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Written by Peter A. Robson
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 As of early November, the Canadian dollar had reached a new high of $1.10 against the U.S. dollar. No one can predict what the value of our dollar will be by the time this issue hits the newsstands, so writing about the impacts is a bit of a gamble. One thing is certain, though: Canadians are looking south for bargains. In this month’s Currents, we look at the substantial savings for Canadians buying U.S.-built boats. And while everyone is happy to pay less, there is a bigger picture to consider—the negative impact on the Canadian economy and specifically our marine industry.
On the up side, Canadian buyers can save big time on new U.S.-built yachts. But brokers who are selling new boats that were purchased and paid for six months ago or longer, aren’t so lucky. They may be carrying boats that cost them more than they can currently be sold for.
The strong dollar also affects the used boat market, as Canadians are now more likely to buy in the U.S., where prices haven’t changed but the selection is larger and our dollar has a lot more buying power. (Look for a feature article on buying in the U.S. in our January issue.) If you must head south, why not go through a Canadian broker? It doesn’t cost any more to do so (the commission is split), and you’re pretty well guaranteed to gain from an experienced Canadian broker who is networked with U.S. brokers—and who’ll handle the paperwork. Plus, you’ll be keeping a bit of your money in Canada.
The segment of the marine industry likely to suffer the most is Canadian boatbuilders. The U.S. market is their main customer, and they’ve always had to fight for market share against industry “giants” like Brunswick and Genmar, who have massive manufacturing capabilities and volume-based savings on construction materials. For smaller companies, a $1.10 exchange rate means they have to cut costs to survive in a market where margins are tight and economies of scale are already working against them. And the problem will spiral if Canadian dealers of Canadian boats can’t sell their products because customers are heading south.
Similarly, retailers are also taking a hit. Visit any marine store, and chances are, you’ll see prices change almost daily. Owners of those stores with inventory purchased some time ago are either reducing prices and taking the loss, or waiting until new stock arrives and then passing those savings on to the customer. Not surprisingly, many consumers expect those savings to be reflected immediately. But it’s important to understand that Canadian prices will reach parity or better with products made in the U.S.A., once the goods already in inventory are sold and new stock is purchased.
To be fair, there will probably always be slight savings by shopping for marine supplies in the U.S. due to the extra costs for shipping, customs, tax and other factors that disadvantage Canadian businesses. But before we think about heading south, we should consider the cost of transportation, the value of our time, border waits and potential duties.
And this doesn’t address the long-term costs to the Canadian market, which could see large-scale closures of all sorts of marine business. Any potential savings from shopping in the U.S. should be weighed against the value of supporting local businesses and the Canadian economy. By keeping our dollars in Canada, we’re helping keep those businesses alive—especially important when we need repairs and service. If small (and large) Canadian companies lose enough business, we may find ourselves having to do all of our shopping in the U.S. Besides, the tax revenue from buying locally also supports the infrastructure we enjoy (but love to complain about), such as education, health services, Coast Guard and so on.
Best wishes from all the staff at Pacific Yachting for a warm and happy holiday.
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