International Boat Industry - June-July 2018

6 JUNE–JULY 2018 | International Boat Industry http://www.ibi-plus.com

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Sea Ray deal nears

conclusion

• IBI-plus.com 4 June

European dealers

cancel US boat orders in

anticipation of tarifs

• IBI-plus.com 12 June

Chris Crat sold

• IBI-plus.com 5 June

2019 London Boat Show

cancelled 5

• IBI-plus.com 15 May

Canada announces 10%

tarif on US-made boats;

Europe to follow?

• IBI-plus.com 1 June

Green light for NZ refit

and haul-out facility 4

• IBI-plus.com 1 June

Challenging trading

conditions send

Henri-Lloyd into

administration

• IBI-plus.com 11 June

German company

invests in Discovery

Yachts Group

• IBI-plus.com 6 June

Positive signals from

Bavaria one month

ater filing for voluntary

administration

• IBI-plus.com 22 May

Oyster confirms new

board members

• IBI-plus.com 8 June

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Sea Ray deal nears conclusion

USA When Brunswick Corp

announed its intention to

divest the iconic Sea Ray

brand in December last year,

negotiations were opened with

a number of potential bidders.

It seems that the field has

since narrowed to a handful

of serious players, but it has

been diicult to arrive at an

acceptable valuation given the

trading performance of the

company in recent few years.

While still a globally

acclaimed benchmark brand

for well-designed products,

Sea Ray is thought to have

struggled to return a consistent

profit for a number of years.

In 2017 it recorded sales of

$387.6m but suffered operating

losses of $17.2m.

Sea Ray was acquired by

Brunswick from its founder

Connie Ray in 1986 for $350m

one month after the engine

maker also acquired Bayliner

for $425m in a drive to become

a more vertically integrated

business by packaging

engines and boats together.

Several other purchases of

boatbuilders followed until

Brunswick became the world’s

USA The National Marine

Manufacturers Association

(NMMA) is urging its members

to continue to pressure

the Trump Administration

to resolve the intensifying

global trade war that it says

has placed the industry in

the “crosshairs”. The NMMA

says its membership is facing

a “triple threat from Section

232 tariffs on steel and

aluminium, anti-dumping

and countervailing duties on

Chinese aluminium sheet,

and 301 tariffs on nearly 300

marine-related products,”

resulting in rising costs of raw

materials, component parts,

and retaliation from trading

partners.

Since the Administration’s

decision to impose tariffs

under Section 232 of the Trade

Expansion Act of 1962, marine

manufacturers have seen

substantial price increases

for the worldwide cost of

aluminium. In addition, after

several unsuccessful attempts

Industry unites

to battle trade war

to negotiate exemptions to

Section 232 tariffs, Canada,

the European Union and

Mexico responded with

retaliatory tariffs on US boats,

with Mexico’s taking effect

immediately. The majority

of boats entering the EU

will face a 25% tariff, while

Canada is applying a 10%

tariff and Mexico a 15% tariff.

This includes all types of

recreational boats on their

lists, impacting roughly 69% of

total US boat exports.

As IBI went to press,

European marine trade

associations said that

retaliatory action proposed by

the EU has already resulted

in cancelled orders for US

boats by dealers in Europe.

Meeting recently at the annual

ICOMIA-IFBSO Congress

in Berlin, marine industry

associations from over 30

countries listened intently to

Nicole Vasilaros, government

and legal affairs council for

the NMMA, describing the

US marine industry’s reaction

to unwelcome tariff actions

initiated by the Trump

Administration. The tariffs

threaten to disrupt both

domestic boat and equipment

supply chains and distort

production costs in the US, as

well as the flow of boat exports

to Europe and Canada.

In a move to reinforce

the industry’s collective

objection to Trump’s tariffs

and subsequent retaliatory

responses by Europe, Canada

and China, it was agreed

that Udo Kleinitz and Thom

Dammrich, the respective chief

executives of ICOMIA and the

NMMA, would write a second

letter to President Trump

emphasising the detrimental

impact of the tariffs on the

global boating business, and

urging the Administration to

reverse its decision.

SThom Dammrich and the

NMMA and ICOMIA are united in

their objections to tarifs

largest builder of recreational

boats with over a billion dollars

in annual sales, although it

may well forgo its top position

after this divestment.

Two potential front runners

• Yamaha and Beneteau,
  which have both acquired US
  boatbuilding businesses in the
  past – have indicated to IBI
  that they are not interested
  in pursuing the acquisition
  of Sea Ray, and while a trade
  buyer might purchase all or
  part of the business, an outside
  investor or private equity fund
  seems the more likely acquirer.