High dollar threat to boat building recovery

Steinlager II and Lion New Zealand, two of NZ's most famous yachts. The marine industry says it's under threat from a high NZ dollar. Photo / Cathy Vercoe

The rising value of the New Zealand dollar is putting at risk a fledgling recovery in the local boat building industry, Peter Busfield, executive director of the Marine Industry Association, said today.

The New Zealand dollar was trading at around US75c a year ago, then went to US85c in March before dropping back go US75c in June. It has since been on its way back up, trading today at US82.40c.

Busfield said the currency's recent gains had added 6 per cent to the price of exported New Zealand boats at a time when the US market was exhibiting a post-global-financial-crisis recovery.

US boat sales have risen by 10 per cent in the last three months compared with the same period last year, he said. "In the last three months, it (the currency) is threatening exports to United States and is threatening to stifle the recovery," Busfield told APNZ at the Auckland on Water Boat Show.

His comments coincide with those of the opposition political parties, several exporters and some economists who have complained about Reserve Bank's interest rate policy and its impact on the exchange rate.

Sales in the international boat markets had dropped by about 30 per cent since the 2008 global financial crisis and turnover in the New Zealand market had fallen by about the same percentage, he said.

He said the local boat building industry was steady and had stopped declining, post the crisis.

"It has stopped dropping, so hopefully we are looking at this show as being something of a turning point," he said.

The industry has a turnover of about $1.7 billion a year, with exports accounting for about $650m of that.

He said businesses' ability to develop new products was helping to keep the marine industry ticking over.

Busfield, who has been in the marine business since the share market crash of 1987, has seen a few market downturns since then.

Each time, the industry appeared to be a leading economic indicator for what later unfolds by going quiet about six months before the rest of the economy, he said.

The boat building and marine supplies industry is New Zealand's largest manufacturing sector, accounting for 10 per cent of the country's manufactured goods.

The show, formerly the Auckland International Boat Show, is one of the main events on the domestic marine calendar.