Riding crest of big roller

By Fiona Rotherham

You could call it having a spar each way in the America's Cup.

Auckland marine company Southern Spars supplied masts to both Prada and Team New Zealand.

Divided loyalties? Not come race time - and especially when Team New Zealand made a clean sweep to retain the Auld Mug.

Southern Spars is just one company that is enjoying the huge direct and indirect benefits flowing to New Zealand's $500 million a year marine industry from world exposure during the Cup.

Ask anyone in the industry and they simply say the regatta has put them on the map.

Ron Czerniak, sales manager for Maxwell Winches, is not a man given to hyperbole.

Yet when asked about the Cup's longterm benefits, he gushed: "All the advertising budgets of all the marine companies in New Zealand couldn't buy what we're getting now."

The America's Cup, as yachting's premier racing event, focused world attention on the local marine industry's existing good reputation.

Another Cup defence in Auckland in three years is the icing on the cake.

Southern Spars general manager Simon Allsopp said the challenge now was to ensure there was an industry plan to manage growth.

"We have to preserve the integrity we've been able to build up."

A few companies falling over because they had expanded too fast would hurt the whole industry.

Exports had already been growing at the rate of 23 per cent for the past few years.

Overseas earnings for members of the marine export group Marex are anticipated to have leapt from $170 million to $250 million for the March year.

The boating industry reaped about $80 million from the Cup, some $25 million directly related to the racing and the rest through indirect benefits such as the superyacht spectator fleet.

Boating companies talk about business being up 30 to 40 per cent.

Handling that level of growth creates its own problems.

A study on boat-building clusters by Massey University MBA students identified a shortage of skilled labour as the biggest impediment facing the industry.

The students also assessed the difference to the marine industry of winning or losing the Cup at $1 billion.

Industry participants downplay that figure.

Alloy Yachts managing director Tony Hambrook said the payback from the Cup exposure, even without the next defence, would be "for as long as we can foresee - 10 to 20 years."

It was not all plain sailing to ensure the New Zealand industry was involved in more than the racing and superyachts.

The 31 umpire and patrol boats used during the races were NZ-designed only after last-minute lobbying from the industry association.

Overseas production boat-builders, desperate for the international exposure, offered free boats to the two organisations responsible for the regatta.

Our companies could not afford to match the offer.

It was finally agreed to pre-sell the locally made boats to other purchasers and lease them for use during the America's Cup.

Meanwhile, pleasure boating around the world is booming.

In New Zealand, about 5000 new boats are sold each year, 80 per cent of them built locally.

The Boating Industries Association says the big threat on the domestic horizon is rising interest rates dampening demand.

Exports account for about 40 per cent of industry total sales.

Maxwell Winches has 60 per cent of the local market yet 90 per cent of its production goes offshore.

New Zealand boat-builders can compete with anyone in the world because of the weak exchange rate and their acknowledged expertise.

There is also strength in unity.

Marex is the sole remaining JAG (joint action group) of the 12 set up by Trade NZ in 1992.

Executive director Lane Finley said it was the only one whose members worked cooperatively in offshore markets.

Much of the export growth has centred on the superyacht market, where New Zealand is now a front-runner.

New Zealand yards have been actively chasing refurbishment work from these boats for some time.

The Cup proved the catalyst for attracting about 100 superyachts to these waters, many for the first time.

It is hoped that after they leave, the members of a relatively small and exclusive fraternity will spread the word about New Zealand.

The summer cyclone season in the South Pacific, from November to late March, makes these superyachts a captive market for several months once here.

Owners often chose to have their boats refitted and repaired.

Many new orders were from wealthy businesspeople who came to watch the racing and left impressed with the industry behind it.

Sensation Yachts received an order for a new boat from a superyacht owner who already has one under construction at the yard.

The question is how to retain that lucrative business more regularly than the next Cup defence.

Babcocks spent a fair whack building 10 berths for superyachts at Devonport Cove Marina and only managed to attract three takers during the Cup.

It is shedding these berths in favour of its new superyacht refit and repair yard.

Gulf Harbour Marina at Whangaparaoa is already negotiating with challenge syndicates and their supporters for the next Cup defence.

Marina manager Tom Warren has put in new sheds and equipment to handle refit and repair work for boats up to 30m.

He said a Canadian firm was also eyeing the local market with a view to cashing in on any post-Cup boom.

Trade NZ has approached Defence Minister Mark Burton about buying a small part of the foreshore at the Hobsonville airbase to establish a marine industry cluster.

The attraction for the eight or so companies wanting to shift there is its deep anchorage and ramp into the Waitemata Harbour.

Trade NZ spokesman Dennis Maconaghie was told the land is part of a defence property review now underway. A decision on any land sales is at least a year away.

He is now talking with the Ministry of Defence about leasing the land, while at the same time pressuring the Government about a later purchase.

Apart from the infrastructure limitations, rapid growth is causing a skilled labour shortage.

Sensation Yachts, for example, has gone from employing 70 people to 450 in one year and expanded its yard threefold.

Changes to the employers' input required for apprenticeship schemes means many have stopped providing them. The industry training organisation is churning out new recruits but demand is fast outstripping supply.

Some companies have resorted to bringing in skilled migrants, while others hope Cup exposure will attract expatriate Kiwis.

While the local employers still cannot match the pay boat-builders get overseas, the lifestyle and quality of workmanship here are drawcards.

The local boat-building industry, like manufacturers in other sectors, complains about the lack of Government assistance to fund growth.

Brian Saipe, spokesman for business development agency Enterprise Waitakere, said a big export hurdle was the financial help foreign competitors received.

The marine industry in Australia, for example, has a well-structured, Government-supported, financial and insurance infrastructure backing its marine industry's bids for big international projects.

New Zealand has none.

Maxwell Winches spends 7 per cent on research and development. Rivals in North America and Europe receive huge sums from their Governments to ensure their technology and products are world-leaders.

"Ironically, Maxwell is seen as a world leader in innovation in terms of what we do with winches. Yet there is no assistance there for it and we are bleeding badly and it can't continue," said Mr Czerniak.

However, the industry believes its problems can be managed. Top boat-builders have full order books for the next two to three years.

Tony Whiting, of Whiting Power Systems, said the industry was following Sir Peter Blake and Team New Zealand's lead - under-promise and over-deliver.