A whole industry rides the Kiwi boat

Posted on Written by Derrick Crandall

kiwi1New Zealand companies say America’s Cup success or failure will influence their bottom lines

Dieter Loibner recently spent a week in New Zealand on a trip organized by New Zealand Trade & Enterprise to showcase the country’s vibrant marine industry. He visited two dozen companies, toured their facilities and talked to executives. Boats are a passion but also big business here, and the Kiwis take pride in what they design, build and sell.

Ah, New Zealand. The residents of this Pacific nation roughly 600 miles south of New Caledonia and 900 miles east of Australia are not among the louder citizens on the planet except on two occasions: when they play with an egg-shaped ball or line up for a yacht race.

The All Blacks are rugby’s equivalent of sailing’s Team New Zealand: immensely proud, highly successful, and integral to the national fabric and self-esteem. And when they show up, they play for keeps. Although the ballers have to wait until 2015 for their next run at the Rugby World Cup, the boaters are beginning their quest to become the next challenger for the America’s Cup this September.

Team New Zealand won the Cup for the first time in 1995 by sweeping Dennis Conner in his home waters off San Diego. That triumph lifted the spirit of the entire nation and pumped billions into the economy over subsequent years with the revitalization of Auckland’s waterfront, increased tourism and global visibility for the country’s marine industry.

Yes, Kiwi Nation, which is the size of Colorado and home to as many people as Kentucky (4.4 million), means big business for the Cup. And vice versa. How big? New Zealand Trade & Enterprise estimates that the Cup could generate more than NZ$80 million of economic activity, flush about NZ$20 million of tax revenue into the government’s coffers and create several hundred jobs. If the Kiwis win the Cup, those figures will increase considerably.

Additionally, about 300,000 hours of labor and 140,000 hours of design work were required by Team New Zealand to build its two AC72 catamarans. Hence the team is not just a standard-bearer but also a potent economic factor.

“Every time we race, the industry’s work is under intense scrutiny from the public and the media,” says Grant Dalton, managing director of Emirates Team New Zealand. “By performing well in high-profile regattas, the team provides invaluable publicity for the New Zealand marine industry. It also projects a positive image of New Zealand and New Zealanders.”

Unlike the billionaire-backed Cup teams, Team New Zealand is fueled by corporate dollars and a NZ$36 million cash infusion from the government, so the team is obliged to help a slew of supporters, including many nautical businesses.

kiwi2“By boaters for boaters” is the selling point of the Kiwi marine industry, which takes pride in competence and quality. However, most of what that industry makes is destined for world markets, which are rather far away and do not respond favorably to the strong Kiwi dollar. So these firms are forced to embrace the principles of lean manufacturing to eke out a profit on smaller margins and pray for a good showing of Team New Zealand in the Cup, which would go a long way toward creating exposure and business. From the top executives down to the last man in the spare parts department, every good Kiwi roots for the team, hoping for a win and a boost to the bottom line.

Some of the companies

C-Tech, run by skiff sailor Alex Vallings, is a small company but a big player in the specialty carbon spars, foils, beams and sail battens found on dinghies, superyachts, and America’s Cup and Volvo Ocean Race boats. C-Tech also developed an inflatable spinnaker retrieval system that is smaller and lighter than conventional products, so it can disappear in the hatch along with the sail.

Mast builder Southern Spars moved into a state-of-the-art 108,000-square-foot production facility, where it makes spars for megayachts and racing yachts, including most of the wingsail components and part of the beam structures for the AC72 catamarans of Team New Zealand and Luna Rossa. Operating under the umbrella of North Technology, the firm uses robots and is now making TPT (thin-ply technology), a super-light and strong composite material, on site. The new EC 6 composite rigging, which consists of carbon fiber pultrusions, can be scaled from one strand (for a tiny Moth dinghy) to massive bundles that make up the stays of megayachts.

Nearly next door is the local (and giant) Doyle Sailmakers loft, which produces about 2,500 sails of all kinds and sizes each year. Considerable business also comes from superyacht refits in the area and from a cooperation with Southern Spars. In its Stratis loft, computer-guided machines lay down carbon fiber threads on Mylar film to make light and strong laminate sails. Much of the development these days focuses on making sails lighter and more durable with a new thread technology called ICE.

Anyone who has watched a sailing regatta of importance knows Protector RIBs, which are made in the Mount Wellington area of Auckland in a facility so clean it could be mistaken for a medical clinic. About 40 percent of Rayglass’ production is dedicated to Protector RIBs, of which 90 percent are exported. They will be out in force in San Francisco during the Cup, including Team New Zealand’s custom RIB, with an outboard mounted in a round well inside the cockpit so it can rotate and push the boat in all directions. Rayglass and Protector are part of Brunswick Corp.’s Boat Group.

Sealegs is the company that brought us the amphibious inflatable. What could be described as “simply add wheels and drive up on the beach” is a sophisticated system of hydraulics and a separate front-wheel drive wrapped inside a RIB. The system works like a charm. Not everyone needs a boat with wheels, but those who do, love it — not just recreational users but also and increasingly commercial and government outfits.

More traditional and much larger are the products turned out by builders McMullen & Wing and Alloy, which specialize in megayacht construction. While Alloy works in the famous Viaduct Basin to put the finishing touches on Encore, a 145-foot sloop, McMullen is recovering from an August 2012 fire at its facility that damaged the 164-foot Starfish, which was about six months from completion.

McMullen was about to deliver an oil spill response vessel to the port of Auckland, but the yard is also seeking a buyer for the Starfish hull, which was tested and found to be structurally sound, according commercial manager Michael Eageln.

Structural strength is also very much on the mind of Mick Cookson, head of Cookson Boats, where Team New Zealand and Luna Rossa had large portions of their AC72 catamarans built. Like his colleague, Tim Smyth, of Core Builder Composites — a shop owned by Oracle Racing Team’s Larry Ellison that built both of his AC72s up the road in Warkworth — Cookson is running a high-end composite shop that relies on precision machines, such as CNC routers, that are being integrated into all aspects of manufacturing.

kiwi3Smyth and Cookson used to bounce back and forth between America’s Cup and Volvo Ocean Race yachts, but with the Volvo going one design, that’s not an option. “A solar car, portable toilet molds, disco balls, Mig replica, parts for caravans and a desalination plant — all sorts of stuff” are some of the diverse projects apart from the Cup work, Smyth says.

Diversification also works for Lloyd Stevenson, who has been a boatbuilder all his life. His first custom boat was Teddy Bear, a swift, unrated 40-foot racer/cruiser that went to a customer in Seattle in 1984. When business was slow, he kept the lights on by building custom kitchens and doing refit work. These days, the shop turns out upscale tenders, and if the Kiwis do well in the Cup, Stevenson reckons he’ll get busy with “trickle-down work.”

A half-hour flight north from Auckland in Whangarei, Circa Marine & Industrial employs a staff of 85 to turn out custom aluminum boats, including the FPB power cruising vessels designed by Steve Dashew. In addition to hull No. 10 of the 64-footer, the first FPB 97 is taking shape and is due to be delivered in late 2014. Circa, which also builds boats for Toyota Marine in Japan, does its own fabrication with its in-house machine shop and foundry.

Importance of electronics

In addition to boatbuilders, New Zealand is home to numerous companies that design, engineer and in many cases manufacture the stuff people like to put inside boats. Take Fusion Electronics, a brand that was taken over in 2006 by Navman founder Peter Maires. The company specializes in marine audio and entertainment systems that are mostly made in Asia. The latest features include independently controlled zones, NMEA 2000 connectivity, linking entertainment systems to multifunction displays, and the integration of iPods and smartphones.

Another Navman alumnus is John Scott, who heads Navico’s R&D shop in Auckland, a natural habitat for people who love to sling computer code, bang on electronics with sharp objects, and expose them to water and UV light or electromagnetic radiation. Much of what Scott’s staff does ends up in Navico-branded products (Lowrance, Simrad, B&G), especially product design, screen layouts and user interfaces. They also know how to spruce up an old steering compass with a data interface for integration into a digital instrument package.

If you’re in the market for LED lights, Hella Marine has them. Founded in 1973, the company is one of the leading makers of LED lights that are waterproof, energy-efficient, and resistant to impact and UV radiation. Hella is proud of its advanced EuroLEDs, which can be synchronized to the same color and light intensity, and the company backs its claims with a five-year warranty. A tour of the high-tech manufacturing facility instills respect for the workers and the precision of assembling high-end LED fixtures.

The picture is quite similar at BEP Marine, which makes electric equipment, including battery switches, circuit protectors and monitors for combustible gases. The firm, which has its roots in the automotive sector, specialized in marine applications and was acquired by Actuant (Mastervolt, Marinco) in 2005. Switching from private ownership to become part of a large corporation had its challenges, says product manager Jarrod Sagar, but it has helped growth and product development, and opened access to a large distribution network.

After years of bluewater cruising, Americans Jeff Robbins and Deirdre Shleigh swallowed the anchor and set up shop in Auckland with Vesper Marine. It’s a small but highly specialized electronics company on the shores of Saint Marys Bay that develops, builds and markets AIS transponders. Its new virtual AIS beacon can help direct ship traffic around obstacles or control the perimeter of the America’s Cup course in San Francisco.

Why Auckland and not Silicon Valley? “We’re a country of sailors, and as an island nation we’ve got a natural affinity for the sea,” Robbins explains. “We’ve got a great education system with highly skilled hardware and software engineers, a government that is helping businesses grow, particularly heavy exporters such as ourselves, and excellent facilities for electronics manufacturing and quality control.”

By the numbers

Robbins’ account mirrors the story of the marine industry, which generates NZ$1.7 billion in annual revenue and likes to promote expertise, innovation and quality of workmanship as it stages a comeback from the global financial crisis. Even if it can grow to more than twice its size by 2021, as some forecasts have it, it’s still a small industry, compared with the nation’s agricultural sector. But it has a much larger footprint here than almost anywhere else in the world.

The New Zealand Marine Industry Association says there are roughly half a million recreational boats (including dinghies, canoes and PWC) in domestic waters. That’s about one for every nine residents (based on a population of 4.4 million). If there were one boat for every nine people in the United States (based on a population of 316 million), there would be more than 35 million boats.

Those numbers help illustrate why boats are important to Kiwis and why the America’s Cup is not just a sailboat race to them. It’s an affair of national interest for a place that’s surrounded by water and populated by people who wave flags and honk horns if their sailing team is winning.

This article originally appeared in the July 2013 issue.

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