Manufacturers Association government relations and legal affairs vice president Nicole Vasilaros met with U.S. Secretary of Commerce Wilbur Ross to discuss the administration’s trade policies and their effect on the recreational boating industry.

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Smoker conveyed to the secretary that the boating industry is being hit on three fronts — increased costs of raw materials, component parts, and retaliation.

Domestically sourced aluminum prices have increased by 27 percent, according to the NMMA.

Retaliation by key trading partners like Canada have also sparked business woes for Smoker, with 30 percent of its business headed north. Smoker said the benefits from last year’s tax reform will be erased if the tariff situation isn’t resolved.

Vasilaros said that the recreational boating industry is facing tariffs from multiple directions – Section 232 on aluminum and steel, Section 301 on nearly 300 marine products, and countervailing and anti-dumping duties on aluminum sheet – which is also trigger retaliatory tariffs from key trading partners.

Last Friday, the European Union levied a 25 percent tariff on U.S. boats, following Mexico’s implementation of a 15 percent tariff earlier this month. And on July 1, Canada is expected to apply a 10 percent tariffs on U.S. boats.

That has caused boatbuilders like Groupe Beneteau to consider whether to shift production of its U.S. brands from Michigan to Europe.

“We export a lot and if these tariffs last for an entire year, we have at risk up to 25 percent of our Cadillac-based brands,” Groupe Beneteau Americas CEO George Armendariz told Trade Only Today. “That’s on the magnitude of 1,000 units. You start translating that into effect on workforce, and we’re looking at layoffs up to 130 people. In Cadillac, Mich., that’s a lot of people. If this thing goes on more than 90 days or so, we’ll be considering layoffs.”

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“Between now and Aug. 31, we’ve had every single order cancelled; we now have zero orders from Europe or Canada, and that’s a very unusual situation for us,” said Armendariz.

“I can confirm that we are looking to immediately transfer some production from American to Europe to avoid losing that business altogether,” said Armendariz. “We have the benefit of having production infrastructure in Europe.”

Armendariz said he worries about businesses that don’t have that option.

Bertram Yachts in Tampa, Fla., is scrambling to salvage sales. This week, a customer in Monaco called to cancel the purchase of a $4 million, 61-foot yacht, citing the added cost of the tariffs, according to the Associated Press. To save the deal, CEO Peter Truslow plans to offer to make the contract contingent on the tariffs being lifted. Yet it's far from clear when — or whether — that might happen.

Before the tariffs, Bertram had been growing rapidly, with Europe accounting for perhaps 15 percent of sales. The company had planned to expand its staff of 90, but the tariffs have put any hiring on hold.

"The perception in the public is there's a bunch of rich guys hanging out at fancy marinas or something,” Truslow told the AP. “But 90 percent of the people that work in the yacht business, they're laying fiberglass and installing hardware. They're hourly, hard-working guys, the same as you'd see in a car manufacturer. Those are the ones that get affected. Who's the loser in this? The small yacht companies and the employees."

The NMMA, the European Boating Industry, and the International Council of Marine Industry Association sent a letter to President Trump asking that he work quickly to “resolve the deteriorating trade situation and eliminate the use of tariffs altogether.”

This article first appeared in our sister publication, Trade Only Today.

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