Yamaha’s response to dumping ruling

WASHINGTON – Differing points of view prevailed Monday in the wake of Friday’s preliminary determination issued by the U.S. Department of Commerce, that found “Japanese producers/exporters have sold outboard engines in the U.S. market at less than fair value, with a margin of 22.52 percent.”

Phil Dyskow, president of Yamaha Marine Group, reaffirmed his company’s position that the DOC had not compared Japanese and American sales in a valid manner, and that, in any case, the ruling was only the first step in a continuing process.

“A bond has to be posted,” Dyskow said in a telephone interview this morning. “This is not a price increase. This is not a duty. It is none of those things. I think there’s a lot of spin being put out there. We don’t plan to increase our price on outboard motors to our customers and we don’t expect to pay duties.”

No duty for the time being

Dyskow said the Commerce Department does not have the authority to impose duties, but that the responsibility falls instead to the U.S. International Trade Commission. Before a final determination is made, the Japanese engine manufacturers will have to post a bond – which could be returned if the Japanese companies are ultimately vindicated.

In the meantime, Dyskow said his company would work to sway the DOC from its preliminary findings.

In a press release Monday, Yamaha outlined several objections to those findings.

– 1. “The Department of Commerce compared sales to OEM boat builders in the United States with sales to retail distributors in Japan. There is a difference between retail and OEM relationships. This difference results in substantially higher prices in Japan that are not taken into account in the Department of Commerce calculation.

– 2. “The Department of Commerce did not take into account all sales expenses in Japan. This raises the prices at which motors are calculated as sold in Japan, resulting in a misleading impression of dumping margins.

– 3. “The Department of Commerce incorrectly included sales of four-stroke powerheads to Brunswick in the same category as sales of outboard motors. Even though they only accounted for ten percent of Yamaha’s sales in the U.S., the powerhead sales to Brunswick accounted for over 50 percent of the dumping margin.”

– 4. “Preliminary analysis indicates that margins on sales by Yamaha to dealers and boat builders in the United States were under 15 percent while margins on the sales of OEM powerheads to Mercury were more than 100 percent. Thus, Mercury, not Yamaha, was the principal beneficiary of the alleged dumping.”

Dyskow also said Yamaha is already moving to reduce the margins on its outboards, having lowered its prices in Japan and increasing prices in the U.S. of approximately 3 to 4 percent on outboards beginning this model year.

Dyskow said he believed Mercury may have initiated its investigation as a way to disrupt its competition, and offered what may be a forecast of things to come.

“Clearly they would like to disrupt their foreign competitors, they would like to drive up the price of 4-stroke engines,” Dyskow said. “As one of those competitors it’s my job to see that they don’t.

“It’s probably time for our relationship with Mercury to come to an end.”

Mercury pleased by ruling

Mercury Marine, which prompted the government’s investigation in January when it alleged foreign engine builders were “dumping” product (selling abroad below cost in order to get rid of inventory or gain advantages on foreign competitors) into the U.S. market – was happy with the ruling.

“We are pleased the Commerce Department’s investigation has confirmed Mercury’s contention that Japanese outboard engine makers have been violating U.S. anti-dumping laws by engaging in unfair pricing practices during the past several years,” said Patrick C. Mackey, president of Mercury Marine in a statement. “We believe these actions have significantly harmed the domestic outboard engine industry.

“Even though engines Mercury imports from Japan will be subject to the duty, we believed it was our responsibility – to our shareholders, our employees and the U.S. marine engine industry – to follow this course. Our hope is that these findings will ensure that everyone competes on an equal footing in the marketplace going forward. As other industries have seen, by deliberately undercutting pricing to create an artificial advantage in the marketplace, these Japanese companies did not follow U.S. law.”

Bombardier weighs in

For its part, BRP US Inc. said it also welcomed the ruling.

“[The] announcement confirms that Yamaha has competed unfairly by selling outboard engines in the United States below what they sell in Japan,” said Roch Lambert, executive vice president. “The corrective action that will result from this ruling, which affects all Japanese manufacturers, should contribute towards returning the American market to a level playing field.”

In a phone interview today, Lambert expanded on that statement saying the ruling may “throw a wrench” into the business BRP does with Suzuki. Lambert – who said he was “fairly surprised” by the size of the margin that was found – said BRP had played only a minimal role in the DOC investigation.

“We’ve been monitoring the situation as much as we could, the only role we’ve had up until now is to provide the DOC with the information it requested,” Lambert said. “We have a plan we’ve been preparing, but that’s the limit of our role.”

Suzuki awaits the DOC document

Larry Vandiver, director of communications for Suzuki, said his company has not yet prepared its course of action, since Suzuki has not received a copy of the DOC ruling. But he said the company would study the document closely when it arrives, then contact its dealers.

“We’ll map out a course and a plan and give our dealers a written communication as to where we’re going to go, we don’t just shoot from the hip,” Vandiver said in a phone interview this morning. “The American market is extremely important to Suzuki and it will continue to be. We will do what it takes to be competitive. This isn’t going to run us off.”

Vandiver said his company was also “a little shocked” by the size of the 22.5-percent margin that was found by the DOC. He said Yamaha was the only Japanese manufacturer investigated by the Commerce Department.

“The Department of Commerce chose not to investigate any of the rest of the Japanese manufacturers, so we’re kind of in the same bucket,” Vandiver said.

He believes the American marketplace has been competitive in recent years and that the competition had made for a better boating experience and resulted in better products for American consumers.

The Commerce Department will announce its final decision on the matter on or about Dec. 24, according to the statement on its Web site.

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