Catching the wave - NZ's marine industry

By Suzanne McFadden

Times haven't been easy for the marine industry. Now Kiwi companies are hoping the America's Cup puts some wind in their sails. Suzanne McFadden reports

Paul Hackett - pictured with a carbon fibre dive ladder and a Boeing Dreamliner tray table will be in San Francisco this weekend, connecting with potential customers. Photo / Brett Phibb
Paul Hackett - pictured with a carbon fibre dive ladder and a Boeing Dreamliner tray table will be in San Francisco this weekend, connecting with potential customers. Photo / Brett Phibb

From a humming yard in Whakatane, a few kilometres from the Pacific Ocean, dairy farm owner Glenn Shaw has one eye fixed on the opposite side of that same ocean.

He is keeping tabs on San Francisco, because Shaw also makes aluminium boats, and his fortunes could be tied to those of Emirates Team New Zealand.

Shaw is a keen fisherman, not a man of sail. His company, Extreme Boats - which exports high-quality recreational craft - has little in common with Team New Zealand, other than the sea. But Shaw is aware of the "positive impact" that the New Zealanders' performance in the America's Cup could have on his business.

"It's the recognition of New Zealand as a marine design centre," Shaw says. "Everyone knows what New Zealand has achieved in yachting, and the positive spin-off reaches all of us in the marine industry."

New Zealand's marine sector has idled along over the past few years in the wake of the global financial crisis. But in an effort to get things motoring again, at least back to 2008's $2.26 billion turnover, the industry is trying to double exports.

The goal is to lift exports of boats, equipment and marine technology to more than $1.3 billion a year over the next seven years. And Team New Zealand's high-tech monster catamaran looms large in that strategy.

"If New Zealand didn't have an entry in the America's Cup, our goal for doubling exports wouldn't be that high," says Peter Busfield, executive director of the NZ Marine Industry Association.

"The America's Cup gives us a huge opportunity, at minimal cost, to promote this industry."

So this weekend the marine industry is putting on a party in San Francisco. About 75 New Zealand companies will spend two days hosting international clients at the Louis Vuitton Cup. They will tour the Team New Zealand base, and watch a race of the challengers' final aboard superyacht Imagine - built by Auckland's Alloy Yachts and owned by Team New Zealand's wealthy benefactor Matteo de Nora - or up close on a Rayglass Protector support boat (itself a Kiwi America's Cup success story).

It will be the largest corporate leveraging event of this America's Cup, Busfield claims, benefiting those looking to expand sales in the United States.

"Hamilton Jet is entertaining a major boatbuilder from Canada that uses its jet engines. It's a way to thank clients, and to make sure they stay clients," he says.

Paul Hackett, managing director of Auckland-based C-Quip, is there for a second time. The company, which designs and manufactures superyacht equipment, hosted European clients during the 2007 America's Cup in Valencia, with "real benefits" becoming obvious further down the track.

"We got a great rapport going, which broke down barriers later. When you're pricing jobs and they are trying to haggle, it just seemed easier," Hackett says.

This time C-Quip is hosting two American and two European clients.

The influence of Team New Zealand's past successes has also been a door opener for the carbon fibre specialists overseas.

"I'm sure that it has bought us 10 minutes' more time in European boatyards, because we're from New Zealand. At the end of the day, the Cup might not have a lot to do with what we're doing, but potential clients join the dots. They recognise we're a big boating nation that excels in yachting, and we leave them to decide whether that translates into making good boating parts.

"From a New Zealand branding point of view, it's been priceless."

BUT Emirates Team New Zealand has also had a more direct impact on C-Quip's fortunes. Just as business dipped a couple of years ago, C-Quip was contracted by Grant Dalton's team, and Italian challenger Luna Rossa, to make carbon fibre parts for their race boats.

They built the control arms for the wing sail - previously known as booms, but housing electrics and hydraulics.

"It was a phenomenal amount of work, expensive too, and it came along at the perfect time," Hackett says. "As soon as we finished that, business began to pick up again. It meant we were able to keep all of our staff, and we're now hiring again."

Last year the marine industry recorded turnover of $1.7 billion, almost identical to the previous year. It's still short of the heady $2.26 billion of 2007-08, and makes the projections of the 2011 Marine Industry Forecast - 8 per cent annual growth for 10 years, and a surge in exports to over $3.7 billion by 2021 - a steep wave to climb.

Last year the industry employed 8000 people and brought in $650 million in exports (down from $850 million in 2008).

"It's still tough, but we're in business, and we have the capacity for growth," Busfield says. "We have the fundamentals of a reputation like the French have to Champagne, and the Swiss have to watches ... Kiwis to boats."

There is no doubt New Zealand's involvement in the battle for the world's oldest sporting trophy has already reaped benefits for Kiwi marine companies. Busfield says there would be "several companies out of business and more with fewer employees" had Team New Zealand not challenged for the Cup and made a lucrative technology deal with Patrizio Bertelli's Luna Rossa syndicate.

Carbon spar manufacturers Southern Spars took on an extra 100 employees specifically to build the gargantuan AC72 wing sails for both teams.

World renowned Cookson Boats, which built the hulls for Team New Zealand and its round-the-world race yacht Camper, would have gone out of business without that work, says owner Mick Cookson. "It's either a feast or a famine in this business. If we hadn't had Camper, we would have been forced to shut down."

Cookson took on more staff for the Team New Zealand contracts, and has been able to hold on to them to work on a 24m yacht for the next Sydney-Hobart race.

"To win this Cup would be huge for New Zealand, and from our perspective it would be hugely rewarding. Composite boat builds are our dream come true," Cookson says.

Team New Zealand called on more than 130,000 hours of outsourced labour to build their two AC72 yachts, as well as more than 120,000 hours of labour internally. Managing director Grant Dalton has done his maths, especially after copping public flak for the $36 million investment from the Government.

The team contracted 13 machine and fabrication shops in New Zealand to manufacture the thousands of parts needed to build the complex catamarans.

"What gives us a cut above the rest of the teams in one respect is that the industry is right on our doorstep. There's a mutual respect between this team and the industry," Dalton says.

THE opportunities weren't there for all New Zealand marine businesses. In fact, Q-West Boat Builders in Wanganui made a conscious decision not to focus on securing business tied up with the America's Cup.

"We knew our counterparts further north would push hard in those areas," says managing director Myles Fothergill. "But indirectly, we benefit from Team New Zealand's success."

Q-West stuck with what it knows best - building a range of custom one-off aluminium boats, from pleasure craft to ferries - and continues to prosper.

"Two years ago we had a bit of a dip, but otherwise we've been pretty busy. Once we saw cracks starting to appear in the economy, we focused on aligning ourselves with our very best customers," Fothergill says.

Much of the firm's business floats offshore, to the US, the Middle East and Australia. Q-West recently built boats for the Victorian Water Police, an Australian mining company in Papua New Guinea and a 16m pollution-control boat for New South Wales Maritime in Sydney.

"Getting work with the Australian Government is good news for us and for our marine industry. In the past it's been a bit of a one-way street with the Australians, all their boats coming here, but it's turning around now," says Fothergill.

Manufacturers of trailer powerboats are discovering the same trend. Trailer boat sales were up 5 per cent last year, with much of the increase due to exports to Australia.

Extreme Boats is focusing on expanding exports this year.

"We've averaged 30 per cent growth a year for the last five to six years," Shaw says.

"The export market was always there, but initially we couldn't handle it because we were always booked out with New Zealand demand. We pulled out of Australia because we couldn't keep up here at home, but we've gone back there in the last three years with a lot of success, despite the difficulties with the exchange rate."

With the help of New Zealand Trade and Enterprise, Shaw is investigating markets in Canada and looking at a joint manufacturing venture in Norway.

"The recession, to be honest, has been a blessing for us," Shaw says. "A lot of our competitors got negative about the market, but we decided to give it a bit of a crack. Our marketing has gone up four-fold. Where there were 30 aluminium boat manufacturers, there are only really four of us in New Zealand that are strong now."

THE NZ Marine Industry Association hopes new growth in powerboat sales in the US this year will translate into new business here too.

"The US represents 45 per cent of the world's boats and equipment sales, and over the last year their sales have grown 12 per cent," Busfield says. "That indicates two things: there is some confidence in the world's largest market, and the baby boomer demographics are starting to come into play. Men in the 50-70 age group are buying powerboats for their recreation."

The focus won't all be on recreational boats or superyachts. NZTE marine programme leader Graeme Solloway says technology and equipment have also been identified as areas that could prosper.

"It may be about how our technology can be applied to the marine industry, boatyards and boatbuilding opportunities, how we can get our equipment into the supply chains," he says. "There are also a lot of composite technologies we are strong in, which have been highlighted by the America's Cup."

Making more ground in North America won't be all plain sailing. The Jones Act, prohibiting any foreign-built vessels from engaging in commercial trade in the US, has long been a barrier for New Zealand exporters, and the high kiwi dollar has made our boat prices uncompetitive. Busfield acknowledges there are other hurdles to overcome.

"We're not yet given full credit for matching it in the technology fields, but we aim to change that. And if we can help sell electric fences and wine at the same time, it won't be a lost opportunity."


Superyacht lustre fades

ONCE the jewel in our marine industry's crown, the lustre of superyachts is fading fast.

During the global financial crisis, the demand for superyachts built in local yards slowed dramatically. New Zealand was hit by a high exchange rate and competition from European yards, which slashed their prices. Last year New Zealand built four new superyachts; the Italians built 53. Now the big boatbuilders are having to reinvent themselves to stay afloat.

Yachting Developments at Hobsonville Point won two honours at the 2013 World Superyacht Awards: best refit for the 1934 America's Cup yacht Endeavour, and a special award for 30m sailing catamaran Quintessential.

But the company has found it "tough" to keep in business this year. "We had to relook at ourselves. It was a matter of what we could do to keep ourselves going," says managing director Ian Cook. "The answer was to diversify, which we're having to do time and time again." Cook, who started in wooden boatbuilding, has gone from race yachts, to superyachts, and now boat refits and industrial composite work.

Yachting Developments built the giant reflector sail on the roof of the new ASB headquarters in Auckland's Wynyard Quarter, and other composite components inside the building. It seconded staff to Southern Spars to work on the Emirates Team New Zealand boats. Now it is surviving with refit work and building two smaller boats.

"Our front of house is leaner and meaner and it's the first time in 15 years I'm not going to the Monaco Boat Show; I've got to rationalise my budgeting," Cook says.

After recovering from a fire which swept through their Mt Wellington boatyard a year ago, McMullen and Wing has also had to change tack.

The 50m steel-hulled Star Fish, 75 per cent complete when she was substantially damaged in the blaze, has yet to be finished. She is on the market - with a new name, Big Star, and a new design concept.

Commercial manager Michael Eaglen says the yard has several other superyachts in the pipeline but, in the meantime, staff have been building a boat for the Auckland Harbourmaster, super- yacht tenders and refitting smaller boats.

West Auckland builders Alloy Yachts launched the 44m Dubois sloop Encore this year and has two significant boats under construction - the 56m sloop Mondango and another 44m craft.

The NZ Marine Industry Association is still banking on New Zealand being a popular port of call for superyachts in need of refurbishment. "We're averaging 20 refits a year and the aim is to double that figure next year," says executive director Peter Busfield. An America's Cup event here would help boost numbers significantly.

- NZ Herald

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