The key leaders of Australian and NZ’s marine sectors talk to MaryAnne Edwards GMBA consultant about current issues
The Covid 19 pandemic has not daunted the fighting spirit of the New Zealand and Australian marine industry. In talking to key leaders of the marine sector it is clear both countries are emerging from the pandemic strongly intact and ready for the flood gates to open.
The ANZAC values include such human qualities as courage, mateship, integrity, initiative, sacrifice, determination, ingenuity and these values are embodied within the Australian and NZ marine sectors. It is these values that make doing business down under so attractive and has helped rank New Zealand and Australia in the top 15 of 190 Global countries for ease of doing business, in the top 5 for obtaining credit and in the top 8 for ease of starting a business. (Source World Bank Group, Doing Business 2020)
It is well known a country’s reputation drives political, commercial and economic success. Businesses are selling their products and services to customers who may never have set foot in their country. These customers rely, in part, on the global reputation of a country to make their buying decisions. Currently both country’s reputations on the global stage are highly regarded not only for their handling of the Covid 19 pandemic but also due to the fact there is strong promotion of their marine sector capabilities by NZ Marine and the Australian International Marine Export Group. Both trade organisations play a key role in the industry. They continue to ensure global markets look their way when making buying decisions and this is currently reflected in the domestic and export success of their boat manufacturing, refit and repair sectors.
MaryAnne Edwards representing Global Marine Business Advisors interviewed the CEO’s of both AIMEX and NZ Marine talking about their views of the current environment in both countries
In NZ the key association for the recreational, superyacht and export sectors is NZ Marine headed up by Peter Busfield an experienced CEO who has managed the association for many years. www,nzmarine.com
In Australia, the leading trade association for the export, superyacht and commercial sector is AIMEX and this is ably run by CEO David Good who came to the association nearly 3 years ago with considerable experience in the superyacht and commercial and defence industry. www.aimex.asn.au
It is confirmed a vaccine will be available in both countries this year and no doubt once the vaccines are available globally this could become a requirement when entering NZ & Australia but one expects a continued cautious approach will be taken to opening borders.
When asked about the global perception of Australia and NZ both CEO’s had a positive response.
David Good response; “Yes, we have been stable and reliable. Not a single lost day in most manufacturing and refit yards. Not a single vessel or crew rotation turned away since the start of the covid 19 pandemic. This should hold us in good stead for a long time to come.”
Peter Busfield equally enthusiastic responded; “ Yes there is currently a huge demand for international companies to move their offices/operations to NZ and it is likely that when the borders open there will be a huge demand particularly from high net worth tourists who will be able to afford the long and costly airline flights.”
Superyacht Australia and NZ Marine were successful in lobbying their governments to provide exemptions for vessels looking for a safe haven during Covid 19 providing a boom for repair and refit yards.
These exemptions applied to foreign flagged vessels and yachts entering the country. Given the world class trades people and significant clusters of marine industry companies NZ and Australia have been well equipped to service all international visiting vessels.
Both governments understand the economic benefit that visiting commercial vessels and yachts bring in, especially given the utilisation of the extensive supply chains that both countries have established to service the industry.
Peter Busfield responded; “We successfully negotiated with the NZ Government to provide border entry exemptions for visiting cruising and superyachts and commercial vessels that have prebooked in refit or repairs of at least $50,000 in value. This process is working and has seen over 30 yachts/vessels gain entry approval since August this year. This has sustained many marine businesses that otherwise would have closed their doors. In addition, 200 or more foreign flagged yachts/vessels yachts that are already in NZ that were meant to depart by May 2020 have been granted an exemption to stay in NZ until May 2021. Many of these yachts have had new maintenance/refits undertaken whilst ‘stranded’ in NZ – some of which are superyachts and owners and crew have been happy to stay put in NZ as we are being seen as a safe haven from Covid 19.”
David Good, responded; “ We have spent many hours lobbying both state and federal governments on behalf of the industry which has resulted in 32 vessels coming into Australia. Crew and owners arriving on the vessel can apply to have time in transit count towards quarantine and a decision is made by each state health authority. Their decision is based on a risk assessment of covid rates at previous ports, time since these ports and likelihood of undetected transmission onboard the vessel. PCR tests at previous ports assists in a more educated risk assessment. 27 of the last 33 vessels arriving into Australia have had time in transit recognised towards quarantine time.”
There have been no cases of Covid19 arriving into Australia via a Superyacht to date.
Superyacht Australia has also been processing applications for these vessels providing a very critical service for members.
SURGE IN BOAT SALES AND CHARTERING
Boat builders, members of both organisations, have also seen a surge in orders and have never been busier with many consumers now seeing boating as a safe, healthy and exciting alternative to international travel. Key boat builders like Riviera and Maritimo in Australia and over 100 trailer power boat manufacturers and yacht builders in NZ have significant export orders as well as a strong increase in sales from local buyers. The domestic charter market in Australia has also enjoyed greater interest as HNWI are unable to travel internationally and are looking for luxury family holidays. In Australia the superyacht fleet has dramatically increased over the past 12 months with an estimated 70 Australian owned superyachts now based in Australia.
Peter Busfield responded; “We always said that international travel was our major competitor to recreational boating, we were right, as 2020 will go down as a year of two halves -no sales in lock down and record sales when out of lock down. Most boat builders /manufacturers have presold 6 months out to mid this year. New Zealander’s are not wanting to leave NZ, why would they? We are basically covid free and if you return to NZ after going overseas you wait for a 2 month booking to go into Government 14 day isolation on return to NZ.”
David Good responded; “We have undertaken several marketing campaigns targeted at high end cruise industry customers promoting the unique, luxury and bespoke opportunity of chartering a superyacht in Australia. It has been important to market this product in a way these cruise enthusiasts understand. We have encouraged members to market a charter at an all-inclusive price experience similar to what clients are used to when booking a high end cruise.”
It would appear this is good advice as in speaking with several HNWI they also confirm the concept of APA is not their preferred way to book holidays and an all-inclusive, no misunderstanding price point is more desirable.
The NZ and Australian governments have responded positively to support businesses through these trying times with economic packages designed to allow businesses to keep their staff employed and the economy moving.
The governments’ response in both countries was quick and effective. This support ranged from wage subsidies for employees to allow businesses to retain staff, to cash flow boosts, deferral of mortgages, interest free loans and solid support for exporters by way of marketing cost reimbursements. To take advantage of the wage subsidy initiative companies had to show a 30% decline in revenue which for most during the height of the pandemic was not difficult.
Government does not directly fund NZ Marine or AIMEX. They are both in the main funded by membership subscription and events.
Peter Busfield responded; “In NZ the government however does provide support for the NZ Marine and Composites Industry Training Organization for setting and arranging apprenticeship training and on a case by case basis occasional support for specific export events. The NZ government is very financially committed to the Americas Cup which highlights NZ as a superyacht and tourism destination and showcases the NZ Marine sector and its facilities.
David Good responded; “In Australia the federal and state governments provide support for specific events and initiatives with contested funding limits. The Government also offers an export market development grant which provides a reimbursement mechanism for companies who spend dollars marketing their business internationally. There are criteria for this and not everyone complies, but for those who do it provides a positive financial injection. The Queensland state government stands out with its marine industry strategy providing strong support for the marine industry in their state. This strategy and the financial support behind it provides comfort to private investors which is currently reflected in the heavy investment many Qld companies are making in their boat building and refit facilities.”
The issue now of course is the transition away from government handouts to managing within the current trading environment. The economic incentives were a bonus for ensuring the continued operation of the marine sector but in some industries it has been difficult getting everyone back to normal wages and work hours particularly tourism and hospitality. In both countries there is a reliance on young international travellers who were able to come and go regularly providing a much needed source of casual labour. With borders locked down and no back packers coming into either country particularly in Australia there is a dearth of casual labour.
VIRTUAL SHOWS V’S THE REAL THING
During the height of Covid 19 both countries were forced to cancel their key boat shows. First off was the cancellation of the Sanctuary Cove International Boat Show (SCIBS) in May, followed by the Hutchwico NZ Boat show in May, followed by Sydney International Boat Show (SIBS) in July and then the Auckland On Water Boat Show in October.
With covid restrictions easing in November, Sanctuary Cove held a smaller “Boating Festival” which whilst having to adhere to a number of covid restrictions was extremely well supported by industry and consumers and it is understood significant business was transacted. It confirmed the industries need for face-to-face interactions and the connections that develop from this.
In May 2021 SCIBS and the Hutchwico NZ Boat show will be the first major Australasian shows to go ahead followed by Sydney International Boat show at the end of July. It is also exciting to hear the famous Tasmanian Wooden Boat Show will go ahead in February 2021. The Auckland On Water Boat show in NZ is scheduled for Oct 2021.
Peter Busfield responded; “Having led our MIA team in cancelling eleven major domestic and internal events March to October 2020 we look forward to planning an event that actually takes place!”
A frustration shared I am sure with many overseas counterparts.
There has been a lot of discussions around the value of virtual shows and whether they filled the void left by cancellation of boat shows but the word from the top is No. Companies still see the very real need for boat shows and the personal interaction and relationship building that comes with these.
David Good responded; “Companies with targeted marketing and online content have reported good enquiry and interest, but member feedback suggests the online shows themselves have not filled the gap.”
Peter Busfield concurred responding; “We have not seen any value in virtual shows but do see value in companies increasing their own digital marketing and connecting with potential customers via social and digital media.”
David Good further responded; “ The shift to online marketing has not replaced our plan to travel as soon as permitted. AIMEX will take the lead in international travel representing members at key international shows that may go ahead in 2021. We may end up travelling more on behalf of members, with a group stand rather than individual stands. Members may not wish to travel or take the vaccine initially.
HOW IMPORTANT IS THE AMERICAS CUP TO THE REGION.
The Americas cup (AC) is a huge boost for the entire Asia Pacific region. Vessels that head down for the Cup will generally visit many South Pacific countries and tend to remain in the region for a minimum of 6 months. Covid 19 has clearly changed the dynamics of the AC but all factors are pointing to an exciting event taking place as we have already seen with the Prada Cup.
The event will still be a boost for the region and Peter Busfield was pleased with the number of superyachts in NZ for the event.
Peter Busfield responded; ”The recently re-elected Labour Government is maintaining very strict border controls and only people with NZ passports can enter NZ. Everyone entering NZ must go into a government provided 14 day isolation period at a hotel directed by the Government. There is currently a 2-month waiting list for New Zealanders wanting to return to NZ due to restriction of isolation beds. The America’s Cup event and some other major sporting events have exemptions where participants can gain an exemption to come to NZ but they must go into the Government provided 14 day isolation.
The pre America’s Cup World Series Christmas regatta started in December where the England, Italy, USA and NZ teams met on the race course for the first time. This highly anticipated event saw 75 foot monohulls on foils doing up to 50knots (93 kmh). The course is windward leeward, so it is traditional on the wind starts. For the first time in many years, the TV broadcasting is free to air worldwide and is likely to be the largest viewed sporting event after the Olympics in 2021. The Prada Challenge series currently running started 15th January and goes until 24th February 2021 with the winner facing Emirates Team NZ in the actual America’s Cup regatta starting March 6th 2021.”
EVENTS COMING UP
When asked what key events were on the horizon for both organisations Peter Busfield talked about the New Zealand Millennium Cup. A key event in the NZ Marine calendar.
Peter responded; “The NZ Millennium Cup is the largest superyacht regatta in the South Pacific. We are excited given so many events have been cancelled that this popular event is going ahead in the beautiful Bay of Islands, with an expected 8 to 10 entries starting 15th February 2021.
David Good responded; “Our next event is “The Superyacht Australia Soiree” scheduled for Feb 27th 2021 at Jones Bay Wharf in Sydney. This year’s event is being held in partnership with one of the world’s largest manufacturer of superyachts, Benetti Yachts and will further build on last year’s success with an extended yacht-hop, followed by a VIP evening of luxury for guests and captains.”
SOVEREIGN CAPABILITY IS HIGH ON AGENDA FOR MANY COUNTRIES
Given the Covid-19 situation there is a strong push for greater sovereign capability particularly in Australia and many businesses given overseas industry shuts downs and freight issues have been forced to review their supply chains. Reliance on overseas countries to deliver critical products has been highlighted. Maryanne asked both David and Peter about their industry’s’ view of this drive for greater sovereign capability. Is it just talk with little in the way of support for manufacturers or are governments actually walking the talk?
David Good responded; “The issue re sovereign capability has always been a key topic. There is a growing enthusiasm for Australia Made. Decisions to relook at the TT Line replacement has put a positive focus on this. The government indicated that given current and emerging economic problems caused by COVID-19, there needed to be more consideration of local content and manufacturing jobs in Tasmania and Australia as part of the overall vessel replacement project. The Australian government is certainly introducing initiatives to support local manufacturing and I imagine the government will definitely take a stronger look at our marine industry capabilities.”
NZ has always had a strong culture of buy NZ Made with the marine sector being a significant industry sector in the NZ economy.
Peter Busfield responded; “There is public and government talk about Buying NZ Made but most of our international trade agreements do not allow the government to mandate ‘Buy NZ Made.’ Having said that already 90% of trailer boats sold in NZ are made in NZ which clearly shows the importance to New Zealander’s of supporting their own.”
Given the isolation of Australia and NZ and their reliance on other countries to supply key goods there will no doubt be further investment by the respective governments to enhance their sovereign capability.
Maryanne asked both Peter and David about their membership and staffing levels since covid, given membership levels and revenue have dropped substantially in some overseas countries. It also surprised many in the industry last year to see the level of redundancies made by the NMMA a significant USA marine industry association.
David responded; “I am pleased to report we have not had to make any of our team redundant. AIMEX membership however has declined slightly mainly due to the fact a key benefit of membership was the ability to participate in the Australian pavilion at key trade shows and AIMEX has always had a strong itinerary of shows members supported. With the inability to travel some members have put their membership on hold waiting for international travel to resume. However membership in our superyacht sector has increased by 10%. I attribute this mainly to the work we have done regarding lobbying for exemptions in this sector which as stated earlier has been a boost for the industry.
Peter Busfield responded; “Since May 2020 our membership is up 5% to 500 member companies. This is mainly due to existing members appreciation for our assistance and communications with members through the difficult months of March to June. We assisted members with Covid Health and Safety plans in accordance with Government rules, negotiated with the NZ Government to be allowed to go boating in some of our covid restriction periods and of course the exemptions to allow visiting yachts entry for refit/repairs and being allowed to stay in NZ was a boost for the industry”.
KEY ISSUES MOVING FORWARD
Maryanne asked Peter and David what they see as the key issues facing the Australian industry both the Superyacht and Export sectors.
David Good responded; “For Superyacht Australia it is definitely the consistent application of rules by government departments. It is the biggest issue and will remain so for a long time. For our exporters it is stability in logistics, foreign exchange rates and global demand. Many countries due to more covid 19 outbreaks are currently looking at further lockdowns.”
Peter Busfield responded; “From the superyacht perspective we have a concern that people in the Northern Hemisphere may not be planning to sail their yacht to the South Pacific in 2021 and as such countries such as Tahiti, Fiji, Australia and NZ will suffer from a reduction in this business in 2021/22. From our exporters perspective the exporting of NZ made equipment is getting more challenging with freight delays and increased costs of freight.”
Maryanne asked Peter and David re the level of investment into the industry currently.
David Good responded; “There is a lot of investment happening here into refit yards and boat building facilities however this growth is mainly occurring in Queensland where we have a supportive state government.
Peter Busfield response; “NZ has seen an increase in refit yards /haul out facilities for large vessels such as the new Orams 820 ton travel lift and yard in downtown Auckland. There has also been recent expansion of facilities in Bay of Islands, Whangarei, Tauranga and Picton. In a normal year and particularly prior to the America’s Cup these facilities would be extremely busy. It is however pleasing to be able to say that during covid they have still had sufficient work to be doing satisfactory business.
WHAT DO YOU SEE AS THE KEY ROLE FOR YOUR ASSOCIATION MOVING FORWARD.
David Good response; “ The key role is to ensure we listen to members and provide value, plus continue to lobbying government on issues affecting the industry. Mentoring of new members is also high on our agenda.”
Peter Busfield responded; “Adding value to member companies that exceeds the membership fees is of number one importance. Many members see the most value coming from their MIA maintaining/growing the profile of the marine industry in the eyes of stakeholders, i.e. local and central government, the general public and the boating fraternity. This translates to effective representation and strong promotion and profile through the media. In addition to this Peter felt it was very important to work closely with the individual marine industry specialised sectors to ensure we understand the challenges and opportunities of members at the ‘coal face’.
The very issue of distance and isolation from key markets which has made NZ and Australia so resilient over the years has also been the catalyst for their emergence from the covid pandemic in tact and ready to meet the demands of their global and domestic markets. The ANZAC spirit has prevailed with the NZ and Australia strategy to manage the covid 19 pandemic working well. The marine industry in both countries has remained vibrant and the surge in boat sales and superyachts looking for a safe haven is definitely supporting the refit yards and the extensive marine industry supply chain. Restrictions on boating have been removed and the industry is experiencing a busy summer period as everyone gets out on the water. With no international travel on the horizon for many months the keen interest in chartering and boating is set to continue. Congratulations must go to both AIMEX and New Zealand Marine who have been proactive and effective in their communications with members and their lobbying to government on members behalf.
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