NAFTA Negotiations: A Potential Challenge for Marine Manufactures?
Fact, 95% of boats sold in the U.S. are made in the U.S. and recreational boating is seeing some of its strongest growth in nearly a decade, and it is expected to continue through 2018. However, there is a potential danger lurking ahead, as the North American Free Trade Agreement (NAFTA) negotiations continue and a push is on to get things wrapped up soon.
Today, North American manufacturers and workers participate in the most vibrant commercial market in the world, thanks in large part to NAFTA. For more than 20 years, NAFTA has provided the United States, Canada and Mexico with a level of mutual market access that has produced significant economic gains for manufacturers, manufacturing workers, their families and communities. Even for our family here at DockMaster.
A Competitive Supply Chain
As indicated by Investopia, many economists and other observers have credited NAFTA with helping U.S. manufacturing industries, especially the U.S. auto industry, become more globally competitive through the development of supply chains. This holds true for boat manufactures as well.
Within NAFTA, boat manufactures are part of the equation and it is estimated that some 14 million US jobs rely on trade with Canada and Mexico combined. Whether it’s boat hulls, engines, canopies, sails, kitchen equipment, fishing accessories, flags, life jackets, clothing, and on and on…….the domino effect and impact of marine related manufacturing is simply massive. An economic analysis for the Business Roundtable prepared by Trade Partnerships Worldwide found that the termination of NAFTA would result in the loss of nearly 1.8 million U.S. jobs in their first year. The analysis showed that it would reduce U.S. exports to Canada and Mexico and make American companies less competitive in the global market due to higher tariffs.
North & South of the Border
Trade Only Today reported for U.S. boat and equipment manufacturers with operations in Mexico, the negotiations are proving to be a nail-biter. Matt Peat of Transhield, an Elkhart, Indiana manufacturer of custom covers for the boating and other industries, said that 15 percent of its products are made in the U.S., and the remainder in Mexico. “We have a local unemployment rate of 1.8 percent,” he said. “There are just not enough people in our area to do the manufacturing we need. That shortage of labor is now epidemic. It’d be a tailspin for us if NAFTA falls apart.”
Total manufactured recreational boats being exported from the United States to Canada is the highest share of boat exports from the U.S. with a total of 37% total export market value. That is a huge number and depending on how NAFTA negotiations settle, there could be a significant impact to the point where the cost of a boat in Canada from US manufactures could collapse the market to the point where it simply didn’t make financial sense to import a boat to the Canadian market.
Buckle up, the coming weeks and months of NAFTA negotiations are going to be very interesting and are certain to have an impact on the North American marine manufacturing market. From boats, to sails, to parts and marine software, the potential impact could be wide spread.