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Yamaha's Response to Dumping Ruling

Yamaha's Response to Dumping Ruling Yamaha Motor Corporation, U.S.A. responded today to an announcement that was issued by the U.S. Department of Commerce on August 6, which calculated the dumping margin
 

KENNESAW, Ga., (August 9, 2004) - Yamaha Motor Corporation, U.S.A. responded today to an announcement that was issued by the U.S. Department of Commerce on August 6, which calculated the dumping margin on outboard motors and powerheads imported from Japan at 22.5 percent. This margin was calculated as part of a dumping investigation initiated by the Mercury Marine Division of Brunswick Corporation (NYSE: BC). These percentages are preliminary and subject to revision by the Department of Commerce.
   A final determination will be made this winter by the International Trade Commission (ITC) as to whether imported Japanese outboard motors and powerheads are injuring manufacturers in the United States. Yamaha, with the support of a large number of American boat builders, including Genmar, Maverick and many other industry-leading companies, will vigorously contest the issue of injury before the ITC. The dumping complaint will be dismissed if the ITC finds that there is no injury to the U.S. industry from the importation of Japanese outboard motors and powerheads.
   "As I have previously stated, the U.S. Department of Commerce's calculation comes as no surprise," said Phil Dyskow, Group President of Yamaha's Marine Group, "but we don't think that it compares Japanese and American sales in a fair manner." We feel that there are four major reasons as to why its results are improper:

  1. The Department of Commerce compared sales to OEM boat builders in the United States with sales to retail distributors in Japan. As even Mercury has recognized in a statement to the IBI on July 20, there is a difference between retail and OEM relationships. This difference results in substantially higher prices in Japan that are not taken into account in the Department of Commerce calculation;
  2. The Department of Commerce did not take into account all sales expenses in Japan. This raises the prices at which motors are calculated as sold in Japan, resulting in a misleading impression of dumping margins; and
  3. The Department of Commerce incorrectly included sales of four-stroke powerheads to Brunswick in the same category as sales of outboard motors. Even though they only accounted for ten percent of Yamaha's sales in the U.S., the powerhead sales to Brunswick accounted for over 50 percent of the dumping margin.
  4. Preliminary analysis indicates that margins on sales by Yamaha to dealers and boat builders in the United States were under 15% while margins on the sales of OEM powerheads to Mercury were more than 100%. Thus, Mercury, not Yamaha, was the principal beneficiary of the alleged dumping. In terms of our ITC case. These facts are extremely important. These facts also explain why Yamaha cannot approach the "corrections" to eliminate dumping in the same way for Mercury as it has for its own engine sales in the U.S.

Mr. Dyskow emphasized, "Yamaha does not expect to pay duties in the amounts announced Friday by the Department of Commerce. These duties are based on past pricing, not current pricing which has already been adjusted both in the United States and Japan to eliminate the margins of dumping. We do not plan to increase our prices to our customers in response to this calculation."
   Mr. Dyskow continued, "On July 29, 2004, Brunswick announced its financial results for the second quarter of 2004. In this announcement, Brunswick claimed that its sales of outboard motors are increasing by double digits, that it has improved operating margins for its marine engine products and that its inventories of marine engines are in great shape. These are not statements of a company that is 'injured.'"
   Mercury filed its anti-dumping complaint on January 8, 2004. Since filing that complaint Mercury has requested that Yamaha help them by:

  1. Selling Mercury new versions of four-stroke powerheads;
  2. Increasing the number of four-stroke powerheads that Yamaha sells to Mercury;
  3. Extending the contract under which Yamaha sells four-stroke powerheads to Mercury; and
  4. Selling Mercury additional F225 four-stroke outboard motors even after it told Yamaha in October 2003 that Mercury had no intention of purchasing any more such motors.

"We do not understand why Mercury would make requests to Yamaha to sell it more Japanese-manufactured four-stroke engines and powerheads after filing this dumping petition. The filing of this petition is even more paradoxical in light of Brunswick's statement in a conference call to financial analysts in late July that Brunswick is planning to start production of engines at a facility in China during the first quarter of next year. We believe that Mercury's claims to the ITC are totally inconsistent with its proposals to increase its purchases of four-stroke powerheads and engines from Japan, to initiate production in China and to make representations to Wall Street of its financial strength and success," said Mr. Dyskow. "That is why Yamaha is confident that the ITC will ultimately conclude that imports of Japanese outboard motors and powerheads are not injuring the U.S. industry."

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