A View from Here

Bill's Sisson's weekly Trade Only blog

Doing business in Europe

Nordic Tugs has received an award from the U.S. Department of Commerce in recognition of the company’s successful move into foreign markets.

The company, which signed its first international dealer in June 2007 in the United Kingdom, says the European market now makes up 10 percent of its annual sales. Last week, it reached an agreement to sign its first Russian dealer.

The Burlington, Wash.-based company isn’t the only boat maker to experience growth in the European market, and elsewhere internationally. As the U.S. economy continues its slump, manufacturers are looking elsewhere to make up for the sales that are being lost domestically.

With exchange rates where they are, “American-made products are on sale everywhere in the world,” Thom Dammrich, president of the NMMA, recently told Soundings Trade Only. “You’ve got some builders whose domestic sales may be down, but in many cases its offset in part or in whole by their export business.”

Soundings Trade Only will examine this trend in the June issue.

Is the international market the answer to all manufacturers’ prayers in these economic times? Are smaller boat builders, who may not currently sell overseas, able to keep up and get their product out there for the world to see?

What do you think of this trend?

– Beth Rosenberg
Staff writer

Comments

5 comments on “Doing business in Europe

  1. Ted Fagerburg

    There is no question that the weak US dollar breeds exports of US boats. I’ve seen it happen every time the dollar swings to the weak side. But when the dollar strengthens (and up to now, exchange rates seem to be as cyclic as the boating industry), export sales can drop like a rock.

    Except – and this is the point – for the few companies which have the foresight to consolidate their position and stick it out when the exchange rate is not at favorable. These companies build strong dealer networks during the good times, invest in the market, and go to the key boatshows in person. They also make modifications to the product to make it more acceptable to the European market. Then when the opportunity arises again, they are the best positioned to benefit from it.

    Companies such as Regal, Bayliner, Sea Ray, MasterCraft and Four Winns come to mind as past masters of investing for the long term, no matter what the currency does, then profiting handsomely when it goes “the right” way.

    It’s easy to make a quick buck now (although not as easy as it was before the RCD and CE marking came into effect), but the smart players will take some of those profits and invest them in consolidating their position for the future.

    There are resources available to help companies do this, including several reputable international manufacturers’ reps who have been in the business for many years. If you want to win in the long run and aren’t a Genmar or a Brunswick, I’d suggest investigating these outside resources who’s business it is to build sales – and profits – no matter how the dollar swings.

    Ted Fagerburg
    Recreational Marine Consultant
    http://www.fagerburg.com

  2. CarlM

    Years ago I was amazed at how Magnum Marine had made a quantum change in how they went to market. They basicly turn away from the US domestic market. In 1999 we looked at being more niche market focused and made the commitment to broaden our horizon.
    We are a small manufacture & Today we shipped the second container of boats to Euorope this month (yes in the last 7 days) and it was our 12th to Europe this year. We are forcasting exporting over 25% of our production this year. If you haven’t got a foot hold (a partner you trust & enjoy working with) you may be to late. Like getting in on the housing run up in the last few years or the tech bubble of the 90’s- some one will be holding the bag. See the real problem exporting today is there are limited spots on the container ships & certian sized contaianers are hard to get. PS. If your new to exporting know this: letters of credit are not worth the paper they are written on & the banks will bleed both sides of the agreement with fee’s.

  3. Mick

    As in the past, US manufacuturers (marine and others) are curently goo-goo about the potential of the international markets as the dollar has weakened and the US market softens. And, then suddenly, when things turn, they forget about their international dealers and distributors. When wiil we realize, more than ever we are in a global market place and plan accordingly.

  4. David Pilvelait

    I think what you’re seeing here is that with the dollar at record lows against the Euro, smaller boat builders, with traditionally lower volumes and theoretically, higher costs, now have a window of opportunity to establish a presence in Europe. I say “establish a presence” because I think there’s a good chance the dollar will recover somewhat before too long, which would eat away at any price advantage our builders have at the moment. But in the long run, to survive (and perhaps grow), all our boat builders must think globally. Many US boating equipment and accessories manufacturers – small and large – have understood this for some time. Year after year at METS, you see a lot of the same US faces in the NMMA pavilion and elsewhere throughout the exhibit halls. Business for our (Home Port’s) US clients doing business in Europe has grown exponentially over the past few years and most are well enough established there now to be able to ride out the ups-and-downs of currency rates.

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