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BRP STICKS WITH MEXICAN CONNECTION

Canadian powersports manufacturer Bombardier Recreational Products (BRP) intends to continue extensive low-cost ATV manufacturing in Mexico if incoming US president Donald Trump rips up the North American Free Trade Agreement (Nafta) between the USA, Canada and Mexico, reports BDN financial editor Roger Willis.

BRP, which exports Can-Am ATVs and Spyder road trikes to the UK among many international destinations, has three Mexican factories employing about 4000 people — 40% of its entire global workforce.

Speaking at his third-quarter financial results presentation, BRP chief executive José Boisjoli revealed that the company expects to take a hit of up to £15m annually if US import tariffs in a 1.4% to 2.9% range are reintroduced following Nafta’s demise. However, he said the impact would be manageable, given cheap skilled labour and supply cost advantages in Mexico.

US-domiciled Polaris Industries, one of BRP’s main competitors in the US domestic market, also makes ATVs in Mexico and faces a much more severe threat. During his election campaign, Trump promised to punish American firms “offshoring” US jobs to Mexico with a heavily punitive 35% tariff barrier on production then imported back into the US. That menace won’t apply to Canadian jobs which have gone south, of course.

During BRP’s third fiscal quarter to 31 October 2016, revenue rose by 3.8% to £652m. Net profit was 20% up at £47.5m. The BRP share price jumped by almost 10% on Toronto’s stock exchange when these figures were announced on 9 December.

 

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