Industry takes wait-and-see approach to Brexit

The marine industry and manufacturing analysts weighed in on the United Kingdom’s decision last week to exit the European Union, which shocked many experts.
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The British pound hit a 30-year low against the U.S. dollar in the days after the U.K.’s decision to withdraw from the European Union.

The British pound hit a 30-year low against the U.S. dollar in the days after the U.K.’s decision to withdraw from the European Union.

The marine industry and manufacturing analysts weighed in on the United Kingdom’s decision last week to exit the European Union, which shocked many experts.

“It is too early to fully understand the eventual impact and implications of the approval of Britain’s advisory referendum to secede from the European Union,” Brunswick Corp. spokesman Dan Kubera told Trade Only Today.

“The immediate effect of the Brexit vote has been to increase volatility and inject uncertainty into global markets, as we all try to assess when and how this exit process will unfold. Brunswick will continue to monitor developments in relation to Brexit and are confident that we are positioned to navigate the consequences of the vote.”

“Those that import from the U.K. will see their dollar go further in buying U.K. goods, whether they are parts and accessories or consumers buying boats,” said Eric Braitmayer, CEO of Imtra, the Massachusetts-based consumer marine product manufacturer and importer. “We expect much of this is based on the surprise decision, so the impact may not be lasting. We have seen the euro drop a bit against the U.S. dollar, but less so than we might have expected for such a shake-up.

“Our biggest concern from the Brexit is the impact on the psychology of buyers in the marine market. The stock market has been hit hard, and that makes the people we depend on to drive the industry think harder before they make significant purchases on luxury goods.”

MarineMax CFO Mike McLamb said that if last weekend was any indication, American consumers are undeterred by Brexit.

“We had a nice weekend of selling boats,” McLamb told Trade Only. “Certainly there will be a period of uncertainty and choppiness in the near future in global markets, but I don’t think it’s going to have much impact on U.S. business.”

British yacht builder Sunseeker declined to comment on the move, saying it was not going to issue a formal statement.

Other sectors continued to react less favorably to the U.K.’s decision to leave the EU.

Ford said it will weigh employment at its U.K. plants to determine whether layoffs will be needed.

The British pound hit a 31-year low on Monday against the U.S. dollar, and Britain saw its credit downgraded. Banking shares suffered the most, amid fears of a U.K. recession, with the Royal Bank of Scotland plunging by 25 percent at one point, according to The Guardian.

The currency edged up today from its lows, but few predicted a recovery, according to the Wall Street Journal.

With Britain’s political situation in flux and its exit negotiations with the EU likely to drag on for years, analysts expect further declines for the pound, the newspaper reported. The U.K. currency is also vulnerable because of the country’s large current-account deficit and an expectation that foreign investment will fall.

“I wouldn’t put too much weight on this move — we’re in uncharted territory now,” ING Bank chief international economist Rob Carnell told the WSJ.

On Thursday, coincidentally the day of the Brexit vote, Markit reported that Eurozone manufacturing activity rose to its highest level so far this year, according to a report by National Association of Manufacturers analyst Chad Moutray. Much of the improvement came from stronger demand and production in Germany, which expanded at its fastest rate since February of 2014.

Yet Moutray said there also were signs that Brexit uncertainties and global headwinds had weighed on sentiment. Along those lines, the Markit Flash Eurozone Composite PMI, which includes services, declined to its lowest point since January 2015. In addition, growth in Europe has not been uniform, with France contracting for the fourth straight month.

Central Florida has a large number of British tourists, but for Joe Lewis at the Mount Dora Boating Center, the impact should be minimal.

“It’s not a big percentage of our business, so I’m not overly concerned,” Lewis told Trade Only. “But I can see how it’s an issue, especially if the pound is worth a third less.”

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