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A Silverdale property that will be the new production base for Ramco, the country's biggest manufacturer of plate aluminium boats, is for sale.
But the new owner will not need to look for tenants. Ramco is planning on staying in half of the 20 Peters Way property on a six-year lease with a six-year right of renewal.
The other half of the 2777 sq m property on a 4779 sq m site has been leased to B&D Doors on a three-year lease with a three-year right of renewal.
Colliers International North Shore broker Josh Coburn is selling the property by private treaty closing on October 31. It was originally built in 2004 for another tenant who became insolvent. It stood empty for a while and was temporarily leased to a couple of businesses.
Auckland investor Charles Brothers bought the Peters Way property shortly after he purchased the assets of Hamilton-based Ramco from previous owner Dart Investments.
Ramco started 25 years ago when Waikato farmer Bill Mackrille built a seaworthy aluminium boat in his backyard. The vessel impressed his friends who encouraged him to set up business. At the height of manufacturing, 500 Ramco boats were coming off the production line every year.
Investment company Dart Investments bought the business three years ago and Brothers invested in the company. Dart Investments appointed a general manager and senior staff to run the company - a classic mistake that corporates often make when buying medium to small businesses, says Brothers.
Small New Zealand businesses cannot sustain a heavy management structure. Cash is king for these businesses and they soon get killed off under corporate management.
Brothers has bought a number of run-down businesses and resurrected them in the past 10 years. When he bought Ramco's assets it was struggling to make ends meet. The company was making 31 different styles of boat, including launches and the production line was down to delivering 281 vessels a year.
Brothers' first action was to cut the number of boat styles back to six, focusing on trailer boats and ditching production of launches.
He has also concentrated on moving the business to Auckland, where he is based. Ramco will start full-time production from the Silverdale property in the next couple of weeks.
Plant and machinery have been gradually moved to the property and Brothers says most of the staff will also be shifting to Auckland. Many employees have been working for Ramco for more than five years and they are passionate about boats and the company.
He says the Silverdale property is ideal for boat building. "It is 15 minutes away from Fish City at Albany, our biggest dealer, and close to 70 per cent of our raw materials suppliers who are all based in Auckland."
Brothers has quickly turned the company around and it is now back in profit. It has always had the capacity to be a profitable business, but only if it's run efficiently.
Tightening up aspects of the production is now at the front of Brothers' mind as demand for Ramco boats outstrips supply. Most are exported to Australia and the Pacific Islands.
Ramco boats are among the best-performing hulls in rough sea and have won a host of awards, including the 2006 NZ Boat Show, Aluminium Fish Boat Under Six Metres award.
He says moving to Auckland has instantly cut two days off ordering components from Auckland suppliers. Whatever they order can be on a courier within two hours. It often took two days to get the same order by courier to Hamilton.
Other areas of efficiency include cutting back on the 200 hours it takes to make a six-metre boat. Brothers says he can create efficiencies by cutting that time down to 120 hours and outsourcing some of the work.
"For example, Mico Metals has cut our hulls for some time and the company is now pre-cutting and holding hulls so they are available immediately instead of a two-day or more wait. It's this sort of attention to detail that is helping us increase production," says Brothers.
The property's other tenant, B&D Doors, is part of Australian Stock Exchange listed company Alesco.
B&D Doors has manufactured and marketed garage doors and automatic openers since 1956. More than five million doors have been installed in properties across Australia, New Zealand and 20 countries throughout the world. In 2005 B&D Doors bought Dominator New Zealand to become the largest door and opener manufacturer across Australasia.
Coburn says the Silverdale building has a good ratio of office to warehouse space and a load-bearing mezzanine. A concrete wall used to split the property can be easily removed for future flexibility.
He says the property's location in a new industrial area and the strong New Zealand and Australian brands as tenants make it a good passive investment and a rare portfolio hold.
Peters Way is in a new Silverdale industrial area and the property is one of only a handful of large, standalone freehold industrial sites.
Coburn has sold 6ha of industrial land at Silverdale for about $18 million in just over a year. The rush for land has left little available. Potentially there are only 30ha left to come on stream in the next 18 months. Developers and investors are pressuring the Rodney District Council to zone more property industrial.
He says Silverdale is an industrial area of two halves - the older yard and retail-based properties on Foundry Rd and the newer, modern warehouse/office complexes in Peters Way and Forge Rd.
Flat usable land costs on average $350 per sq m in Silverdale and the cheaper price has resulted in a number of bigger office/warehouse developments with lower rents and the same build quality as other areas. "It's been a big pull for manufacturers," says Coburn.
Brothers says as mezzanine funding dries up and trading banks tighten lending criteria in the wake of the collapse of 10 New Zealand finance companies, there will be few, if any, warehouse/office buildings of this size erected in the next 12-18 months.
