Boat manufacturer tries to ride out choppy economy created by tariffs

Global Business

In just under a year, U.S. voters will head to the polls for the 2020 Presidential elections.

Just who President Donald Trump will face in that election has yet to be decided, with a large field of Democratic candidates vying for the nomination.

But what about the issues? CGTN’s Dan Williams has more.

The economy is likely to be a key issue for voters, not least those that work in manufacturing, an industry that is showing signs of a slowdown. One sector that is under pressure is boat building. The Marquis Yacht plant in Pulaski, Wisconsin employs some 350 people.

Rob Parmentier is the President and CEO of the company. He said they have been hammered by rising tariffs following the various trade disputes that were first implemented by the Trump administration.

“We pride ourselves on being an American company. We really are almost 100% American component bought,” he said. “But those components are all made of raw materials. A lot of those raw materials come from China , Europe and Mexico. Henceforth, the tariffs. It has had a huge effect.”

Parmentier said the company has had to increase their prices three times in the last eighteen months because of tariffs. But the tariffs are not just impacting input costs. Once completed, the yachts are then subject to further tariffs on exports. Parmentier said exports make up 30% of total sales for the company.

“No customer wants to be the last customer to pay a tariff so what happens is they don’t buy American boats. It’s killed our international business.”

Although U.S. unemployment is at record lows, the latest data suggest manufacturing output is already in a recession. Federal Reserve figures show manufacturing output shrank over two straight quarters this year, which Chad Hart, an economist at Iowa State University, said does not bode well for future growth.

“I think when you look, the economy is growing but there are also growing concerns that a recession is fairly close by. The economy is not firing on all cylinders and when you look at where our growth is right now, the U.S. economy is highly reliant on U.S. consumers. And so that is a concern that if consumers start to pull back, we will see a downturn in our future,” said Hart.

Back in Pulaski, Parmentier said signs of a recession are clear to see.

“My business is really a telltale sign of a recession as it is the first thing people stop. I am right on that line that if something does not get done pretty soon, there is a very good chance we will have to lay some people off,” he said, noting, “You can’t keep going and miss 30% of your business.”

For now, workers in Pulaski are busily preparing a new batch of custom ordered yachts. But here, and across many areas of U.S. manufacturing, uncertainty remains.

Sourabh Gupta on a key US campaign issue: manufacturing

CGTN’S Rachelle Akuffo spoke with Sourabh Gupta, senior Asia-Pacific international relations pollicy specialist, Institute for China-American Studies, about the role the shrinking manufacturing sector will have in the U.S. presidential election.