Maryanne Edwards, GMBA Consultant, talks to Clint Jones a New Zealand Marine Industry personality about his thoughts on the current state of the New Zealand Industry. 10 years ago, Clint was appointed skipper of the Camera Boat for the 2011 – 13 Americas Cup, including all of the World Series events sailed in many locations around the World, using the AC 45’s. He has since been involved with the Americas Cup in Bermuda, the Olympics in Rio in 2016, and Sail GP.
Upon returning to NZ in 2014, Clint was offered the role as MD of a small marine export company – Propspeed, a silicon foul release coating for propellers. Clint started with a team of 3 growing to a team of 26, including 5 in the USA, 3 in Europe and distribution facilities in Florida and The Netherlands. The company has won several Export Awards and Vendor of the Year Awards from their largest customer in the USA, West Marine. Propspeed is now exported to over 35 countries around the world and is seen as a leading brand in this market. Clint was recently elected President of the NZ Marine Export Board and is current President of Development at Propspeed International.
WHAT ARE THE MARKET FORCES IN NEW ZEALAND DRIVING BOAT SALES AND HOW IS THE MARINE INDUSTRY FARING OVERALL?
Our borders remain closed for international travel and this of course tends to focus people on their domestic market activities. NZ has seen a significant increase in boat sales both of locally built boats and imported (mostly from Australia and Europe) in the period July 2020 to March 2021.
This is put down to several reasons including a catch up on reduced sales from the COVID-19 strict lock down in NZ, when people were restricted to their one home bubble and shops and factories were shut except for petrol stations and food supermarkets and sales of boats dropped 90%.
House prices have increased by 20% in 2020 over 2019 providing confidence and additional equity for homeowners to borrow against to buy a boat.
Interest rates for house mortgages have dropped to a 70 year low of 2% and many homeowners have freed up weekly cash that can be used to finance a boat.
Interest rates for boat (and car) purchases have dropped 40% to approximately 8%
The Prada Challenger and America’s Cup, Series held November 2020 to March 2021 in Auckland NZ has seen an increase in interest in sailing and water sports nationwide. Yacht and fishing club memberships are on the increase and many people have purchased or refitted their boat to view the 36th America’s Cup from the water. Over 1000 boats were on the Hauraki Gulf in Auckland watching the Prada Cup final in late Feb where Luna Rossa of Italy as beat INEOS of Gt Britain – Luna Rossa now challenge Emirates Team NZ for the America’s Cup in March 2021.
NZ has seen a decrease in visiting yachts and subsequently the marine businesses that service this sector of the industry have suffered a reduction in business in the period April 2020 to March 2021. In a normal year we would expect approximate 50 superyachts to visit NZ and have maintenance and refit work done whilst here. Due to our closed border this number has decreased by 50% to 25 and the yachts allowed into the country have had to obtain a special exemption under a process that the NZ Marine Industry Association negotiated with the NZ Government. In addition to superyachts, we would expect approximately 500 cruising yachts of 10 to 24m in length to visit NZ in a normal year and this has reduced to 60 over the same period above.
Given the attraction of the America’s Cup there were 160 superyachts on their way to NZ in 2020/21 but as referred above only 25 made it to NZ and of the expected 600 cruising yachts only 60 made it to NZ due to the closed border -So the opportunity lost here was and is enormous, not only for NZ but for other South Pacific countries where the yachts would visit on their way to and from NZ.
WHAT ARE THE CRUCIAL ISSUES MOST BUSINESSES IN NZ ARE ADDRESSING TO ENSURE SURVIVAL AND SUCCESS?
As we are an export driven company, delivering a marine product to 35 countries around the world, the biggest challenge for us has been how we maintain ongoing relationships and support to our distributors. So much of our pre COVID-19 business was strongly driven by personal visits, boat show representation and support of the local distributor, plus the ongoing in market training and support of their field sales team. We have been forced to design a whole new way of doing business, strongly using Zoom to now be our channel to relationship management and training. We have backed this up with a redesign of our website, video application training and digital platform upgrades. We have also looked to launch some new products and build a wider distributor network.
HAS THERE BEEN A NOTABLE CHANGE SINCE COVID IN SUPPLY CHAINS FOR NZ MARINE INDUSTRY BUSINESSES WITH A MOVE TO SOURCE MORE LOCALLY?
We import raw materials, but already use local suppliers wherever we can. We then turn these products into the export product that makes up 90% of our total business. We have been touched by supply chain issues. This has flowed onto hold ups to our Export orders, made more difficult by port hold ups, a reduction in some shipping timetables, and a massive spike in both shipping and sea freight costs. This has caused disruption to deliveries to our customers world-wide. This forced us to take a positive look at improving our distribution and in 2020 opened our own distribution facilities in Florida and The Netherlands. We are just seeing the advantage of this decision, enabling faster delivery of bulk product into both of our largest markets
WHAT ROLE IS THE AMERICAS CUP CURRENTLY FULFILLING FOR NZ BUSINESSES
Due to my involvement with the Americas Cup for the last 10 years, the Cup, and the networks developed around the events, have been valuable for the NZ Marine Export industry. I think that the involvement by Team NZ in the Cup for the last 30 years has had a very positive effect on the flow on of business that comes out of this involvement, both practically with the boats and products the event needs, but also the cutting-edge technologies and skills that have developed. I also see the ‘credibility’ the event gives to NZ Marine industry businesses, though hard to value, has a positive effect on our industry.
The America’s Cup has provided a stimulus to the local boating market and the sport of sailing throughout NZ. This is evidenced by an increase in yacht club membership including young people and children getting into sailing for the first time. Also evidenced by a 4% increase in new boat trailer registrations in 2020 over 2019 and that is even after a very slow March to June 2020 due to the COVID-19 lockdown.
There were over 1000 spectator and support boats on the America’s Cup racecourse watching the English vs Italy in the Prada Challenger Final Series held in February in Auckland. With the America’s Cup Match starting on 6Th March we are likely see an even a larger flotilla of spectator boats as Emirates Team NZ endeavours to defend the cup against the CHALLENGER ‘Luna Rossa’ of Italy.
NZ Marine has successfully negotiated with the NZ Government to allow the 200 foreign flagged visiting yachts already in NZ, to stay longer in NZ and for foreign yachts with a booked in refit or repair of over $50,000 to be allowed into NZ. This has seen approximately 60 cruising yachts and 25 superyachts enter NZ over the last six months providing valued business for the local marine businesses.
We are privileged in NZ to be hosting -two superyacht regattas-the first in the world for nearly a year. The Mastercard Superyacht Regatta run by the Royal NZ Yacht Squadron in Auckland 24th to 27th Feb February 2021 and the NZ Millennium Cup being run in the Bay of Islands 28th to 31st March 2021 run by the NZ Marine Export Group.
ARE CONSUMERS STARTING TO BUY LARGER VESSELS, OR WITH COVID ARE CONSUMERS LOOKING TO SPEND MORE RECREATIONAL TIME WITH THEIR FAMILY ON A MANAGEABLE SCALE AND LOOKING AT SMALLER, EASIER TO MANAGE VESSELS?
The activity of boating has increased during our summer of December 2020 to March 2021. People who may have travelled overseas, but not allowed to due to covid, have purchased boats and are using them. This applies to small boats, jet skis to keel boats and large cruisers. The only restriction is the lack of marina berths (pens) or hard stand storage to keep the boats. NZ has over 60 manufacturers of trailer power boats and they supply 90% of NZ trailer power boat sales in NZ . Most of these manufacturers have full order books 6 to 12 months ahead and are struggling to keep up with the current demand. As a result our world acclaimed apprenticeship boat building program has seen a record number of registrations with over 500 trainees currently being trained through 220 companies nationwide.
WHEN INTERNATIONAL BOAT SHOWS RESUME, WILL THEY BE AS IMPORTANT AS BEFORE?
I think there will be a close look at the previous costs and time spent by the industry attending international boat shows, and like all good business decisions a return on investment will be closely scrutinized. Having said that, we are people that like the interchange of personal relationships, and that missing off the current landscape will dilute some business relationships. If you have not done a good job in the current Zoom/Digital world, business will be lost, so a clever balance of both options going forward is how we see the future and attending events that generate results will be hard to miss. We are planning our own Auckland Boat Show to be held in the America’s Cup Viaduct Harbour area 7th to 10th October 2021 and this is eagerly being looked forward to by the 200 exhibiting companies.
For further information
Maryanne Edwards | GMBA-Australia/NZ
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