Despite Trump, BRP to expand plants in Mexico
Softer rhetoric from U.S. administration encourages firm to move ahead with plan
MONTREAL BRP Inc. is charging ahead with expanding Mexican output of its Sea-Doo watercraft and other sport vehicles, encouraged by U.S. President Donald Trump’s relaxed rhetoric over the North American Free Trade Agreement.
“We were a little bit worried when President Trump came to power, given that he took some pretty drastic positions during the campaign,” said CEO Jose Boisjoli. “Now we’re starting to see a timetable. We have a better idea in terms of the schedule, and the tone has softened a bit.”
His view reflects increased confidence in the future of regional integration. After Trump was elected, Boisjoli expressed concern about BRP’s future in Mexico, telling analysts in March that he would be “ready to act” if the 23-year-old trade pact was torn up. The president’s statements since have become more constructive, Boisjoli said after the company’s annual meeting on Thursday.
The former snowmobile unit of Bombardier Inc. is shifting work to Mexico in a bid to lower costs. The Latin American country now accounts for about 3,600 of BRP’s global workforce of 8,700 people. The Valcourt, Que.-based firm has about 2,500 workers in Canada.
Trump last month notified Congress that he intends to start renegotiating NAFTA. U.S. Commerce Secretary Wilbur Ross said Wednesday that the strongest chance for overhauling the trade deal is before Mexican presidential elections next year. During the campaign, Trump called NAFTA “the worst trade deal maybe ever signed anywhere.”
BRP, which also makes Spyder motorcycles, Can-Am off-road vehicles and Ski-Doo snowmobiles, is investing about $25 million to expand the capacity of two Mexican plants by about 20 per cent, Boisjoli said. The company will install new equipment at two facilities by April and hire about 100 employees, he said.
“The industry is going well and we’re winning market share, so we felt it was a good time to expand capacity,” he said. Regarding international trade, “we are much more comfortable with the situation than we were six months ago.”
BRP’s shares surged 31 per cent this year through Thursday. The stock closed at $36.74, down 29 cents, on Friday.
Any changes to NAFTA probably wouldn’t be implemented for at least two years after agreement, giving manufacturers ample time to adapt, Boisjoli said. Three-way talks among Canada, Mexico and the U.S. increase the chances of success, he said.