U.S. boat builders, start your engines.
After hitting a 16-year high in March 2002, the value of the U.S. dollar against the Euro has fallen about 30 percent, returning to early 1997 levels. For those who export or are considering exporting, this means an improved ability to compete in foreign markets.
Boat builders that don’t export may not care. But they should, according to the National Marine Manufacturers Association. A weaker U.S. dollar also means less competition from abroad for U.S. boat builders.
“We benefit greatly from a sound dollar,” says Monita Fontaine, vice president of government affairs for the NMMA. “By this, I mean a dollar that is allowed to fluctuate with market forces rather than being artificially backed up.”
In the sailboat market, for example, imports typically make up about 20 to 25 percent of sales of boats over 30 feet in length, according to Sally Helme, publisher of The Sailing Company, which publishes Cruising World and Sailing World magazines.
With the decline in the dollar’s value relative to other currencies, not only should domestic builders be able to capture a higher percentage of U.S. sailboat sales, they also should see growth in demand for their
products overseas, Helme says.
Those U.S. boat builders that have invested in marketing their brands overseas, such as Hunter and Cat-alina, are particularly well positioned to benefit from this,
Another reason why exporting may be an effective strategy for U.S. builders right now is that the economies of some of the European countries may be faring better than the U.S. economy.
The only downside is that boat builders that import materials from overseas, such as steel, may see prices rise, according to Fontaine.
Trade deficit to shrink?
In 2003, U.S. boating industry exports increased 17 percent over the prior year to $1,087,900,000, while imports increased only 12 percent to $2,222,000,000.
The bad news is that this means the boating industry’s trade deficit continues to grow. The good news is that that growth continues to slow. It grew by only 8.7 percent in 2003, compared to 20.5 percent in 2002, 29.3 percent in 2001 and 36.5 percent in 2000.
In fact, if the dollar remains competitive against other currencies in 2004, the deficit may shrink this year for the first time in six years, according to Fontaine.
In fact, she says NMMA has started seeing an increase in unit sales in Europe of about 5 percent this year and an increase in dollar sales of about 25 percent.
Fontaine believes the administration will continue to allow the dollar to adjust to market forces, resulting in a sound dollar throughout 2004.
“We [the United States] have a huge budget deficit,” she explains. “We need to encourage a trend of strengthening our export products. Whoever wins in November, there will be the same trend
of allowing the dollar to float based on market forces.”
Sailboat importers seem to believe this will be the case as well, according to Helme. They were surprisingly cautious about 2004, forecasting an increase in imports of only 11 units to 398 boats.
— Liz Walz
Sailboat imports have been particularly hard hit by the weakened dollar, according to the 2003 North American Sailing Study, conducted on behalf of The Sailing Company. The number of sailboat imports declined 103 units last
year to 387 – the lowest number of imports
Mid-size cruisers (36 to 45 feet in length) took the brunt of the hit, with a decrease of 122 units, while imports of sailboats 46 feet and above were up 17 units to 95 boats, and sailboats 20 to 29 feet in length were up 2 units to 9 boats.