Recreational watercraft are subject to the swings of the economy – both here and in the United States
When Princecraft Boats Inc. used to send reps to Alberta boat shows, people would roll up with a truck and fifth-wheel trailer just to measure their wares.
"Price was not an issue," says Jean-Philippe Martin-Dubois, director of marketing, research and development at the Princeville, Que.-based company, which builds aluminum fishing and pontoon boats. "They were just measuring to make sure the length of the truck, the trailer and the boat was OK with the law."
Alberta used to be one of Princecraft's biggest markets. Then the oil downturn happened; as thousands of jobs disappeared, watercraft became a frill. So the brand turned to another market that had once let it down: the United States.
A recreational boat is no cheap toy, and their manufacturers – at least those who survived the recession less than a decade ago – are all too familiar with steering through the rough waters of a bad economy. Canadian boat makers are now using the low local dollar to entice consumers on both sides of the border to buy their wares at massive discounts compared to American competitors.
Before the recession, "the U.S. market was a good market for us," Mr. Martin-Dubois says. Princecraft's annual sales to America plummeted to one-twentieth their pre-recession number.
Now, Mr. Martin-Dubois says, it's looking good again. "We're getting requests from different dealers in the U.S. that are looking to have a boat made out of aluminum. They look at Canada and say 'Hey, we're gonna save money by selling those products.'" (While Princecraft was bought by recreation-focused U.S. manufacturer Brunswick Corp. in 2001, the brand is still made in Quebec.)
The majority of boats sold in Canada are U.S.-made, says Sara Anghel, executive director of the National Marine Manufacturers Association (NMMA) Canada. During the slow climb out of the recession, from 2009 to 2015, total personal watercraft sales (such as jet skis and Sea-Doos) at Canadian dealerships rose 29 per cent, according to NMMA figures. Pontoon boat sales rose 51 per cent in the same period.
There are about 376 boat manufacturers in Canada, and 110 accessory manufacturers, according to NMMA. Total sales are down the last two years, but the total value of the sales is up because the exchange rate has been pushing up prices, Ms. Anghel says.
While Canadian boat dealers have been negatively affected, Canadian manufacturers gained an advantage with the dollar: "They have an edge competing against U.S. product," she says.
Campion Marine Inc., an independent Canadian fibreglass power-boat builder, also survived the recession. Campion's output has doubled since the downturn, but hasn't made up for the 80-per-cent drop it first brought.
"I used to have 185 employees," says its president, Brock Elliott, by phone from his Kelowna, B.C. headquarters. "We went down to 42; today we are 65. You can see we have a long ways to go."
For the last two years, at least, Campion has seen double-digit sales growth – thanks in no small part to the U.S. exchange rate. (As of publication, the Canadian dollar was worth 77 cents U.S., after 13-year lows earlier this year.)
"Canadians are no longer running across the border to buy American boats," Mr. Elliott says, and it brings his company a significant advantage: "We are building a high-quality product that can compete with any of the American products, but we're offering it at a better deal by selling it in Canadian dollars."
Connor Industries, which manufactures aluminum Stanley Boats in Parry Sound, Ont., has seen similar benefits. Owner Bill Connor says that at the Toronto International Boat Show earlier this year – an annual bellwether for the industry's sales – his colleagues were concerned about currency issues.
But, he says, his company has had a great year. "We can still play within our Canadian dollar without being hit with a huge increase," Mr. Connor says.
On the export side, things are a little slower. After three consecutive years of growth, Canada exported $353-million in recreational boats in 2014, the last full year of available measurements. That is down 15 per cent from 2013, according to figures collected by the federal government and provided to The Globe and Mail by NMMA.
Mr. Elliott says his company is looking to enter many new U.S. markets, since his products are already available widely in Canada. He is seeing positive indicators of growth, but it is "spotty": The Puget Sound, Wash., dealership he works with sold out of products earlier than expected this season, but California remains "very disappointing."
Campion, however, has acquired numerous other manufacturers, including U.S. ones – some of which were on the verge of bankruptcy after the recession – and now has more than 50 models to offer to dealers. This, he hopes, will bolster his American expansion. "We're diversified, so when somebody is shopping for a boat, there's a good chance that Campion will offer it," Mr. Elliott says.
The currency difference goes two ways: Many parts and raw materials, such as aluminum, vinyl and glass, are imported to Canada from the United States, or are sold in U.S. dollars. Even if boat-builders buy windshields from a Canadian manufacturer, for example, the U.S. material cost can raise the price.
"The trick is to get your U.S. sales to offset your U.S. payables," Mr. Elliott says, "and then you've got a natural hedge."
This has encouraged companies such as Princecraft to expand their U.S. sales force, in order to offset those costs, too. "I expect that for the next three, four, five years, we should grow," Mr. Martin-Dubois says. He expects American sales to double for the next couple of years, or longer. "Even if the market is shrinking here, the market in the U.S. is still growing; we'll become a bigger company."