Bill Barry-Cotter

MB: How is the Australian boat manufacturing industry placed in 2010?

BBC: It has definitely started to pick up a little, but still has along way to go. The main factor at the moment is the dollar. The Aussie dollar is the highest it’s been against any currency for the past twenty years. It makes it difficult in the US and very difficult in Europe. In years gone by it was very easy to compete with American boats.


MB: Do you believe the dollar will remain high?

BBC: I think it will stay up while you have bank interest rates rising. We have highest interest rates in the world and that won’t help the cause. You can’t count on the fact that it will change, you just have to work around it. From my side of it, what we’ve done is to push into smaller boats, which are more orientated to the Australian and New Zealand market, rather than export. We make them super efficient, labour wise, and we’ll source a lot of the componentry from overseas. This is what I was doing in the late ‘70s and early 80s when the currency changed. Again, we were bringing a lot of interiors out of the East. At Riviera we brought things in from Thailand, Singapore, Malaysia and Taiwan. We’ll have to start doing that again.


MB: Was the recession of 2009 as damaging to the industry as what was widely reported and what business lessons were gained in the process?

BBC: It was, it decimated the industry. We were probably more fortunate than, say the likes of Riviera, because we were in a growth stage anyway so we were coming off a far smaller base than they were. So it was probably a bit easier for us, but it was still very tough. We were probably down close to 40 per cent.

With the market getting bigger [for larger boats] all the time, that was the way all our development was pushed. We only had one boat under 50 feet and more boats above 60 feet, than below. We had to push our development into smaller boats. That’s what came out of that market. By Sanctuary Cove we’ll be down to about 40 feet and will have nearly 20 boats across the range, which is probably one of the best range of boats in the world. We were forced into that situation because of the market. We were in the midst of developing a lot of bigger boats - we did a 180 degree turn and moved in the smaller end of the market.


MB: Are the same incentives still there for  boat manufacturers to establish themselves in Queensland, as there was when you moved your business there in the early 80s?

BBC: There are no incentives whatsoever up here. If I was starting again, Queensland would be the last place I’d do it. If you look at Australian labour costs, up here has become very expensive. There’s a very poor skills base because the building industry’s boomed so it has become expensive. From a government bureaucracy perspective, particularly local government, it has become a disaster. They’re incompetent people and we finish up having to go to state government to get things sorted. I’ve hired two people in the past two years, while we were getting rid of labour, to just deal with compliance. The issue of labour at the moment is the same. With Riviera, I came up here from NSW to get away from all that. I’ve got friends in business in NSW, and honestly, NSW today has less bureaucracy than Queensland. The best states at the moment if you were to build boats in Australia would be South Australia and Western Australia. And by far the best place to do it would be New Zealand. You look to New Zealand for business, and they want you there, they want it to work. There’s a bureaucratic attitude to help, not hinder.


MB: Is it feasible for Australian companies to manufacturer in New Zealand?

BBC: Yes, for any business that is about to start, my suggestion is that’s probably the place to do it. I’ve got enough infrastructure here, so obviously I’m not going to run off to New Zealand, but if it keeps getting tougher, you’ve really got to look at going elsewhere.


MB: Has the Queensland state government or the Gold Coast Council been proactive in the growth and sustainability of the Gold Coast marine precinct?  

BBC: The state government has, and originally, so did the council. But the council today is very different to the one that started that precinct. To try and do anything is just impossible because of the bureaucracy here. I’ve got 30,000 square feet of joinery shop and about 1200 square feet of foundry and engineering. What I really need to do is ship that to the precinct. At the moment it’s in an industrial area in Southport. The cost to do that and comply just wouldn’t be viable. If we had to wind the business back, or try and be more competitive, the logical thing to do is close all that and send it to Asia. We’re bringing stainless steel castings out of China and machining them here, so the next step would be bringing the whole lot from China. Then the quality would fall off. But we could be forced into it.  


MB: What sort of effect would that have on the overall industry if more manufacturing is moved to China?

BBC: The biggest export out of Australia is expertise. It is well qualified people going to the US and Asia teaching them how to build boats and to be more competitive than us. The reality is the typical Australian boat builder can build a boat, better quality, and in less hours, than the Chinese. That’s only through the methods that we’re using like better tooling and the way we’re structuring and training people. There were a lot of businesses that closed here in the past 12 months and now those skilled people are off to China, and the US, teaching them how to do it. We’ll have all those boats back here, and that’s what governments don’t understand, you lose the whole skill base.


MB: Would you ever consider manufacturing in Asia?

BBC: Well hopefully not, but two years ago I would have conclusively ruled it out. Initially it will be componentry and at the end of the day, time will tell whether the system changes or not. If it doesn’t change I’d suggest that we’d be bringing boats from somewhere else. It will either be the US or Asia, probably the US. If you look at the dollar seven years ago, it was 58 US cents. Today it is at 91 cents. We had an hourly rate of about $15 AUS dollars an hour. In the US that was $12. So effectively we were almost half the hourly rate of the US. Today we’re more than double, we’re $30 an hour here, and we’re almost level with US dollars. They’re at $15 an hour today. Labour wise, hourly rate wise, you can do it a lot cheaper in the US than you can do it here. The average Australian worker is probably more productive than the American worker but the recession is probably changing that too. The typical response from government is, it doesn’t matter, it’s dirty filthy manufacturing and we’ll just live off the service industry.


MB: Where is your export market focused?

BBC: Because of the currency, the US is all but decimated. My attitude is you can’t count on the US being a market any more. The market is actually picking up there, but with our pricing, we’ve gone from something that was well-priced a couple of years ago to something expensive compared to Europe or the US boats. If you look at all the English boats, that currency crashed and they’ve had a 35 per cent price reduction and we’ve had the same amount as an increase. I don’t hold a lot of hope there. Ironically the only export market I can see us getting into is Asia. We’ve sold 73s in Singapore. We’ll do a small amount of export to Singapore, but overall the export market is going to die.


MB: You mentioned the trend to smaller boats earlier, is this where the market is headed?

BBC: Yes, smaller boats to get the niche in the market. We’re chasing smaller boats, better fuel efficiency, better sea boats and better quality. I believe we will always beat the Asian and American products on quality. Even if we are the expensive end of it.


MB: And finally, in your personal opinion, will Riviera after the very public fall from grace, recover and become the iconic brand it once was?  

BBC: I cannot see how. You’ve got it now being owned and run by the bank. To me, this industry needs people that know what they’re doing, trained people really with a passion for it. That’s why Riviera failed in the first place, that’s what they didn’t have and now with the bank it’s probably worse. I don’t think there’s too many businesses that banks run, that they make a success of.


MB: Thanks for your time, Bill.

BBC: Thankyou.