Opinion - Propelling prosperity in the marine industry

Written on the 12 May 2009

Opinion - Propelling prosperity in the marine industry

 

The marine industry injects $7.8 billion a year into the Australian economy and employs around 28,000 people. Queensland’s 80 plus boat builders create 80 per cent of all boats built in Australia, while the Gold Coast’s 30 manufacturers create 65 per cent of all Australian craft. Manager of Marine Queensland Gold Coast division Charles Dickson, says more must be done at federal and state level to foster growth in the sector — before it sinks into the murky abyss alongside the struggling automotive industry.
 
Factors impacting the Coast’s Marine Industry
Consumer uncertainty
More than 70 per cent of Australia’s workforce is currently employed in secure jobs. The difficulty is to get them to continue to spend. Continuing negative media comments from federal and state governments does nothing to bolster consumer confidence.
 Cheap imports/poor build quality/dumping allegations against US builders.
Because it is seen as a sizeable and affluent market, Australia is becoming a dumping ground for cheaply-produced boats from Asia and as a market for surplus stocks being carried in the USA and Canada.
Withdrawal of finance facilities
With the withdrawal of GE Money and GMAC from Australia, floor plan finance has become very difficult to obtain. This is restricting the amount of stock that dealers can carry and that is flowing through to fewer orders from the boat builders.
Banks unwilling to lend against property
Banks are lending less than 50 per cent of valuation – where 12 months ago, a bank may have advanced $750,000 for working capital against a $1million dollar property. Banks have now re-valued the security as say $800,000 and reduced the overdraft to say $400,000 (50 per cent of the new valuation). In this example, the business owner has had to find $350,000 to avoid foreclosure and winding up proceedings. Very little capital is now available for new product development or marketing initiatives.
 Infrastructure deficiencies
Dredging, boat ramps, sewerage pump-out facilities on the Gold Coast’s waterways have all been sadly neglected by a succession of disinterested governments and bungling bureaucrats over the past 10 years.
Lengthy and costly approval processes for new marinas up to 10 years.
The Gold Coast desperately needs investment in new marinas if the city is to keep up with projected demand for marina berths over the coming 10 – 15 years. We are heading down the same path as NSW did, where for several years, due to the extreme shortage of marina berths, boat sales have only been made by those people who could guarantee somewhere for the new owner to moor the boat.
What kind of government assistance is required?
Same sort of packages as the car industry.
The Federal Government handed the auto industry a $6.2 billion assistance package. The leisure marine industry employs around the same number of people as the auto industry, but was completely overlooked by the industry rescue package.
Investment allowances for new moulds and equipment.
Thirty per cent investment allowance under the Federal Government’s industry assistance package was welcome, but the main problem is that the industry does not have sufficient capital reserves to come up with the other 70 per cent due to the financial squeeze initiated by the banks.
Structural adjustment program
Assistance with mergers and acquisition costs to assist the industry to become more efficient.
Changes to existing government regulations.
- Manufacturing standards must be applied to all local and imported boats. Australia’s boat builders are not seeking protection; simply a level playing field. They want internationally recognised build standards and for those standards to apply to all imported boats. (Similar to the Australian Design Rules that apply to all cars sold in Australia).
- Excessively harsh environmental regulations – The environmental regulations that boat builders must adhered to in Australia are not experienced by overseas boat builders. Many of these costly regulations are simply unwarranted and add significantly to the cost of building boasts in Australia.
Infrastructure assistance
- Marketing support – especially for export markets. Past EMDG grants have proven too costly and time consuming for smaller boat builders to be able to avail themselves of the grants.
- Boat Ramps – There are more than 24,000 trailer boats registered to Gold Coast owners vying for space on very few local boat launching ramps. The shortage of ramps and inconvenience to owners is hindering new boat sales.
- Sewerage pump outs – Laws now prohibit boat owners from discharging their toilets into the waterways. No argument with this; but there are precious few sewerage pump out facilities available to boat owners on the Gold Coast.  

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