Appreciation of the Canadian dollar has increased the price of imports, limiting growth
New York, NY (PRWEB) April 25, 2014
The Boat Building industry has exhibited a high level of volatility over the five years to 2014. Plagued by the economic recession, consumers opted to postpone new boat purchases and revenue dropped a considerable 24.9% in 2009, forcing several operators to sell inventory at steep discounts and operate at a loss or exit the industry. Furthermore, rising steel costs cut into industry margins since the majority of operators were unable to pass on price increases to consumers. While the economy has recovered somewhat in recent years, appreciation of the Canadian dollar relative to the US dollar has increased the price of imports over the period, limiting growth. In the five years to 2014, revenue is consequently expected to fall at an annualized rate of 1.6%, totaling $594.7 million.
Poor demand challenged industry profitability during the period. The majority of boat builders operate only one facility and, according to Industry Canada, 48.0% are nonemployers. As a result, the majority of companies were unable to further reduce their operating costs, resulting in an overall loss of 3.5% in 2009. According to IBISWorld Industry Analyst Britanny Carter, “Larger operators cut costs by reducing their workforce and closing facilities, reducing the number of establishments at an annualized rate of 6.6% over the five years to 2014.” While few companies have returned to prerecession levels, IBISWorld expects rising consumer confidence will boost industry revenue a modest 0.4% in 2014.
Boat builders have increasingly invested in eco-friendly technology to increase their competitiveness within the industry. In 2012, Campion Marine Inc. launched the first 180 horsepower electric outboard engine, appealing to consumers looking to reduce their carbon footprint and fuel costs. The company also now manufactures all its boats with Envirez resin to reduce carbon emissions. “Rising fuel prices and economic instability have also shifted consumer preferences toward smaller boats that offer higher fuel efficiency at a low price,” says Carter.
Moving forward, the tides are uncertain for the Canadian Boat Building industry. Relative to ten years prior, the industry has contracted by more than half its prior size. Growing consumer confidence and depreciation of the Canadian dollar relative to the US dollar, however, are expected to increase revenue over the five years to 2019. Industry consolidation is expected to continue as operators look to increase their market share and improve profit.
For more information, visit IBISWorld’s Boat Building in Canada industry report page.
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IBISWorld industry Report Key Topics
The Boat Building in Canada industry is composed of establishments that build boats, which are defined as water-craft not built in shipyards and typically intended for personal use. This does not include establishments engaged in ship building (IBISWorld report 33661aCA).
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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