Marten Yachts, NZ bankruptcy

[brian eiland]

I saw this report in one of the trade publications, and wondered if anyone had some more info on why this might have come about in that robust boat industry of New Zealand?

"One of the world's leading shipyards, Marten Yachts of Auckland, New
Zealand, has filed for liquidation. Over the years, the yard has been
responsible for building some of the world's best known race boats,
including Ellen MacArthur's Kingfisher, America's Cup yacht KZ 1 and
various performance cruisers such as the 19.8m (65ft) Spirit of Adventure
and the 20.1m (66ft) Pinta Smeralda. The NZ Companies Office listed Marten
Yachts' claim for bankruptcy on its website last week, and the news has
since been confirmed by the Marine Industry Association (MIA) of New
Zealand."

[CDBarry]

Just because you can sell the boats doesn't mean you can make them at a profit. Palmer Johnson also went under a year ago or so and was bought.

"We lose a little bit on each one but make it up on the volume" might be a funny joke but...

Rec boat builders, especially custom "I'm in it for the art ..." often have quite low productivity and don't know about the tools to improve.

The techniques are all out there for anyone to find out about: Lean, Six Sigma, 5S, TQM are all established manufacturing industry techniques. Get Journal of Ship Production, belong to APICS or SME, etc.

[D'ARTOIS]

This will not be the last one..... I get bad reports from people involved in yachtsales.......

[RThompson]

The Yacht industry has had it coming for a while. Like D'Artois says, it will not be the last.
I come from NZ and it is a saddening bit of news to get - Marten Yachts are iconic.
Through the '90 s the growth of the yacht building industry in Auckland (and the rest of NZ) was explosive.
The whole America's Cup circus came to town for a while. The government invested heavily in the yacht industry.
All of a sudden builders who had been building 6 to 14 metre boats were building 20 to 30 metre boats. New megayacht yards sprung up all over the place (well two or three anyway). The NZ dollar compared very favourably with the USD and Euro/Pound.

Unfortunately, I think it may have been to much, to fast. The infrastructure and mentalities of the industry were overwhelmed, then the booming market was taken for granted. (keeping in mind the majority of the industry is within a population of about 1.2 million people)
Indeed new yacht sales world wide have been booming.
What goes up, will probably come down.
I see that several of the bigger (NZ) yards are suffering.
The previous unsatisfied demand for tradesmen is in decline.
I think the stockmarket term is "correction".

However, I believe that the quality of boats coming out of NZ will not suffer. Yards may close and profits shrink, but the national pride of boat building standards will be maintained.

I am sorry to learn of Marten Yachts in trouble. They are one of the old guard.

Rob

[brian eiland]

I have tried to maintain a watch on the boatbuilding situation in NZ as I have always though (and recommended) that it was one of the best places in the world to build....and primarily as it is just a national pride, and they have such a dedicated and skilled labor supply.

I particularly liked their skill with wet-preg epoxy layup verses pre-preg systems. In fact ALL of their skills advanced at a very significant level.

I was concerned that these capabilities might be overbuilt considering the slow down that would eneviably occur after the lost of the Cup and the narrowing of the currency exchange with the dollar.

I had a friend who looked at building a power cat in NZ several years ago, but found the industry a bit TOO busy at the time, and the price a little more than he had hoped to pay. I imagine one might strike a better deal at this time?

[brian eiland]

END OF AN ERA
Auckland, NZ - Over the years, at least seven America's Cup yachts -
including KZ 7, New Zealand's plastic fantastic - and ocean-going battlers
such as Kingfisher for British solo sailing star Ellen McArthur, two Grant
Dalton Whitbread entrants and many cruising boats took shape at Marten's
Auckland yards. With the boom brought on by New Zealand's America's Cup
reign, it looked like Marten was in a dream position in a dream industry.
The dream ended this month when Marten Yachts collapsed. The voluntary
liquidation of his company has come at a time when the marine export
industry is struggling after years of tremendous growth. Two main factors
are raised as the reason for the slump: the rise and rise of the Kiwi
dollar, which this week hit 73.05USc, the highest level since it floated in
March 1985; and the loss of the Auld Mug to Alinghi in 2003.

In the past year, exports have dropped, companies have laid off staff, and
the industry has been through a major overhaul, leading to the redundancy
of one of the men who led it through the heady days. Documents relating to
Marten Yachts' could just as easily tell the story of the industry as a
whole. "The liquidators have been advised that the business had begun to
experience trading and cash-flow difficulties as a result of the generally
depressed state of the industry," says the liquidators' first report. "In
addition, the strengthened New Zealand dollar has made the purchase price
of yachts produced by the company much more expensive to foreign
purchasers, thus precluding desired new contracts from being signed."

In the weeks leading up to the February 10 collapse, Marten tried to seal a
contract for a large boat to keep the company afloat. But the efforts were
in vain and the company was left with liabilities of $6 million, almost $2
million more than assets, as assessed at the time of the liquidation. Three
yachts were under construction, including one for German businessman and
sailing enthusiast Michael Illbruck, and discussions are underway with the
owners. Experts predict more companies will close as the industry adapts.
By the Marine Industry Association's reckoning, many companies were close
to dire straits - with dangerously low numbers of orders - in the six to 12
months after the loss of the Cup.

Excerpts of a story by Eugene Bingham in the NZ Herald.
Full story: www.nzherald.co.nz/index.cfm?ObjectID=10112676

[RThompson]

So there we go...

Still not very good news, but on the other hand it probably is a good time to look at building a boat there.

Rob

[CDBarry]

Unfortunately, it is very easy to get into a cash flow crunch in any business with a small number of very expensive projects that take significant time.