Queensland – State of play

Queensland is Australia’s dominant boating state, both for industry and boating participation. A recent Marine Queensland report into the state’s boating industry revealed some interesting facts as the industry recovers from a turbulent year. Boat registrations were up slightly from the year before with 228,869 Queensland registered recreational marine vessels. That was an increase of 2.7 per cent over the previous year, yet that was below the five year trend average of 4.4 per cent. Queensland has the highest number of registered boats, followed by NSW and Victoria. South Australia was the only state to experience a decline in registrations last year.

Marine Queensland GM Don Jones said Queensland’s entry level market remains buoyant and he is confident the market will grow in 2010. “This reinforces the importance that recreational boating has in large sectors of the community ... I think there are strong messages there for the government that it’s unlike other recreational activities ... people see (boating) as a core part of their lifestyle,” said Jones.

“The Queensland industry can take from the report that the rate of growth is set to continue. When confidence returns to the economy that demand is not going to abate.”

Data revealed 95 per cent of Queensland vessels were eight metres, or less, in length. Some 62 per cent of boats were up to 4.5 metres and 37 per cent were more than 4.5 metres. The most common size for registered vessels was between 3.01 and 4.0 metres.

The industry

According to the Marine Queensland report, the boating industry on the Gold Coast contracted in the 2008-2009 financial year. Median annual revenue per business declined by 33 per cent from $1.5 million in 2007-2008 to $1 million in 2008-2009. Some 30.8 per cent of businesses surveyed reduced staff or expected to reduce staff.

Elsewhere in the state, regional centres with less diverse sectors suffered the most.

Marine Queensland said this sends a message to government on the “importance of regional economic development measures that encourage more broadly based regional economies”.

The Queensland marine industry faces a new set of challenges in 2010. After a turbulent 2009 and renewed optimism at the beginning of 2010, many manufacturers were caught off guard and are now facing low stock levels, skills shortages, and, as a result, lengthy lead times to deliver orders.

“It’s a combination of manufacturers and dealers. The dealers last year ran their stock levels down to very low levels, manufacturers did the same and many were only building on order,” said Jones.

“There’s just no stock around because production capacity was naturally scaled back last year. As far as production levels, ramping things back up, with skilled staff ... it just won’t happen overnight. The result is lead times are stretched out,” he said.

Other challenges for the Queensland industry come in the form of a lack of government investment into infrastructure, training, licensing and so on to keep pace with the growing demand in boating.

“When you look at centres like the Gold Coast, for example, the pressure on local waterways is increasing, but the expenditure is nowhere near the level that it needs to maintain channels, boat ramps and facilities.”

Jones said industry development is a key priority for Marine Queensland and lobbying for infrastructure development and access is high on the agenda. “I put this under the heading of water access, whether it’s boat ramps, dredging programs or marine parks. So when people get out on the water they can actually do what they want to do, like fishing and other water activities, and they’re not impeded by no-go zones.”

Jones said it comes down to organisations like Marine Queensland to continue convincing the three tiers of government of the importance of the boating industry from an economic and social perspective.

“We spend a lot of time and resources across the three levels of government. When talking about marine parks it’s with a negative perspective, trying to implement them in a way that won’t impact the industry. From a positive perspective, in terms of regional development and policy development, we’re trying to convince the three tiers of the positive benefits of the marine industry in fairly narrow economies, like Far North Queensland. These economies are very much
reliant on tourism. The marine industry is a good fit in those economies, it can be developed quickly and provide a good return for the economy and it’s really that continued emphasise that ensure the industry remains strong,” he said.

The state of business

Marine Business spoke to a number of prominent players for their thoughts on the Queensland industry. The common factor behind Queensland’s domination over other states, in all sectors of the marine industry, relates closely to the high level of boating participation. The industry chooses to stay close to its strongest customer base.

And as the figures above prove, Queensland, despite having a smaller population, has more boat users than any other state, including the higher population states of NSW and Victoria.

“We choose to be amongst the cluster of marine businesses in the area,” said Chris Baird, GM of Fusion Electronics, which is based on the Gold Coast. “The simple reason is that you need to be close to your main market and South East Queensland is strong for building retail and end-users.”

According to Baird, Fusion had an increase of more than 30 per cent last year, despite the difficult economic conditions.

“This year has started higher than 2009,” Baird said. “My travels around the country have shown me that we are obviously all in a better frame of mind and I see the better companies gravitating to each other quickly. What this shows me is that the base we are rebuilding will be more solid, and I see steadier growth for all ‘good’ companies.”

Baird also said Fusion’s move from NSW to Queensland two years ago “had nothing to do with the lifestyle, weather, or the Brisbane Lions”.

John Hogan, managing director of Superior Jetties, another Gold Coast business, said the location is ideal with its extensive waterways and was important for propping up slower export sales.

“In tough times this has been an important base to maintain our business,” said Hogan. (See page 18 for more on Superior Jetties).

Rob McIntyre, MD of Brisbane-based Steyr Motors, said the local market appears to be coping well economically with the global financial crisis.

“Perhaps we will see the benefits of this throughout our Boat Show season,” said McIntyre.

“As was to be expected there has been a noticeable decline in OEM business and there does not appear to be much improvement in this area as yet. However, there has been increased enquiry from the re-power and after sales markets generally. As an industry, we have to pay good attention to this market as it is this group that is assisting us all in these times,” he said.

Haines Suzuki MD Greg Haines said bigger boats have dominated the trailer boat market since the economy crashed.

“We’ve seen a shift to bigger boats. I think the people are still willing to spend money on boats in the $80,000 to $120,000 market. They can still afford them and have secure jobs. The small boats have been very tough. Our market is $60,000 plus at the moment,” said Haines.

Stephen Milne, Riviera’s director of brand and communication, said since the company formally went into receivership in May last year, it has achieved a new boat sales run rate of over two boats per week. “These boats have either been stock or new builds ... given the market conditions this is a remarkable effort,” said Milne.

“We have maintained our marketing position with a strong presence at all of the major boat shows around the world. Our global inventory of stock boats is now the lowest it has been in three years and this is now driving new boat orders into our plant at Coomera.”

Milne said company year-to-date had sold 27 new boats, indicating that for Riviera the market in Australia, the US and Europe is gaining some momentum.

“We are ahead of our current financial year plan and hold a good forward order bank,”
he said.

“We have 400 people on site right now building boats and we are have many doing overtime to keep to our delivery schedules.

“We are now actively recruiting new production people to help grow with demand. Our new product development team are very busy working on a number of brand new models. The first of which is a 43 Open Flybridge that will have its world release at the Sanctuary Cove Show this year.”

“Internationally, we have appointed several new dealers in the past few months including on the West Coast of the USA, Ohio and Puerto Rico.”

Riviera said Queensland offers a lower cost base than some other states with a growing population base to draw new staff from. “Queensland has a climate that attracts people who want to work in the boating industry and has an established skills base,” said Milne.

Does Queensland, through government support and assistance, still offer the marine industry a level of support greater than other states?

Fusion’s Chris Baird said: “Our business is nationally focused but our R&D happens in New Zealand. My thoughts are that originally there was considerable support for the marine industry here in Queensland over other states, but I certainly think that is now diminished.”

Baird said the federal Government wasn’t doing enough to ensure Queensland companies don’t move to offshore manufacturing.

“Asia just keeps on knocking and I am talking to more and more companies that are looking at moving at least some of their operations off-shore. I certainly would hate to see our marine industry just continue to lose more offshore. I don’t believe it should be inevitable and I certainly don’t believe this Federal Government has any constructive programs in place to stop this happening. I hate to say it but the Kiwis look after their marine industry better, and no, I’m not a Kiwi,” he said.

Marine industry icon Bill-Barry Cotter, in a interview with Marine Business, echoed these sentiments, also declaring New Zealand as a friendlier business environment than Queensland.

“You look at New Zealand for business and they want you there, they want it to work. There’s a bureaucratic attitude to help, not hinder,” said Cotter.

Stephen Milne said Riviera receives no support from local or state government.

“Local and state government do not value the contribution of boat building to the state’s economy. They have made no attempts to understand our business and how they may be able to assist us grow our business and employ more Australians,” said Milne.

“When we reluctantly were forced to lay off staff early last year as the GFC really started to impact the wider global boating industry, government made no attempt to understand our plight nor offer any assistance.”

Marine Queensland’s Don Jones said in centres such as the Gold Coast, council has recognised the marine industry as a key industry within the region.

“From our perspective it’s never enough, but credit has to be given that they do acknowledge it as a key industry and consult with us, and work with us on many initiatives. The onus does fall back on the industry to keep its argument fresh and relevant to government priorities and that’s where reports like the industry snapshot Marine Queensland does will help us do that,” he said.

The future

Don Jones said a raft of regularity changes are coming. “I think build standards will be a topic of ongoing discussion for some time. Again it’s about trying to get a balance right, it’s about ensuring build standards are at an acceptable level and that the appropriate checks and balances are put in place to ensure that vessels can be identified properly in case of theft. Like motor vehicles, consumers shold have confidence that vessels are manufactured to a certain standard.”

Jones concluded by saying the broader message is the tremendous influence this industry is making to regional, state and national economies. “I think when you take a national perspective of it there are huge opportunities right around the country to continue to build on what’s been happening in Queensland in the last number of years, and building those benefits right around the nation. It’s not a state by state issue, it’s to everyone’s advantage if this state continues to grow and prospers, right around the nation,” he said.