CNY Boat Company Feeling the Squeeze of Tariffs as Trade War Catches Firms Off-Guard

Jun 25, 2018

Marathon Boat Group makes Grumman boats like this. But production is threatened by tariffs on imported aluminium, and counter-tariffs on their products.
Credit marathonboat.com

A long-time manufacturer of aluminum canoes and other boats south of Cortland is starting to feel pinched by tariffs on imported aluminum and pending counter-tariffs on U.S. products. 

Marathon Boat Group has unwittingly been pulled into the growing trade war.

CEO John Jackson says he feels uneasy and pretty helpless not knowing what might happen.

"It's been pretty good for the past two to three years.  But this definitely can make you nervous."

Marathon Boat group has been making aluminum boats including the legendary Grumman canoes and pontoons at its factory in Marathon for 65 years.  Jackson says about 75 percent of their business is domestic, and the other 25 percent goes overseas.

"The worst case...it can be devastating.  We're not in a position to lose 25 percent of our business.  In turn, the cost of materials is going up 10 percent or more.  We've already seen major increases in the aluminum market.  For the first time, we had to increase our prices in the middle of the year."

Grumman started making aluminum canoes in 1945 on Long Island before moving production to the Marathon factory in 1953.
Credit marathonboat.com

Jackson says they have to import certain aluminum alloys from Germany and other countries because U-S manufacturers can’t keep up due to demands from the auto industry.  He says the confluence of higher costs and pending tariffs is starting to have an impact.  Jackson says a European client told him earlier this month they were cancelling a large order.

"They said with the new duty that will be implemented, it would increase their cost by 25 percent, and  there's no way they're going to order the product if that in fact became a reality."

Jackson admits he’s no expert, but has seen enough ups and downs over the years to know we’re not in a good situation.

"Trade wars...there's been some in the past,  and I don't think for the most part they've been effective or beneficial for any party."

Jackson says they’ll work as long as they can, and will deal with the fallout if and when it comes.

"I think I understand they're trying to protect American jobs, but they're not going to protect them.  We're going to lose them.  If we can't produce a product in a competitive market, it'll go away."