16 Mar 2011
Our America's Cup glory days are long gone, but for the marine industry, blue skies beckon again, reports Suzanne McFadden.
As the gargantuan superyacht Vertigo slips through the Hauraki Gulf, it leaves the New Zealand marine industry feeling a little giddy.
The 67m aluminium ketch, nicknamed "The Big One" by her builders at West Auckland superyacht specialists Alloy Yachts, is the largest luxury sailing yacht built in the Southern Hemisphere. It is now undergoing sea trials in Auckland waters before being delivered to its Northern Hemisphere owners.
With its on-deck swimming pool, room on board for three 6m tenders and an interior by feted Parisian designer Christian Liaigre, Vertigo's launch last month hinted at a change for the better in the stalled superyacht industry.
"It was deathly quiet for us in late 2008, but lately we haven't taken our foot off the pedal," says Linda Berry, Alloy's marketing manager. "Right now we're building three boats that will see us through to 2013 and we're getting a few more inquiries. I like to think of it as being 'steady as she goes'."
When Alloy, a world leader in custom-built motoryachts, scores a contract of this magnitude, it means business for other Kiwi marine suppliers such as Southern Spars, Doyle Sails, North Sails and Manson Anchors.
The same spin-offs are happening around Warkworth-based company Core Builders Composites, which has brought a wave of new business to local boatbuilders and suppliers as it builds the new training class for the America's Cup, the slick AC45 catamaran. With the work comes priceless international attention for New Zealand boatbuilding, not seen since this country's America's Cup heyday a decade ago.
And what a distant memory those champagne days seem. Players big and small have sunk without trace, including Bill Lloyd's much-hyped Sovereign Yachts and Ivan Erceg's collapsed Sensation Yachts.
Yet there's hope the corks will soon be popping again. After a gloomy few years, signs have emerged that the marine industry is getting back on an even keel. More than that, the industry's parent body is heralding plans for growth of nearly $1 billion within five years. However, with some businesses saying that goal is too ambitious, is this just wishful thinking? The forecast by the NZ Marine Industry Association (NZMI) is for the industry to grow by 55 per cent by 2015, hitting revenue of $2.66 billion. Exports of boats, parts and services are expected to increase by about 70 per cent, from $650 million to $1.11 billion.
Peter Busfield, the NZMI's executive director, is bullish that it's achievable.
"New Zealand makes up only 2 per cent of the world's marine industry's market share turnover; it's such a small market share, we have the opportunity to grow.
"I believe we have the right companies and the marketing nous to achieve it. But it's a matter of New Zealand providing the infrastructure for it to happen."
Busfield says the targets are based on a global recovery in the superyacht market, new infrastructure in key ports around New Zealand to support the growing yacht refit sector, a "large number of baby-boomer retirees" with time and money to boost recreational boating, and New Zealand's sought-after marine industry workforce.
No doubt clouds still hover - the fluctuating Kiwi dollar, limitations on infrastructure (specifically, large buildings near deep water), competition from Australia and a lingering hesitation from the well-heeled about being seen spending millions on luxury yachts.
Chris McMaster, managing director of Doyle Sailmakers NZ, predicts more casualties in the industry this year. Relationships with Kiwi superyacht companies have helped Doyle strengthen its international reputation for high-tech sails, but McMaster admits the company's growth has been to the detriment of their opposition.
"The good companies will only get stronger. Those who have invested heavily over the last few years will come out the winners," he says. "I think the local industry is quite dismal; superyacht builders like Alloy and Fitzroy Yachts are pulling us through.
"While there are people still having superyachts built, they aren't new to the industry; it's the same people investing.
"With sails, we're right at the end of the food chain, so a superyacht ordered now won't need sails for another 24-36 months. We have some incredibly good orders for 2012, but 2011 will be a matter of surviving."
This year Doyle is focusing on reinvesting in the company with R&D on new adhesives, fibres and engineering. It will step up the marketing of Stratis, Doyle's own brand of super light and strong sail cloth, manufactured in New Zealand.
"I can see us growing almost 100 per cent in size over the next two years, but that's very much driven around major changes in our own business," McMaster says.
Much of the projected growth will depend on the success of superyachts. New Zealand is now down to four major superyacht builders - Alloy Yachts, McMullen & Wing and Yachting Developments in Auckland, and Fitzroy Yachts in New Plymouth.
The Yacht Report, an international industry magazine, says New Zealand has built five superyachts a year for the past two years. With the pricetag for a superyacht running anywhere from $15 million to $140 million, this is a big business indeed.
In the year to September 2009, Busfield says, "local boatbuilders did not manage to secure a single order for a new superyacht. But in the last 14 months, there have been 10 new boats ordered."
Ask for details, though, and Busfield is coy about identifying who is building those 10 new boats. One is Starfish, a 50m steel-hulled motoryacht with five guest staterooms, under construction at McMullen & Wing in Mt Wellington. Building began in July and will take the yard through to mid-2012.
McMullen & Wing managing director David Porter sees signs that the superyacht market is recovering: "I hadn't had an inquiry for eight weeks, then I had four in the last week. But it's definitely not boom time.
"McMullen & Wing won't increase by 50 per cent in the next four years. It just can't. There are all sorts of limitations - there's still a worldwide crisis in yacht sales."
But Porter is involved in another project which could help propel the marine industry towards its heady targets.
The Overseas Investment Office has granted consent for French company Le Port Blue to redevelop land on Whangarei's waterfront as a world-class shipbuilding facility, capable of building superyachts and commercial vessels about 80m long. The site is where the failed New Zealand Yachts once stood.
Porter and his brother, Terry, each hold a 9 per cent interest in the company, whose largest shareholder is French developer Charles Lehartel.
McMullen & Wing made its name internationally during the 1995 America's Cup, when it built the victorious NZL32 - Black Magic - for Team NZ. "It gave us credibility and gave us business at the time, but I get told that I don't use that [recognition] often enough. To me, it's history," Porter says.
The company scores its own wins these days: Starfish's sister ship, Big Fish, launched a year ago, has already collected two international honours and is a finalist in this year's World Superyacht Awards.
Both Alloy and Fitzroy are finalists for the best sailing yacht longer than 45m, while Orams Marine Services in Auckland is up for best refitted or rebuilt yacht with Adele.
"The whole of the New Zealand industry does exceedingly well through world recognition and awards; we punch well above our weight. Peter Busfield is correct in having confidence," Porter says.
One example of the revival has come out of Yachting Developments at Hobsonville. Work on a 30m cruising super catamaran was suspended in October 2008 at the owner's request, but construction is under way again.
New Zealand's marine industry is varied - about 1400 companies employing 10,000 people. A third are boatbuilders or manufacturers, with products ranging from yacht spars to wet-weather gear to electric fishing kontikis. Last year the industry turned over $1.71 billion, still well down on the 2007-08 turnover of $2.26 billion, but a $30 million increase from 2009.
One sector the industry is particularly keen to bolster is refit - refurbishing and repairing recreational and commercial boats, especially superyachts sailing here in the Southern Hemisphere summer.
"Refit is one area that hasn't declined with the recession," Busfield says. "Most of the world's 7000 superyachts are less than 10 years old, so every five years they have a major overhaul. New Zealand would like a share of that, especially of the sailing yachts."
New Zealand has the tradespeople: the NZ Marine Industry Training Organisation has 650 apprentices employed by 180 companies - the highest number of trainees in the boat trade anywhere in the world.
But it is short of facilities. It's not easy to find land alongside deep water where resource consent will be granted for an industrial boatyard. The $80 million superyacht precinct at Hobsonville on the upper reaches of the Waitemata Harbour is a case in point.
"Hobsonville is in its 13th year of planning and lobbying, and the grass is being mowed while we're turning superyacht contracts away," Busfield says. "But we've been meeting with the Ministry of Economic Development, and had dialogue with Auckland Mayor Len Brown, so we can try to reduce the bottlenecks of the Resource Management Act."
Busfield says developments are well under way to accommodate a growing refit industry, in Auckland - at Wynyard Point, Gulf Harbour and Hobsonville - and at the ports of Whangarei, Tauranga, New Plymouth, Wellington, Marlborough, Nelson and Lyttelton.
Meanwhile, the Orams Marine Village on Auckland's waterfront is full to capacity. The marina in the hub of the country's marine service industry is booked solid for the next 18 months.
One of the drawcards is the newly refurbished superyacht slipway to take heavier boats, and new superyacht berths. Outside is the 90m sailing yacht Athena, owned by American billionaire and Netscape founder Jim Clark, which is undergoing the largest refit ever carried out in New Zealand.
Michele Berry, the village's general manager, says their 310-boat dry stack is 97 per cent full: "It's always a good barometer for confidence in the marketplace.
"We have 39 specialist tenants on site, and they're busier than ever ... The Orams brand has a strong reputation. The refurbishment [of the slipway and a new cradle] created an impetus and the signs are that it will continue for a while. We're optimistic, but cautious."
Three private luxury craft have already booked up the $1.5 million superyacht marina on the waterfront for the duration of the Rugby World Cup; as many as 12 are expected in New Zealand for the event.
The armada of superyachts that flooded into Auckland in the summer of 2000 sparked a number of new Kiwi enterprises, with Yacht Lifeline among them.
Started by two former SAS paramedics who gave medical training on big boats, Yacht Lifeline is now a prosperous business supplying medical kits and a 24/7 medical assistance service to the world's luxury yacht fleet.
When the America's Cup was wrenched from New Zealand shores in 2003, Yacht Lifeline followed the super-rich, setting up offices in Britain and Mallorca to be near the cruising capitals of the Northern Hemisphere.
"We chase the new-builds. The medical kits we put on these boats are like a warrant of fitness for a car - they're required safety equipment," says Yacht Lifeline CEO Steven Bates, who was previously boat captain on Larry Ellison's superyacht, Katana.
"For the last three years we've focused on the larger superyachts - 90m plus - and we're the only people putting full medical centres on these 'giga-yachts', with surgical rooms, and specialised crew placements of paramedics, nurses and doctors."
As the business grows in Europe, in New Zealand Yacht Lifeline has branched into medical services for the commercial sector - fishing boats, tugs and ferries.
"We're still a privately owned New Zealand company, and we do a lot of our R&D in New Zealand. It's a good testing ground," Bates says.
And if Emirates Team NZ should happen to win back the Auld Mug, the trail of boats that follow it will bring Yacht Lifeline's business back to where it all began.
Until that day, the marine industry is pinning its hopes on another sporting trophy - the Rugby World Cup - to help boost business.
The annual Auckland International Boat Show in the Viaduct has been strategically realigned with the World Cup, to run the same weekend in September as the Australia-Ireland test. An international forum of superyacht captains is being held to coincide with the tournament, and influential rugby fans will be invited to visit boat yards.
It's a strategy which has the Government's support. "In terms of worldwide demand, that growth is possible," says Hans Frauenlob, director of specialised manufacturing at NZ Trade and Enterprise.
"We're also trying to help them prepare for what the economic growth in Asia is going to mean to the industry. The marine-equipment guys are already doing reasonable business there.
"What sets our marine sector apart is that there's a good domestic market here. At least that gives the smaller players a New Zealand or transtasman-based market."
The domestic market, however, hasn't been so kind to the motor launch builders of New Zealand. Imports from Australia and the US have forced most local launch companies to close their doors.
One that bucked the trend is Dean Salthouse's Next Generation boats in Greenhithe. Three of its Salthouse Corsair boats (13.5-15m long) are now being built, with a handful of inquiries trickling in.
"There's certainly been a reprieve in the last three months. The dollar is good for us, so no importers will come in when it's like this," Salthouse says.
"It's been tough, and people have been sitting on their money. But we made sure we kept improving the boats during the quiet times, which I think has helped."
Some smaller boats, like the Invercargill-made Stabicraft, have managed to ride the waves. In fact, Stabicraft Marine's managing director, Paul Adams, sees the 55 per cent growth target as a "healthy challenge".
His 24-year-old company, which pioneered the first rigid-hulled aluminium pontoon boat for local paua divers, aims to double in size over the next three years.
Although not quite back to its best production figures of 600 boats a year before the global recession, Stabicraft has developed new boat initiatives with the help of Better By Design, which Adams predicts will "put us in a new space".
"Everyone in the power-trailer boat sector has had some kind of effect from the recession, some small, some large," he says. "2009 was an interesting year for us but we made adjustments, and last year we picked up again - our turnover was up and the bottom line was pretty damn good.
"It's almost as if the upper North Island, in particular Auckland, seems to be on the up, but regional New Zealand is still somewhat flat. With exports, Australia is okay, but the mood in the US is positive and presents a huge opportunity."