Boating Industry

February 2016

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February 2016 | Boating Industry | 25 [ Big money ] contributed to a wider, global economic uplift. The recovery of the U.S. economy over the past two years has gone hand-in-hand with a recovering U.S. dollar. The value of the U.S. dollar is measured by the U.S. Dollar Index (or DXY), which is an index of the value of the greenback relative to the currencies of our major trading partners, in- cluding the Euro, the Japanese Yen, the British Pound Sterling, the Canadian Dollar, the Swedish Krona and the Swiss Franc. The DXY goes up when the U.S. dollar gains value compared to these other currencies. The buck hit rock bottom in April of 2008, when one U.S. dollar was worth just 71.32 cents in international trading – an all-time record low. By January 1, 2016, it had climbed back to 98.35 cents – roughly the same level where it sat prior to the downturn. The consensus among the banks is that the dollar will remain somewhere around par at least through 2017. So looking forward, what does it all mean for the recreational boating industry? Greater purchasing power for importers As the largest boat and boating equipment market in the world and the world's strongest economy, the United States is the engine of growth that drives global markets. The U.S. market is so large, so strong, so driven by consumption, and so partial to product that is different, that it has the capac- ity to directly impact production in European and Asian nations. When the U.S. boating market does well, it isn't just domestic suppliers who benefit. A stronger U.S. dollar brings benefits to dealers, distributors and manu- facturers alike. A strong dollar gives dealers increased purchasing power, and it allows distributors to obtain better deals on aftermarket goods from all over the world – everything from electronics to rain suits – which translates into better margins in the chandlery. A stronger dollar can also help U.S. boat manufacturers when they need to source raw materials and finished components. That's especially true in the case of product that is imported into the United States. A higher cost of goods for exporters A strong U.S. dollar is a bit of a double-edged sword. While it affords U.S. buyers with greater purchasing power, it also makes American goods more expensive to buy in a global market. "It is true that the growing strength of the dollar is making things a bit tougher right now for U.S. exporters," said National Marine Manufacturers Association President Thom Dammrich. Pushback against price increases is normal, he says – in this case, the price increase resulting from U.S. dollar exchange rates returning to a point near their long-term average, following a few years of lower values in the wake of the 2008 downturn. "Before the downturn, when rates were similar to where they are today, This year's METS featured a record number of U.S. companies exhibiting. PHOTOS ON THIS PAGE: BAS TIAANAALBERSBERG "We are hearing feedback from some of our overseas distributors, who are feeling a bit of margin compression from the currency exchange rate." — Bennett Marine CEO Charles Sweet

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