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    BRP Plans to Stay in Mexico if U.S. Withdraws from NAFTA

    Posted by Emily Hare
    on Wednesday, December 14, 2016

     According to a report by The Globe and Mail, BRP Inc. has vowed to keep its factories in Mexico if president-elect Donald Trump pulls the U.S. out of the North American Free Trade Agreement (NAFTA).

    BRP calculates that if  the U.S. gives a mandatory six-month notice of withdrawal from the agreement, then Mexico would fall under a most-favored nation certification status. This means that BRP products manufactured there would be subject to import tariffs of between 1.4% and 2.9% per transaction.

    BRP has three plants in Mexico and trades products worth slightly more than $1 billion on a wholesale level between the U.S. and Mexico. That means it would be subject to added costs of about $20 million to $25 million a year, which it could pass down to suppliers or counter with price increases, the company said.

    At that tariff level, the benefits of keeping plants in Mexico, with access to skilled labour at a lower cost than elsewhere in North America, outweighs the prospect of moving them to another country, said Sébastien Martel, BRP’s chief financial officer. BRP has been in Mexico since 2001 and employs about 4,000 workers there. They produce BRP’s Can-Am all-terrain vehicles and side-by-side off-road vehicles, among other products.

    “When you manage a multinational business, you are constantly faced with regulatory changes and you find ways to adjust,” said José Boisjoli, BRP’s chief executive officer. “While we are monitoring the situation closely, we believe that the potential impact is manageable.”

    For the full story, click here.

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