Latest / The CURRENT / The Current News: Bankruptcies, Tariffs, Parts Delays and more! 8-28-26

Transcript

The Current News: Bankruptcies, Tariffs, Parts Delays and more! 8-28-26 · The CURRENT

• 0:03
  If you work on the water, sell to it, service it, or just can't stay away from it, you're in the right place. This is the Current, the business and news podcast for the marine industry, with weekly news overviews every Friday and engaging interviews as they happen. I'm your host, John Logan. Welcome aboard. Welcome to the current. It's Friday, August 28th, and I'm John Logan and this is the current news.
• 0:26
  This is the first one, so just give me 90 seconds to tell you what this is and then we'll get to work. The Current is a weekly news show about the marine industry made for the people who actually keep it running. Tech shop owners, boat surveyors, fleet operators, investors, business owners, the person behind the parts counter. Every Friday, one feed. We're trying to just keep everything all in one spot. Every week we're going to be doing the news like today.
• 0:50
  Other times, as we get conversational opportunities, we're going to be having interview conversations between myself and other business leaders in the marine industry.
• 0:59
  I'm the president of Marine Diagnostic Tools. We sell diagnostic equipment to independent techs and shops. MDT sponsors the show so you'll hear a plug from them later on. I'm telling you up front so it won't be a surprise. And so, you know, kind of what I'm doing here.
• 1:14
  As for why I'm here at all, I came into the marine industry kind of with this vision to replicate what diesel laptops has done for the trucking industry.
• 1:24
  Diesel laptops was owned by Tyler Robertson. Now it's owned by Snap On. And what they did is they kind of took the fragmented ecosystem of diesel repair and really created one independent platform.
• 1:36
  That way, diesel repair shops could operate fully independently of OEMs. They could really make more money and do more efficient work, especially with the labor shortage and everything going on, really marine is having a very similar issue. So I'm excited to try and build that in the marine space. So how the news episodes work is I'll just kind of go through. Hey, what's going on this week? Trying to keep it short and sweet and really just summarize the news that you need to know as a marine industry business.
• 2:07
  So without further ado, two builders went under this month.
• 2:11
  Tariff deadline is coming up in about nine days. There are 55 idle container ships sitting around the entire planet. So let's get into it.
• 2:21
  Caddy Crogan and the American Tugs filed for Chapter 7 liquidation in July, which took down both Caddy Krogan Yachts and American Tugs, which Caddy Grogan acquired in 2023. So it's not chapter 11, which is like bankruptcy restructuring is chapter seven. So there's no attempt to restructure or trade through it. Court filings show more than one and a half million dollars owed to the Taiwanese yard building the halls goes back to October of last year. Plus, over 300,000 3, $327,000 is owed in back taxes to Washington State, stretching back to November 2024.
• 2:57
  Kim Cavin's reporting for the Sounding Straight. Only collected buyer counts, and it's pretty bad. One man had paid roughly 40% on an American tug for 35 and found out mid flight home from Europe that they went under.
• 3:12
  Can't really get that money back. Another couple expects to lose their 20% deposit on a Krogan 480 AE that they've wanted for 17 years. It was like their dream boat. They put the money down on it and now they went under and they're, they're kind of screwed.
• 3:25
  Tucker west, the president and CEO of the company, replied to interview requests by text saying, I'm not allowed to speak at this time.
• 3:31
  I can tell you not to believe everything you want to hear or read. Which, you know, typical CEO response.
• 3:38
  But with that company going under, if you are an independent shop or even a dealer, if you could find out local boat owners who own one of those two brands of boats, it might be a good time now to reach out to them and reassure them, like, hey, you can get maintenance and service through us. You can't get warranty because the company is gone, but you can. We can still service your engines. We can still patch fiberglass. We can still do all those things. So that might be a good marketing opportunity for your business.
• 4:01
  Our second story of the day, West Marine has now emerged from chapter 11. So the company announced on the 24th that it completed its restructuring with a statement about, you know, strengthened financial foundation, exciting new chapter, you know, all the normal hype stuff.
• 4:18
  However, when a couple publications reached out to different vendors of West Marine, like David Calton of American Blue Claw, found out that they were owed $2012,000 and he says he received 6.6%. So 800 bucks, you risk a lot going into retail and kind of this, this guy kind of got the butt end of that. Our next story, Canada's counter tariffs take effect on September 8th. This is kind of one with a deadline on it. So the government of Canada published its counterterroriff list this week. Rates run between 15 and 50% across $27.6 billion of American goods effective September 8, finished recreational boats are not on the list, which NMMA rightly calls Good news.
• 5:01
  The US origin boat trailers take 25% under the new tariffs. 25% tariff.
• 5:08
  Non portable stoves and ranges built for boats take 25% tariff right all the way down to the burners and the door assemblies all take 25%.
• 5:17
  Certain iron and steel articles used to build and repair engines and engine parts for commercial fishing vessels take a full 50% tariff. NMMA's Clay Crabtree and Patrick Periera flagged a wider group exposed because the tariff codes are written pretty broadly. Aluminum and fabricated aluminum, steel and fabricated metal, marine electronics and electrical systems, marine hardware and pumps, seating and furniture, lighting, refrigeration, onboarding, appliances and manufacturing tooling.
• 5:43
  This is most if not all of the boat, basically everything except the hull going to get tariffed. The new US section 338 tariffs catch some Canadian marine goods as well, including floating docks, certain vessels, electronics.
• 5:58
  We'll kind of just have to see how that all shakes out.
• 6:02
  But one thing to take into consideration for your shop is if you do source any parts from Canada, maybe be able to order ahead before those those tariffs come into place. Also, if you're not putting expiration dates on your quotes that you're sending to customers, you might want to consider taking that and doing that for your customers. Because that way if tariffs do hit and you've given them a quote 6 months ago and now you know you're your material costs are twice as expensive, you know, that might be a good way to protect yourself from that. Our next story. A company called Express Fasteners sued in the US Court of International Trade in January, arguing customers have been applying Section 232 steel tariffs to the entire value of an imported fastener rather than just a steel inside it. The machining, the fabrication, the layer, all of it. So basically they've been overcharging on tariffs.
• 6:51
  The complaint says Customs did this through unpublished internal memo from December. Rather than actual proper rulemaking, those tariffs hit 50% in June. There's no ruling yet. We'll see how it kind of all plays out.
• 7:02
  But a practical upshot for you guys, again, kind of when a supplier raises a price mid job, you know, ask whether a tariff whether there's a tariff line item or a general increase, a tariff bump might end up reversing. A general increase usually doesn't come back down, so might be a good thing to communicate with your suppliers about. Next thing. So info link data through May showed that new boat registrations are down with one exception. They reported by trade only that there are registrations for boats 15ft and over running 4.3% below the 12 month rolling average. 213,549 across all segments. Basically what this means is pretty much every watercraft is down in sales except for freshwater fishing boats which is up 1.2%.
• 7:48
  So a lot of these buyers, they've been turning to lower cost options. I mean during COVID the cost of boats and everything else just went sky high.
• 7:57
  A lot of these buyers who maybe they bought a boat during COVID or pre Covid now they want to get into something new. They don't want to buy a brand new boat because they're ridiculously expensive. I mean you could buy a house for what some of these go for.
• 8:09
  So they're turning to the used market which is a great opportunity for independent repair shops, marine mechanics, mobile mechanics.
• 8:17
  This is a great opportunity for you guys to expand your businesses. Our next story, Yamaha has expanded its boat club platform. Yamaha's marine connected boat division brought in Skippery into its lineup. A Yamaha owned boat club platform aimed at helping dealers build recurring revenue instead of relying just on unit sales. By building out boat clubs, this is the same kind of indicator as the registration data clubs, peer to peer rentals, fractional access are really absorbing people who want to be on the water without having to purchase. For a service based business that could be good news because club and rental fleets usually get run pretty hard. They run high hours and need a lot of maintenance. So these boat clubs, especially of Yamaha is expanding them. I assume they have the staff for it. But the trend of boat clubs is continuing to get more popular, not less. So I think a lot of that has to do with boat prices again. So if you're an independent repair shop or if there's a boat club near you that you could partner with if you're, if you're inclined that way, it's a good, good way to get a job or a good way to partner with them and increase your business.
• 9:21
  Senator Tim Kaine and Representative Bobby Scott toured Volvo Penta's North American headquarters in Virginia this month.
• 9:28
  Specifically, look at how the company trains the skilled workforce behind its marine industrial technologies. Next to that NFIB number from a Second ago, the 32% of small business owners couldn't fill positions. 19% named labor quality as their biggest problem. The technician shortage has been the industry's emergency for about a decade. And it's getting worse, not getting better and it's finally getting attention at the federal level. So we'll see kind of whether that turns into funding. Hopefully it doesn't turn into regulation, you know, kind of see how it all plays out.
• 9:58
  Panama is rationing passage and they're also raising their prices. So drought has a canal cutting daily transits and maximum draft. One of the operators paid a record $5.3 million at auction just to jump the queue for a September 1 slot, beating a $4.6 million record set earlier the same month. So ships arrive up to the the canal without reservations and have waited upwards to 11 days.
• 10:26
  Another international story, A bulk carrier went down in the Bay of Bengal. The Panama flagged bulker Ocean winner sank roughly 240 nautical miles off of Paradip, India on August 22nd. 22 of the 24 crew members are still missing. The Indian Coast Guard recovered the emergency beacon and a damaged empty lifeboat. The survivors say the ship took a sudden list on Sunday, Saturday morning and they estimate roughly eight minutes passed before she began going down. She was built in 1998. She had been holding off peradip since August 3 through heavy rain, then loaded 72,200 tons of iron ore.
• 11:05
  Investigators are looking at cargo liquefaction, so the Coast Guard is careful to say no cause has been determined. Eight minutes is not enough time to really diagnose anything, which is why moisture limits and loading condition checks are the only real defense of all them that happen at the dock. Marine Max has agreed to a one and a half billion dollar sale, all cash, with Safe harbor and its parent Blackstone are involved. If you're an independent shop, consolidation at the dealer level changes who your customers buy from and who they call first when something breaks smaller but kind of in the same direction. Some dance Marine in Grand Junction, Colorado changed hand this month and Vision Marine entered a letter of intent for a transaction structured as a reverse takeover and that would take control of the company. The dealer landscape your customers shop in is now kind of getting rearranged. So if they're not buying used or you're dealing with a used dealer, some of that's going to be switching around two days. To put on your calendar, take into consideration the Northwest Marine Trade Association's Marina and boatyard conference runs October 6th through 8th in Lana, Washington. Early pricing ends September 1st, which is Monday. If you're going, you got to book it this weekend. And fall boat show season is coming.
• 12:12
  We got everything's on track. Fort Lauderdale runs in October. We got Ibex in Tampa coming up and then we got the Miami show coming up early next year as well. Marine Diagnostic Tools will be at Ibex and at Miami, not Fort Lauderdale this year. All right, so we just kind of rapid fired a bunch of news updates, but really when you add it up, it kind of comes up to four things. So first, finding work is not going to be your problem over the next two years. The used boat wave is already here and it's only getting taller with the orphan Krogan and American tug owners already out there with no factory behind them. Every used boat that changes hand is going to need a survey. They're going to need to catch a maintenance list, they're probably going to need a repower conversation.
• 12:56
  So a lot of these jobs, they're not going to go near a dealership and they're going to go to independent shops though. So really it comes down to your constraint as a business is going to be throughput. 32% of small business owners nationally cannot fill their positions.
• 13:10
  So the question is not how to land jobs, how to get more business, but how fast the work can get done, how fast you can turn boats, how fast you can get them through the shop and out the door.
• 13:21
  A big piece of that obviously is going to be diagnostic time. Trying to figure out what parts you need, looking at the fault codes, finding what the fixes are.
• 13:29
  It can cost you time at the bay. And so obviously this would be a time to talk about marine diagnostic tools. So marine diagnostic tools, we provide an independent third party diagnostic platform. We have 80 plus brands plus repair and information where we can recall fault codes, clear fault codes, get repair information and really just accelerate the efficiency and efficacy of every technician out there.
• 13:53
  We're not tied to an oem, so we're actually kind of dealing with OEM stuff all the time where they are getting in the way, trying to lock stuff down, fighting against right to repair. In the marine industry, where we are trying to be the embodiment of right to repair. And a big part of what we do is also business development.
• 14:09
  We have a private online community where you can share fixes. You can actually find more repair information and manuals there. You can ask for advice. We have five courses on everything from sales to marketing to operations to people in HR and finance, how to be a more profitable business.
• 14:25
  That's going to be the main constraint of any marine repair company in the United States is going to be how can we be more efficient. And Marine Diagnostic Tools is the company to help you get there.
• 14:36
  All right. Second thing, counterparty risk is the real story of the month. Two builders and A national retailer all ran out of Runway. And every single time, the people upstream and downstream get screwed. Vendors and customers, people who signed contracts and thought they were going to fall through.
• 14:51
  Nobody in this industry really vets who they extend credit to. We kind of look at price and lead time and whether they answer the phone. Nobody actually asks where, whether a company is stable enough and kind of thinks, are they going to survive a bad quarter. So pull your aging report in this week. Anything past 60 days with large account, make the call, follow up, read your own terms, find out whether you have security interests or just kind of an invoice from them. Start taking deposits on special orders. Because if you're fronting $2,000 for a part on someone else's boat, you know, you don't want cash that's sitting out that you're fronting you. You don't want to have that out.
• 15:31
  Thirdly, the money in this industry is moving and it's moving towards you. New boat sales are down across every segment. But those buyers did not leave the water. I mean, most of them, they bought used or they kept what they had. And both of them, both of those roads end up in a, in a repair shop. And then the fourth takeaway, and this one has a deadline of September 8th. Canada's counter tariffs on trailers, marine, electronics, pumps and fabricated metal. So two things I would look at.
• 15:56
  Put a 30 day expiration on every quote that includes parts because without a date on paper, you're going to eat that difference. And call the customers with open estimates now, you know, get them to follow up, see what's going on, tell them like, hey, tariffs are coming.
• 16:09
  You know, we don't know how that's all going to play out. This isn't a sales tactic. It's just being honest and telling your customers what's going on so they don't get surprised. And you get some post sticker shock they didn't expect to get.
• 16:21
  So a quick recap before we go. Two builders liquidated, holding customers money. Those orphaned boat owners need independent shops and surveyors. So go get that work. West Marine came out of chapter 11 and at least one vendor got 6.6 cents on the dollar. So check your aging report. Canada's counter tariffs will hit September 8th. Trailers, electronics, pumps, fabricated metal. So start dating your quotes before Monday.
• 16:45
  New boat sales are down 4.3%, but used boats are going up.
• 16:50
  Used boats means surveys, deferred maintenance, and doing a lot of repowers. There are 55 idle container ships on the entire planet. So verify your part lead time.
• 16:59
  Um, instead of just assuming. If you're looking at going to any events this year, go ahead and start booking that. You know, got early bird pricing and everything else is going to wrap up soon. Every source is going to be linked in the show notes. I link everything every week so you can check. You know what I'm talking about. Go read these articles and these references yourself.
• 17:16
  And since this is the very first episode, I got one ask.
• 17:19
  So tell me what you want more of. Follow us on Shopify, Apple Podcasts, YouTube is going to be our main one and just leave a comment, tell us what's going on.
• 17:28
  Do you want more talking about the commercial and fleet end? Obviously we're going to be doing interviews as we can.
• 17:34
  Do you want us to go more in depth on things? You know, whatever it is, just let me know. Find me on LinkedIn.
• 17:41
  You can even call in marindiagnostictools.com if this was worth your time, I really sincerely hope it was. And if it wasn't, let me know why.
• 17:49
  But what the single best thing you can do for us and for anyone else that works on the water is going to afford this episode to them. But that's the current for this week. That's the current news. If this was useful, it with someone in the industry. Subscribe for next week's episode. The Current is proudly sponsored by Marine Diagnostic Tools and I will see you on the water.