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Brunswick's Parts Business Outearns Its Boats · The CURRENT

• 0:00
  New tariffs on Canadian boat parts and coatings take effect today. Brunswick tops expectations and raises its outlook. Boat trade groups say your doc fee belongs in the advertised price. And in Washington State, a shop founder hands over the keys after nearly 50 years. Now, this is The Current.
• 0:14
  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, Jon Logan. Welcome aboard.
• 0:33
  Good evening. I'm Jon Logan. Tonight, a new tariff list, where the profit in this business is actually coming from, and what your ads have to show. Starting today, more Canadian products carry an extra 50 percent tariff. A White House proclamation issued Friday, October 23rd, rewrote the list. It's the same Section 338 duty we covered in September, when it hit Canadian-built motorboats. The new list adds 100 tariff codes and drops 22. Canoes are on it now.
• 0:57
  So are certain boat parts. So are certain sealants and coatings. The National Marine Manufacturers Association says the 50 percent stacks on top of Section 232 tariffs, where those apply. And it applies even if the product qualifies under the U.S.-Mexico-Canada Agreement. Certain thin hardwood plywood, some packaging materials and some industrial machinery came off. NMMA says Canada buys more than half of all U.S. recreational boat exports. So ask yourself what this means for your shop. If your sealants, coatings or replacement parts come from a Canadian supplier, check them against the new codes. Then talk to your distributor before your next order.
• 1:30
  And that brings us to tonight's main story. Brunswick reported its third quarter yesterday, and the company says it came in ahead of expectations. Sales were 1.45 billion dollars, up almost 7 percent, and adjusted earnings were a dollar fifty-eight a share, up 63 percent. Brunswick raised its full-year outlook to about four dollars and sixty-five cents a share. Chairman and CEO David Foulkes said boat and engine pipelines remain lean and well-aligned with retail demand. The profit didn't come evenly. Brunswick's parts and accessories business sold 381 million dollars in the quarter. It kept about 94 million of that as adjusted operating earnings. That's a margin near 25 percent. The boat business sold more, 394 million dollars. It kept 14 million. That's under 4 percent. Brunswick says its results have decoupled from new boat unit sales in the U.S., and it credits healthy participation and good late-season weather. Freedom Boat Club kept growing, too. Brunswick says Freedom now holds close to 70 percent of the North American boat club market. Polaris reported on Tuesday, and its marine business, which includes Bennington pontoons, grew sales 29 percent to 133 million dollars. Polaris credits product mix and higher pontoon shipments.
• 2:33
  Polaris also raised its full-year guidance, and it says about a dollar nine a share of that full-year number comes from tariff refunds. CEO Mike Speetzen pointed to the company's disciplined approach to dealer inventory. And Patrick Industries, which supplies boat builders, estimates wholesale powerboat shipments rose 8 percent in the quarter. Its own marine revenue grew 14 percent. So ask yourself what this means for your shop. If Patrick's estimate is right, builders are shipping more boats, and dealer pipelines are still lean. But the fattest margin in Brunswick's report came from parts and accessories. That's the business of keeping boats already on the water running. That's my take, not Brunswick's. If you sell boats, your advertised price is getting a closer look. In September, Federal Trade Commission staff published pricing guidance written for car dealers, after warning letters went to 97 auto dealer groups in March. Now the boat trade groups say the same rules reach you. The Marine Retailers Association of the Americas laid it out on Monday, October 19th. NMMA followed today with guidance for builders. The advertised price has to be what a buyer actually pays, minus government taxes and fees. So your doc fee goes in the advertised price. A dealer inventory tax goes in too, even if you pass it on to the buyer. The price anyone can get has to be the most prominent price in the ad. For used boats, MRAA says it's best to use real photos of that exact boat, or none. MRAA says using AI to cover up damage would be a clear violation. MRAA also says ads for sold boats should come down quickly. That covers your website, listing sites, social media and signs. NMMA says it even covers phone calls and texts.
• 4:00
  The Federal Reserve held rates steady on Wednesday, at 3.75 to 4 percent. But the vote was 10 to 2, with Lisa Cook and Beth Hammack dissenting because they wanted a quarter-point hike. The Fed's statement says economic activity is expanding at a strong pace, and it says inflation remains elevated. Consumers, meanwhile, feel a little better. The Conference Board surveys consumers online every month. In October, 21.4 percent said business conditions were good, up from 18.8 percent in September.
• 4:25
  Fewer said bad. But planned spending on durable goods dropped across the board. Plans to buy cars and homes edged down, and vacation plans dipped. Feeling better isn't the same as buying, and that's my take, not theirs. If you carry floorplan, I'd plan as if the next move is up, not down. The Current is sponsored by Marine Diagnostic Tools. MDT puts dealer-level Jaltest marine diagnostics in the hands of independent marine repair shops and boat surveyors. Full system coverage across the engine brands already in your pipeline, so you stop turning away work because the software says no. Find the right diagnostic kit at marinediagnostictools.com, or call 844-627-4630.
• 5:03
  One more thing. In Everett, Washington, the man who started Harbor Marine is handing it off. He began in 1979, servicing boats out of his truck at the Port of Everett marina. He later bought a shop and named it Harbor Marine. Today it does service and repair, sells marine supplies, and even carries some groceries. The new owner is Steve Carver, CEO of Northwest Marine Services, and he's keeping the Harbor Marine name. The founder is staying on for three years to help, and then he's retiring. The Port approved a 12-and-a-half-year lease on about 56,000 square feet, at a marina with more than 2,300 slips. Carver says the business has to reach the next generation of boaters. Nearly 50 years in, the business that started out of a truck has a new owner. That's The Current for the week of October 30th. The Fort Lauderdale International Boat Show runs through Sunday. I'm Jon Logan. Subscribe wherever you get your podcasts, and I will see you next Friday.