Despite the uncertainty surrounding the NAFTA renegotiations, Canadian manufacturer Bombardier Recreational Products Inc. (BRP) announced it will invest US$ 78.6 million over the next two years to expand its global production capacity. Part of the investment will be used to double vehicle production output at its Juarez 2 plant in Chihuahua, Mexico.
“We cannot manage our business waiting for the government to finalize negotiations,” CEO José Boisjoli said in a conference call to discuss the company’s quarterly results. “Right now, we are in a situation where we have more demand for our product than we can produce. We have no choice but to follow our business plan, and make these decisions.”
If NAFTA is terminated, BRP would be subject to WTO tariffs in the range of 2 to 2.5%, said chief financial officer Sébastien Martel.
“Obviously it’s not a scenario that we would prefer,” he said, “but it’s something that we could manage and that would be addressed through supplier reductions, or increases over to the consumer, or do as we do every year and optimize our business.”
The investment announcement came as BRP reported a revenue increase of US$ 126 million, or 14% to US$ 0.97 billion in the three-month period ending October 31. The company also reported a gross profit of US$ 259 million, up from US$ 241.5 million during the same period last year, while net income fell US$ 7 million to US$ 61.1 million.