GMBA

Global Marine Business Advisors

Moelay

TRAINING BLUES

The title does not reflect what I am thinking now but it is the closest simple description I have found.

 

Many groups, societies and well ment people make it possible that trainees can join workshops or join the crew onboard to learn the “real things” of the nautical careers they chose. I am picking the example of Phil Wade, of oversize emotional heart and legendary yachting fame, who organised some nine years with another SA yachting friend, a charity for South African unprivileged children, allowing them to learn about yachting and become yacht crew or yachting technicians. Marine Inspirations, inspired in “time to give back to the industry” have since trained both female and male kids and opened for them the possibility of a promising future within the yachting industry. The children are given theoretical training in South Africa, and the ones who better assimilate the learning are taken on a two-week trip to Palma to assist with regattas, visit shipyards and yachting support companies, and sometimes do some sailing too. Other pupils are placed as apprentices onboard or at yachting supplies companies.

 

So far so good. This organised and recognised ONG can show results with successful cases of youngsters now part of the yachting community, who otherwise would have suffered the traditional limitation to find quality jobs. Beautiful story, but we must now find the first cultural blockage to their further development: the on-the-job training. Of course, someone without experience must start with the basic chores of the trade, but that period must last only the strictly necessary time, and bring the person to the next level, taking more responsibilities and being allowed to make mistakes which are indelible experiences. Assigning higher levels of (surveyed) decision-making is the next step, and letting them fail and learn from it is necessary.

 

Too many managers accepting trainees keep them away from decisions or machinery operating afraid they could make a dangerous mistake. That does not help in gaining experience; management should limit the mistakes a trainee can make and trust the person to take the proper reaction if things go wrong. If I would have deckhand trainees on a yacht, aiming to get their officer’s ticket, of course I would not go to my cabin letting them take a night watch alone, but instead stay sleeping close by the bridge to check everything now and then and be ready to react on a call for help (I did that during my deliveries). The fear of something going wrong is with us trainers, expressing our insecurity. Our knowledge and experience should give us the peace of mind to see a trainee as another variable in the system that should be monitored but not limited to the new tasks being learned, remembering that making your own mistakes is the best experience. Novel doctors must practice a few years after graduating under (but not limited by) a seasoned doctor’s supervision before they can practice alone.

 

The method is used in many disciplines, but would not work if the trainees cannot perform under real conditions. In helicopter pilot training, you are sent to fly solo after 30 hours with an instructor. The aerospace industry is highly conscious of safety, but the apparent dangerous learning protocol works. Those two situations can be more dangerous than mistaking fishermen’s lights for shore ones just showing up above the horizon, wrongly tying down a mooring line, or pinpointing a plot in the chart a few miles off. Trainees with special abilities will excel in handling their assigned job situations, and be identified early in their career as an industry promise. These examples can be extrapolated to each and all duties in our nautical (and other) professional worlds. Let us eliminate our fears and give our (needed) followers the opportunities they deserve.

 

Oscar Siches, CMP, GMBA Spain
Tel: +34 667 494 858
Email: oscar.siches@gmba.blue

 

 

Disclaimer: Global Marine Business Advisors is a registered legal entity and is a network of independent marine industry advisors. In all articles the opinions expressed are those of the author and does not necessarily reflect those of GMBA.

AIMEX CELEBRATES A VERY SUCCESSFUL 25 YEARS

Jeremy Spear – Chairman

AIMEX has celebrated 25 years of operation, no mean feat for any organization in today’s business environment.  Marine Industry Organisations in many countries have struggled to survive during tough economic times, have had multiple leaders and have seen their funding and membership bases erode.  AIMEX can tell a very different story, one of stable leadership, diversification, growth, and continued relevance.  This is a story that needs to be told as I believe the success of AIMEX and how it has developed is something that should be shared. A close look at the success of AIMEX and its leaders is being developed as this article goes to print.

 

Jeremy Spear, the current President of AIMEX spoke recently at an event at the Sydney International Boat Show talking about these 25 years.  His overview of AIMEX and what the organization has achieved was impressive to say the least and he firmly stated we continue onwards and upwards.

 

Jeremy stated in his address; “AIMEX is truly a National body, representing and providing services and initiatives to members who derive assistance, representation and have business interests looked after in all 7 states and territories of Australia. We are doing exciting things now in the Jobs and careers sector. Moreover, AIMEX is truly an International body – we take part in events and represent Australia and are active continually in over a dozen countries. The AIMEX group, incorporating Australian manufacturers and service providers, the Australian commercial vessel marine group and Superyacht Australia has repeated, regular and strong attendance and representation at many major and significant industry events worldwide servicing the very broad spectrum of the manufacturing, commercial marine and especially Superyacht sectors. “

 

Jeremy listed the extensive achievements of AIMEX, all of which have contributed to promoting the Australian marine sector globally and to improving the Australian marine industry operating environment by changes to legislation, providing a strong voice to government on issues affecting the industry and above all ensuring AIMEX, Superyacht Australia and Commercial Marine Group members are well informed in terms of the business environment and opportunities nationally and globally.

 

Well done CEO David Good, Chairman Jeremy Spear and the committed AIMEX board.  A true example of a successful organisation looking after its members.

 

Maryanne Edwards, GMBA Australia / New Zealand
Tel: +61 41 291 6036
Email: medwards@gmba.blue

 

 

Disclaimer: Global Marine Business Advisors is a registered legal entity and is a network of independent marine industry advisors. In all articles the opinions expressed are those of the author and does not necessarily reflect those of GMBA.

TRANSPORT COSTS. EVOLUTION AND MITIGATION

Sources: the Wall Street Journal and Statista.

 

The pandemic has wreaked havoc on the transportation infrastructure since the beginning of the pandemic, with extreme disturbance on land (resulting in the disruption of supply chains) and sea shipments.

 

In the yachting industry, in 2021 new shipyard orders went through the roof in all segments of yachting, particularly in the mid-size and superyacht sectors.

 

For a good part of 2020 and 2021 many ships were stuck in harbor or on anchor, and couldn’t sail internationally. Goods were piling up in ports and warehouses. When ships started sailing again in small numbers container shipments were up five to seven-fold.

 

Between 2020 and 2021 domestic shipping rates for moving goods by road and rail in the U.S. were up about 23% and warehousing prices up 14%. Sea shipping went up 75% YOY. (Note: the sea carries more than 80 percent of the world’s traded goods).

Domestic prices in Asia, and especially China barely saw any changes due to a number of specificities. (Very efficient domestic logistics; very advanced network and infrastructures). International shipments prices were dampened by the belt & road rail system that reopened as soon as lockdowns were over.

 

With the pandemic over, the demand was still far outweighing the capacity of the freight sector, and transportation and logistics providers were still seeking big boosts in prices for contracts in 2022. (Contracts are annual and generally negotiated at the beginning of each year).

 

Shippers have been trying various ways to keep the transportation inflation at bay, such as consolidating more loads to minimize truck trips and renting truck trailers for storage rather than paying rising warehousing rents. But experts say companies have little choice other than absorbing the cost or passing it along to their customers.

 

Now it’s 2023 and the costs have kept decreasing since mid-2022 and dropped at the end of the year. They are now back to pre-pandemic level since March 2023.

 

However the inflation, as well as the rise in oil prices will have lingering effects for quite a while. According to the IMF data from 143 countries over the past 30 years, it appears that shipping costs are an important driver of inflation around the world: when freight rates double, inflation picks up by about 0.7 percentage point. Most importantly, the effects are quite persistent, peaking after a year and lasting up to 18 months.

 

Luckily shipyards that had full order books have been able to keep production, and are now able to ship yachts worldwide at reasonable rate since the second quarter of this year.

 

Pandemics and other catastrophic events are not new; what is indeed is the fact that they are now scientifically documented and quantified thanks to information technology. Should we ponder on the impacts and envision emergency plans for the future? Certainly some transportation alternatives exist when it comes to general goods shipped in containers, but when considering yachts, viable solutions are hard to come by.

 

Godfrey Zwygart, GMBA China & Asia
Tel: +86 188 0899 8617
Email: godfrey.zwygart@gmba.blue

 

 

Disclaimer: Global Marine Business Advisors is a registered legal entity and is a network of independent marine industry advisors. In all articles the opinions expressed are those of the author and does not necessarily reflect those of GMBA.

Supply chains and Greedflation. Reflection on skyrocketing prices.

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way–in short, the period was so far like the present period that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.” Charles Dickens; – Opening phrase of “ Tales of Two Cities. Published in London 1859.

 

The Covid period turned economies upside down and IMF has estimated that the pandemic cost the global economy in the region of USD 12, 5 Trillion.

 

Trillions of costs and losses to be recovered we must assume.

 

On a microeconomic level, the pandemic hit viciously on our labor force and absence from their daily tasks led to a huge vacuum in the supply of our products and services to soaring markets.

 

Businesses and operations were not fed with the ingredients, components and material required and with domino effect, vertically and horizontally, our traditional supply chains defaulted with the consequence that individual companies quickly found themselves in loss positions.

 

But Covid also triggered the sales boom at the retail end and the pressure to accommodate our markets was frantic.

 

The human nature, as well as the true spirit of well managed companies, are organisms with a strong desire to survive. New plans are quickly put into action; – we change, we adapt, we adopt, we adjust and do what is needed to survive. In the worst of times we also had the best of times.

 

We were fighting the horrors of the pandemic, and, at the same time, fighting to meet demand. Our frustrations also became our motivation to get back on track – in partnership with our sources of supply, and deliver to the buoyant markets in front of us.

 

Sources of supply to our industry are now more or less operating at capacity and with some exceptions, they are in a position to accommodate us with the capacities we need.

 

Some Long –Covid effects are closely observed by all builders; – including, but not limited to inboard engines, and labor (Poland, for instance, depending on a significant portion of Ukrainian labor and general shortage of skilled labor).

 

Components like resin, steel, glass, upholstery, semi-conductors, outboard engines are back on a track.

 

I took the liberty to use the opening phrase from Tales of Two Cities by Charles Dickens as my metaphor for the two very different world we have been through; – the pre – and post Covid- years. Why? Simply because I just love this phrase, but also because I find it well suited to describe the parallel worlds we experiencing today.

 

And this is my reflection.
In the 3- year period before the Covid, world-rich prices rose by 6 %.
In the 3- year period after the Covid, world-rich prices have risen by 20 %
Retail prices in several boat segments have risen more than 20 %. Some above 35 %.

 

With global Covid losses of USD 12, 5 Trillion followed by global energy shortages and inflation out of control, we see that industries and large corporations are increasing their prices and margins far beyond inflation levels. Companies and services that survived the pandemic with some serious dents and losses in their business, have discovered a window of opportunities which they admittedly take advantage of. Their operational margins are soaring while the operational margins of their customers are defaulting. From our traditional sources of our supply we have to accept new terms of business and significantly higher prices which in my book are far beyond cost & loss coverage levels.

 

As governments and Central Banks announce measures to get inflation to below 4 % , we see our industry raising prices to new levels. I recognize that this is not happening across the board, however, in the wake of the fundamentally growing inflation, corporations, organized industries, and coops are grabbing the opportunity to increase prices and profits far beyond cost coverage and contribute to the spiral of inflation. Greedflation.

 

Economists, bankers, politicians, and the international business community are to some extent divided in their views of what they define as “Greedflation” or “Egg-flation”. The latter from the time dominant egg producers in the US actually used the pandemic as the opportunity to extract super- profit and prices went up by 300 %.

 

So if they can do it; – I can do it!

 

Our industry and the individual companies operating within must be profitable We also know that some dominant players in our markets are not.

 

We should also recognize that we are in an industry which offer products and services for pleasure and comfort. A huge market and growing, however, very sensitive compared to life’s necessities. We should bear in mind that in times of inflation and the cost of living is severely hitting your wallet, people, for obvious and less obvious reasons, change their purchasing habits.

 

My concern is that an “over-pricing” of the products and services we offer, vertically and horizontally in aggregate will drive the cost of boating to a level that triggers changes the purchasing habits.

 

Knut Heiberg-Andersen, Norway
Tel: +46 70 675 65 20
Email: knut.heiberg-andersen@gmba.blue

 

 

Disclaimer: Global Marine Business Advisors is a registered legal entity and is a network of independent marine industry advisors. In all articles the opinions expressed are those of the author and does not necessarily reflect those of GMBA.

GMBA SIGNS AGREEMENT WITH DELOITTE ITALY

Tommaso Nastasi

GMBA is excited to announce the signing of a significant agreement with Deloitte Italy.

 

Deloitte and GMBA have been discussing the formation of this relationship for some time with the focus on leveraging each other’s experience, skills, expertise, and contacts within the global maritime industry.

 

Deloitte provides Audit & Assurance, Consulting, Financial Advisory, Risk Advisory, Tax and Legal services to public and private sector clients in a variety of industries. With a network of entities in more than 150 countries, Deloitte has at hand a range of international expertise as well as extensive local knowledge to assist clients to achieve their business goals.  The relationship developed with GMBA will enhance this.

 

The Italian marine industry is a leading international player, ranking among the best in the world and in first place for orders of super-yachts (boats over 24 metres long). Despite the crisis due to the pandemic, the Italian nautical industry has overcome the challenge with flying colours.  The Italian industry continues as a major global player and is a sector in continuous growth. This is a complex sector, made up of large workforces and high-end shipyards that guarantee the undisputed quality of Made in Italy worldwide. This sector generates work for many companies that work alongside shipyards, offering them activities and ancillary services.

 

Jouko Huju, one of the founding members of GMBA, said: “Working together with an organisation like Deloitte Italy opens new areas of services we can provide to the boating and marine industries around the world. The 19 members of GMBA in 18 countries around the world on all continents, will provide Deloitte Italy with a unique insight into local industries, markets, and companies. The agreement will enable multinational projects in a whole new scale. With better access to information and knowledge around the world, the agreement will also improve GMBA’s services to the SME’s, especially in their search for new export markets”.

 

Tommaso Nastasi, Partner of Deloitte Italy and Value Creation Service Leader, said: “We are thrilled to partner with GMBA in our shared mission to support the development of the boating and marine industry. This collaboration represents a remarkable synergy between two industry leaders, and we are excited about the opportunities it will bring. Our experience and network, along with GMBA’s knowledge of the industry, will allow us to help companies of all size to face the current industry shift and face future challenges”.

 

This is an important step forward for GMBA, who have been in business since 2019 and continue to support marine industry businesses around the globe.

 

Veda Pretorius newly elected Chairperson of GMBA, sees this development as another positive move by GMBA to be able to offer the best possible cooperation with one of the world’s leading consultancy groups. “This relationship is important for GMBA and is one we have put considerable effort into developing and finalizing.  It is another step in the continuing progress of our group”.

 

The international presence of GMBA extends to 18 countries around the globe ensuring a significant global footprint and the ability to offer extensive expertise to Deloitte.

The Global Marine Business Advisor group (GMBA) has grown over the past 3 years with a key focus being on working with businesses who wish to expand their export markets. The recent GMBA conference held in Petersfield in the United Kingdom, discussed key issues affecting the industry, environmental and sustainability issues, developing technologies, the position of boat shows post covid and the current economic climate affecting the marine industry.

 

For further information
MaryAnne Edwards
Email: medwards@gmba.blue
 Mobile: :+61 412916036

 

 

Disclaimer: Global Marine Business Advisors is a registered legal entity and is a network of independent marine industry advisors. In all articles the opinions expressed are those of the author and does not necessarily reflect those of GMBA.

GMBA CONSULTANT ACHIEVES SIGNIFICANT RECOGNITION

Veda Pretorius was presented with a lifetime achievement award at the SABBEX Industry Awards evening hosted on May 31st in Cape Town. This is significant recognition of the work Veda has done within the industry in South Africa.

 

Bruce Tedder, Chairman of SABBEX stated, “Veda was one of the originals and I recall the first employee of SABBEX. She then took over running SABBEX, CTBi and set the solid foundations for what SABBEX is now. A legend of the boatbuilding sector in SA”.

 

The theme for this year’s Awards dinner was “On the Shoulder of Giants” and recognized those personalities and businesses who had paved the way for other businesses in South Africa to achieve success in global markets.

In speaking about Veda the Chairman of SABBEX highlighted the fact that Veda had paved the way for other women to continue to drive the development of the organization. Two women following in these footsteps are Vanessa Davidson and Thina Qutywa, both working closely with industry to create the best possible environment for marine industry members to thrive and survive.

 

Since leaving SABBEX, Veda has been the South African based consultant for Global Marine Business Advisors (GMBA) and has worked closely with other consultants on several key projects making a valuable contribution to the success and ongoing growth of GMBA.

 

For further information
MaryAnne Edwards
Email: medwards@gmba.blue
 Mobile: :+61 412916036

 

 

Disclaimer: Global Marine Business Advisors is a registered legal entity and is a network of independent marine industry advisors. In all articles the opinions expressed are those of the author and does not necessarily reflect those of GMBA.

GMBA ELECTS NEW CHAIRPERSON

At the GMBA conference currently being held in Petersfield in the UK, Veda Pretorius, the GMBA consultant based in South Africa, was appointed as chairperson of the group. Veda takes over from David Lewin who has held the position of Chairman for the past 3 years and has been a driving force for GMBA since it started and will continue as Vice President supporting the new chairperson.

Jouko Huju, one of GMBA founding members, thanked David Lewin for the significant contribution he has made to GMBA, stating ‘David has done a huge job guiding GMBA through the first years into a very unique, experienced group of industry professionals.”

The newly appointed chairperson, Veda Pretorius, has been a member of GMBA since 2020 based in Cape Town. Veda was last week presented with a lifetime achievement award by SABBEX, The South African Boat Builders Export Council. Veda was instrumental in developing SABBEX into the organization it is today having run the council for 6 years.

MaryAnne Edwards, GMBA stated, “I have worked with Veda on several projects, and she brings a wealth of knowledge and experience to GMBA. Her broad-based understanding of the South African boat building, marina and superyacht sector are extremely valuable to GMBA and the projects we have worked on will assist in the ongoing development of the industry there. As the new Chairperson of the group Veda will be tasked with moving GMBA into the next stage of its development.”

The international presence of GMBA extends to 18 countries around the globe ensuring a significant global footprint and the ability to offer extensive expertise to the marine industry.

The Global Marine Business Advisor group (GMBA) has grown over the past 3 years with a key focus being on working with businesses who wish to expand their export markets. The GMBA conference being held over 3 days will discuss several key topics including the current situation with supply chains, environmental and sustainability issues, the position of boat shows post covid and the current economic climate affecting the marine industry. Outcomes from these discussion will be covered briefly in the next GMBA newsletter.

 

For further information
MaryAnne Edwards
Email: medwards@gmba.blue
 Mobile: :+61 412916036

 

 

Disclaimer: Global Marine Business Advisors is a registered legal entity and is a network of independent marine industry advisors. In all articles the opinions expressed are those of the author and does not necessarily reflect those of GMBA.

Economic and Geopolitical Instability Risks and Their Impact on Expectations for the Global Recreational Marine Industry

As recently as March of 2022, marine industry associations and major marine companies were euphoric about the surge in demand for recreational boats during the global pandemic and offered predictions that interest in boating and demand for boats would continue growing for years. Dealer inventories were at all-time lows if not completely non-existent. At the time, I wrote an article expressing the point of view that the laws of economics had not changed during the pandemic, the industry had not suddenly become great at customer retention, and the cyclicality of the industry would soon bring the inevitable cooling off and slowing of the industry.

 

In the US, inflation, demand that outstripped supply, and supply chain issues led to significant increases in the price of new boats in the past three years, with some models seeing price increases of 30% during this period. Studies have shown that in normal times the price of boats is highly elastic. That is, as price increases, unit volume decreases. And as new boat prices have risen, pre-owned boats become more attractive to first-time boaters.

 

In the US, new boat sales have fallen in the past 12 months to pre-pandemic levels, dealer inventories for the most part are back to pre-pandemic levels, customers have become more scarce, dealers need to sell again, and some manufacturers are cutting production. And, the recession has not even begun, except perhaps in Germany.

 

According to McKinsey and Company, business executive confidence is fading, and global business prospects are viewed far less favorably than six months ago. Only a third of global executives believe business conditions are better today than they were six months ago and only a third believe they will be better in the next six months.

 

According to the McKinsey survey of global executives, inflation and geopolitical instability top their list of concerns, and two-thirds now see these two things as a risk to global growth. Banking issues with regional banks in the US and Credit Suisse have also raised concern about financial volatility which is now viewed as the number three risk to global growth and has resulted in declining availability of credit.

 

Inflation is a major risk to recreational boating as it reduces the buying power of consumers who have less disposable income as more of their income goes to food, housing, transportation, and other necessities. While consumer spending in the US has remained strong, we are beginning to see softening.

 

There appear to be four primary forces that propelled inflation: massive government spending during the pandemic, supply chain constraints, labor shortages, and very low-interest rates for a long period of time. Interest rates have risen rapidly and may be near their peak (though further increases are not off the table) and supply chain issues have moderated significantly, but long lead time remain in some sectors. A tight labor market continues to be a concern for wage inflation.

 

From a macroeconomic perspective, a recession in the US is expected in the second half of 2023 and the first two or three quarters of 2024 followed by recovery and a strong economy in 2025.

 

As retail sales of new boats declined by 16% in 2022, dealer inventories are back to pre-pandemic levels and dealers are feeling the sting of higher interest rates on their inventories. Floorplan lenders expect inventory turns to decline and MY 2024 production to be down 9-10% as retail sales drop another 5-8% in 2023. As the recession sets in, economists expect interest rates to begin to fall in late 2023 and throughout 2024 which will provide some relief on floorplan financing costs.

 

First-time boat buyers surged 21% from an average of 346,000 annually in 2018 and 2019 to 415,000 in 2020 and 420,000 in 2021. When numbers for 2022 are finalized, the number of first-time boat buyers is expected to return to more normal levels around 350,000.

 

In the meantime, geopolitical volatility impacts business confidence and the stock markets. The stock market impacts the wealth effect which has a more significant impact on large boat sales, which have been holding up well, but are expected to begin declining later this year.

 

Never get too comfortable with current conditions in the recreational marine industry because you can be sure they are about to change.

 

Dr. Thomas J. Dammrich, DBA
Tel: +1 847 274 5167
Email: thomas.dammrich@gmba.blue

 

 

Disclaimer: Global Marine Business Advisors is a registered legal entity and is a network of independent marine industry advisors. In all articles the opinions expressed are those of the author and does not necessarily reflect those of GMBA.