Industry snapshot for the Auckland region The Marine Sector

Industry Snapshot for the Auckland Region

The Marine Sector

October 2009

Prepared by

Dr. Catherine Murray Social and Economic Research & Monitoring team Auckland Regional Council October 2009 ISSN 1175-074X Tel: 09 366 2000

Auckland Region Marine Sector in a Nutshell

The Auckland recreational marine industry, in 2008:

had sales turnover of $1.2 billion, 64% of the New Zealand total had a turnover growth rate of 31% over the preceding three years, higher than the 23% growth rate for the industry nationally contributed $399 million to gross regional product (GRP), less than 1% of Aucklands GRP was a signicant contributor (4.4%) to the regions total exports had signicant market share in most recreation categories, notably generating 93% of New Zealands superyacht exports employed 5,523 people - approximately 50% in boat-building and marine equipment retailing services, the remaining 50% in ancillary industries associated with the marine sector had at least 884 business units was training over 600 apprentices 56% of whom were modern apprentices, and 44% non-modern apprentices.

Table of Contents

Auckland Region Marine Sector in a Nutshell Introduction Understanding the Marine Industry Data Sources Economic Activity in the Recreation Marine Sector Gross Regional Product Gross output and turnover Exports Employment Training and Skills Industry Business Units Drivers of the Marine Industry in the Auckland Region Consumer demand and forecast growth Reputation Extended value chain Innovation Social Capital Marine culture Conclusion Appendix 1 Appendix 2

3 5 6 9 10 10 10 12 13 15 19 21 21 23 23 23 23 24 26 27 28

Introduction
Auckland lays claim to an outstanding connection between land and sea, in a way only a few cities around the world can. The evolution of many cities worldwide has revolved around transport networks. In former times with the different waves of settlement in the Auckland region, access to the coast, mooring and port facilities determined settlement patterns. Thus began Aucklands maritime connection which manifests in the current cultural, social and economic associations with the sea, water and boats. The environmental importance of Aucklands maritime heritage is recognised in the Hauraki Gulf Marine Park Act 2000. Industry sectors evolve and change, driven by changes from within rms themselves or from changes to the environment within which they operate. This report presents a snapshot of the marine industry in 2008/2009. Although the global economic nancial crisis has impacted on businesses and rms within the industry, with some casualties, the industry remains, quite literally, buoyant, showing resilience to the changing economic climate. While acknowledging that not all of Aucklands residents utilise marine resources for the same purpose or to the same extent, the marine environment (beaches, harbour and water activities) is a signicant contributor to the well being of its residents.1 It was estimated in 2006 that 17% of Auckland households owned a boat. There are approximately 169 boat ramps in the region and 105 marine mooring areas. Evidence abounds of the connection between the people and the sea in Auckland, the City of the Sails. Statistics New Zealand estimated that economic activities that take place in or use the marine environment contributed 3.3% of total GDP in 2002.2 Sea and maritime interests are integral to Aucklands character, history and contemporary culture. For example, Westhaven is the fth largest marina in the world and its distinctive position, facilities and activities make it ideal for activities such as recreational boating, charter services, boat clubs, coastal services and marine industry activity in Auckland.3 There is a thriving marine industry in the Auckland region. It includes the sub-sectors of: recreational boats manufacturing/building and servicing commercial vessels servicing the shing industry, visitor market, used for transport commuters and goods and services including tugs, barges, charter boats and ferries marine defence industry.

These sub sectors do not operate in isolation, as many enterprises provide materials and expertise across all three. The value chain of the marine industry is extensive. However, Aucklands marine industry is predominantly focused on the recreational market. This is partly due to the export potential of this sub sector, which differs from the more domestic focus of commercial vessels and the defence industry. This report represents a snapshot of the marine industry in the Auckland region. A large proportion of the data refers to the recreational boat sub-sector, due to availability and recent survey evidence. The recreational boat industry has been the focus of interest given that it has gained a reputation for quality and is a signicant contributor to the regions exports. However, other sources of data encompass all three sub-sectors and are used especially to create a prole of workers within the industry. It builds on existing research into the marine industry, given that it has been recognised as a key growth area of specialised manufacturing, increasingly with a quality reputation leading to international competitiveness. The recreation marine industry is the largest non-primary based manufacturing sector in New Zealand.

See for example Crothers, C. (2003) Aucklanders Attitude to Auckland. Auckland University of Technology; and Auckland Regional Council (2004) The Hauraki Gulf State of the Environment Report 2004. 2 Statistics New Zealand (2006) New Zealands Marine Economy 1997-2002.

Auckland City Council (2009) Auckland City Centre Waterfront Masterplan.

Understanding the Marine Industry

As stated above, the marine industry sector is made up of the building and servicing of recreational vessels; commercial vessels such as ferries, shing boats, tugs and barges; and services to the marine defence industry. Thus the value chain of the marine industry is extensive. It is essentially a manufacturing industry, however, interdependent with other industries. It is diverse, ranging from suppliers of new materials, advanced electronics and new technologies not exclusive to the marine sector.

The sector requires skilled input from designers, engineers, mechanics and architects; carpenters, surveyors and painters; divers and drivers; specialized insurance assessors; craftspeople; computer programmers and services of the tourism industry.4 As Figure 1 shows, the marine value chain is extensive and integrated with various other sectors. The marine industry has developed a competitive advantage in design and construction technology, with an innovative exible approach to doing business, contributing to an excellent global reputation for the industry.

Figure 1

Marine Industry Value Chain

Inputs/Enablers
Engineering Sector
Material Equipment Components

Priamary Benefit

Secondary Benefit
Industries where Marine enables
eg Fishing, Transport

Supply Base Tourism/Entertainment Education Transportation Services

eg Financial Sector

Marine Industry

Innovation to other Industries

eg Composites

Social

Civil Engineering NZ Brand Industry Excellence Property Marine Events

Economic Benefit
Source: Auckland Plus (2009) Auckland Marine Industry Feasibility Study.

Deloitte and Walker Projects (2008) Auckland Regional Innovation Systems Review. Report commissioned by the Ministry of Economic Development, June 2008.

The sector is predominantly focused on the recreational market in Auckland (Figure 2), although the shing eet operates from Onehunga in the Manukau Harbour; Devonport is the location of the Royal New Zealand naval base and engineering facility; and the Waitemata Harbour is abuzz with commercial activity such as charters, passenger ferries, sea freight and pilot boats operating from the Ports of Auckland (Figure 3). Although uncertainty exists around the actual rate of recreational boat ownership and use, estimates indicate high levels by international standards.5 Aucklands recreational marine industry ranges from superyachts to personal leisure craft, from high quality customised boat building to marine services, both for the domestic and export markets. Furthermore it is integrated into the broader Auckland economy through the hospitality and tourism industries. Large marine events which are hosted

in Auckland generate additional economic activity, contributing to the visitor and tourism economy, while offering international exposure to the industry. The sector has major impacts on the Auckland economy, given that it is integrated across many sectors from the research and education sectors to specialised manufacturing for products such as textiles, sails and ropes, leather, furniture, electronic equipment and also to the construction industry for trades such as plumbing, welding, painting and coatings. It is also integrated with the tourism and visitor industry, which accommodates individuals who come to the region, as stated above for major events, but also for boat owners and crew when they choose to ret their boats and use maintenance services on their vessels.

Figure 2

Recreation Marine Industry Categories

Trailer power boats

Boats ranging between 3m and 8.5m and powered by an outboard motor

Rigid hull inatable boats

Lightweight boats constructed with a solid shaped hull and exible tubes at the gunwale

Yachts and launches

Boats between 8 and 25m

Rets
Upgrading and renovation of existing boats and yachts

Race yachts
Sailing yachts built specically for competitive purposes

Equipment
Advanced electronics, sails and ropes, accessories etc.

Superyachts
Recreational boats longer than 25m either sail or power.

Services
Ancillary activities linked to the recreation marine industry including engineering, design, research, computer programmers, painting and coatings etc.

Source:

adapted from Ireland, A. et al (2009) (see footnote 16 for full reference).

AucklandPlus (2009) Auckland Marine Industry Feasibility Study. Report prepared by Beca Applied Technologies Ltd, June 2009

Figure 3

Location of Aucklands marinas and marine activities

Gulf Harbour Marina

! (

Hauraki Gulf

Milford Marina

Hobsonville Development Site

! (

_ ^

! (
West Park Marina
Waitemata Harbour

Bayswater Marina

! ( ! ( ! (! (

Wynyard Ports of Quarter Auckland

^ _ _^ ^ _ ! ( (!

! (

Devonport Naval Base

Orakei Marina Half Moon Bay Marina

OBC Auckland

! ( ! (
Bucklands Beach Yacht Club Marina

! (
Pine Harbour Marina

_ ^
Manukau Harbour

Onehunga Port

Westhaven Marina

Viaduct Harbour Marine Village

Hobson West Marina Viaduct Harbour Marina

! (
Wynyard Quarter

! (
Pier 21 Marina

_ ^

! (

! ( ! (
Auckland CBD

_ ^
Ports of Auckland

Data Sources

A range of data sources were used for this analysis. Each source has its own merits, and where possible the most appropriate source was used. There is however a strong emphasis on the recreation marine industry, given the availability of regional data from the Marine Industry Associations marine survey of 2008, who made the data available for this report. This survey was conducted by Market Economics Ltd, who subsequently calibrated the data into the Auckland Regional Councils Economic Futures Model. This enabled an analysis of the relative size of the industry to the overall economy. Statistics New Zealand publishes annual data on business demographics, giving information on business units in the region by industry and by number of employees therein. The data gives an accurate count of businesses in operation across industries, in February of each year. The proportion of ANZSIC six digit industries which comprises the Auckland marine industry was determined from the Economic Futures Model, based on the Marine Industry Association survey. The 2006 census data provided an insight on workers within the broader marine industry, given the stated occupations and qualications in the census. The Boating Industry Training Organisation provided information on current apprentice and training numbers in the industry. Monitoring data from the Auckland Regional Council was used for the maps on boat ramps and busiest navigational routes in the region.

Economic Activity in the Recreation Marine Sector

Gross Regional Product
The recreation marine sub-sector contributed $399 million to Aucklands gross regional product (GRP) in 2006. This was less than 0.7% of total GRP of $55 billion for the region.6 GRP is the market value of all nal goods and services produced in an economy. The marine industrys contribution to GRP is projected to increase from 0.7% in 2006, to 0.9% by 2031. Although these GRP gures seem insignicant in the overall Auckland economy, the marine industry is the largest specialised manufacturing industry in New Zealand, Auckland having a 64% share of New Zealands total turnover in 2008. Furthermore it is an important export sector, with potential for export earnings. This is of great consequence given the current account decit of New Zealand (8.5% of GDP for the rst quarter of 20097). Many of the industries within the region which contribute signicantly to GRP do not generate export earnings, as they are inward focused producing goods and services for the domestic market. It is interesting to explore Aucklands activities and markets in detail. Turnover for equipment has the highest dollar value out of the eight recreational marine industry categories for Auckland ($320.2m) and for other regions ($230.5m). This equates to 29% of total industry turnover for New Zealand. Equipment generated the most export turnover for regions other than Auckland, and therefore can be seen as the most important category of the recreational marine industry for them. Auckland has a signicant share of sales in rets (78% of New Zealands total turnover). Imports of rets were zero in 2008, indicating that no New Zealand vessels are sent overseas for ret. However, New Zealand export sales in the ret sector were declining up to 2006, with fewer international yachts coming to New Zealand for ret.8 There has been a slight increase, from the low in 2006, in the value of export sales - $49m in 2008, but this is under half the value of ret export sales in 2003, once ination is taken into account. Just over 50% of yachts and launches and 45% of trailer power boats purchased in the Auckland region are imported indicating the level of international competition in these markets (Table 3). For trailer power boats, Auckland only has 31% of national turnover, indicating the relative concentration of marine industry activity elsewhere in the country. There is a polarisation of certain sub categories in Auckland. For example, 100% of marine industry services that are imported into the country are for the Auckland region. Similarly Auckland has 85% of the market for domestic race yachts although the turnover in this category is the smallest of all eight. Auckland exports the same amount of race yachts as the rest of the country.

Gross output and turnover

Gross output is the value of gross regional product plus intermediate consumption, or the total value of sales before subtracting the value of intermediate goods used in the production of the output. The gross output of the industry was $1,222 million in 2008 for the Auckland region. This represented 64% of New Zealands recreation marine industry turnover (see Table 1). Forty three percent of Aucklands marine industry activity relates to domestic turnover, 40% for export and 17% for import turnover. Total domestic production is comprised of domestic turnover plus export turnover, gures for which are given in Table 2. Figures are similar for New Zealand marine industry turnover as a whole, although Auckland has a slightly higher export focus (see below).

This is acording to the Auckland region Economic Futures Model, in which the recreational marine sub-sector was classied by the New Zealand Marine Industry Association and measured through their survey conducted in 2008. 7 Treasury New Zealand (2009) Monthly economic indicators July 2009. http://www.treasury.govt.nz/economy/mei

Market Economics (2006) New Zealand marine Industry Survey 2006.

10

Overall the Auckland marine industry grew 31% in terms of total monetary turnover in the period between 2005 and 2008, which was higher than the 23% growth in the industry nationally (see Appendix 1 for comparable gures of table 2, for 2005).

Table 2

Marine industry turnover, and Aucklands share of New Zealand total

Marine Database Category 2008 Equipment Rets RHIBs Race Yachts Services Superyachts Trailer Power Boats Yachts and Launches TOTAL

Domestic Turnover Auckland ($m)

129.5 88.6 11.6 7.6 192.7 0.1 36.9 64.0 531.1

Import Turnover ($m) Aucklands Auckland % of total ($m)

64% 88% 45% 85% 63% 0% 26% 77% 59% 42.8 19.9 7.1 31.6 102.7 204.2

Export Turnover ($m) NZ ($m)

277.2 49.0 24.4 38.5 7.5 248.6 16.4 55.1 716.8

Total Turnover ($m) NZ ($m)

550.7 150.0 72.3 47.4 320.5 280.0 221.9 262.4

NZ ($m)
202.2 101.0 25.8 8.9 305.9 24.3 142.6 83.0 893.7

NZ ($m)
71.9 22.1 7.1 7.0 62.9 124.3 295.4

Aucklands Auckland % of total ($m)

60% 90% 100% 0% 50% 82% 69% 147.9 28.7 22.8 18.9 2.2 232.2 1.0 33.1 486.7

Aucklands Auckland % of total ($m)

53% 59% 93% 49% 29% 93% 6% 60% 320.2 117.3 54.3 26.5 202.1 232.3 69.5 199.9

Aucklands % of total
58% 78% 75% 56% 63% 83% 31% 76% 64%

68% 1,222.1 1,905.2

Table 3

Total domestic production and imports

2008

Domestic production as Imports as % of total % of total turnover turnover Akl NZ

87% 100% 63% 100% 96% 100% 55% 49% 83% 87% 100% 69% 100% 98% 97% 72% 53% 85%

Akl
13% 37% 4% 45% 51% 17%

NZ
13% 31% 2% 3% 28% 47% 16%

Equipment Rets RHIBs Race Yachts Services Superyachts Trailer Power Boats Yachts and Launches TOTAL

11

Exports
Aucklands recreation marine industry generated $486.7m export turnover in 2008, or 48% of its output was exported. The equivalent gure for the country as a whole was 44.5% indicating a stronger export focus in the Auckland region. The recreational marine industry is the largest nonprimary product based manufacturing industry in New Zealand. Overall, it is estimated that the recreation marine industry made up 4.4% of Aucklands exports ($11,091m) in 2008.9 Table 4 shows Aucklands top 10 exporters by industry from the Auckland Region Economic Futures Model, to give a general sense of the level of exports from the region, by value of industry. The marine industry is not differentiated or included as a separate industry in the table below10, but components of the marine industry are included in machinery and equipment manufacturing hence the marine industry is not mutually exclusive to the classication below. However, under the classication below, it is clear that the recreation marine industry is within the top 10 exporting industries. Superyacht exports accounted for nearly half of all recreational marine exports from the Auckland region and generated $232.2m in sales, followed by the export of equipment, which constituted 30% of exports or $147.9m (see Table 2). Nearly all of the rigid hull inatable boats (RHIBs) exported from New Zealand were manufactured in the Auckland region. Similarly, 93% of money generated from New Zealands superyacht exports were from the Auckland region, whereas Aucklands market share for the domestic turnover in superyachts was negligible, indicating that superyachts for domestic use in New Zealand are built outside of Auckland.

Table 4

Aucklands top ten exporters by industry, 2008 estimate

Industry Air transport, services to transport and storage Machinery & equipment manufacturing Dairy product manufacturing Other food manufacturing Wholesale trade Basic metal manufacturing Accommodation, restaurants and bars Business services Textile and apparel manufacturing Rubber, plastic and other chemical manufacturing
Source: Auckland Regional Council: Economic Futures Model

Exports 2008 $2008mil

1,403 1,259 973 785 733 625 503 470 417 383

Percentage of Aucklands total exports

13% 11% 9% 7% 7% 6% 5% 4% 4% 3%

9 10

Auckland Regional Councils Economic Futures Model. This is due to the industry classication system used, based on Statistics New Zealands ANZSIC 96, where the marine industry is not recognised as a discrete industry.

12

Employment

Exact gures for employment in the marine industry are elusive, given that the marine industry spans across many industries and occupations.11 Based on the Marine Industry Association survey of 2008, which was then calibrated within the Auckland regional Economic Futures Model, an estimate of 5,781 full time equivalents was generated for the recreation marine sub sector. Using the same survey and applying them to Statistics New Zealands annual Business Directory database, it was calculated that 5,523 people (employee count) were employed in Aucklands recreational marine industry in 200812. These two gures are not incompatible, given that one is for full time equivalents, and the other as an employee count. Furthermore, there is evidence that workers in the marine industry work longer hours

than the 40 hour denition of a full time worker (see below). As is evident from Figure 3, boat-building and repair service employment is the most signicant, with nearly 40% of marine industry employees. It must be noted that Figure 3 does not include those who work in the marine defence or the commercial marine industries. It does capture workers in the ancillary industries that the recreation marine industry depends on. While the Business Demography data provides valuable information on broad industry structure, it does not collect any information on the demographic characteristics of workers within industry

Figure 4

Employment in recreational marine industry, 2008

Boatbuilding and Repair Services Rigid and Semi-Rigid Polymer Product Manufacturing Clothing Manufacturing Other Polymer Product Manufacturing Marine Equipment Retailing Other Water Transport Support Services Cut and Sewn Textile Product Manufacturing Shipbuilding and Repair Services Paint and Coatings Manufacturing Electronic and Precision Equipment Repair and Maintenance Other Professional and Scientific Equipment Manufacturing Natural Textile Manufacturing Other Basic Polymer Manufacturing Other Repair and Maintenance Synthetic Fibre Textile Manufacturing Scenic and Sightseeing Transport Rope, Cordage and Twine Manufacturing 0

2,270 573 479 380 340 310 267 250 208 116 106 85 66 42 15 11 6

500

1000

1500

2000

2500

number of employees

Source: Market Economics Ltd and Statistics NZ Business Demography database 2008

11

Statistics New Zealand (2006) New Zealands Marine Economy 19972002. 12 Statistics New Zealand classify full time equivalent employees as the number of full time employees plus half the number of part-time employees. Employee count is a head count of salary and wage earners sourced from taxation data.

13

sectors. It is useful to turn to the 2006 Census data to get a socio-economic prole of workers in the extended marine industry based on their declaration of occupation. However, a caveat with this data source exists, as a persons occupation is not necessarily exclusive to one industry. An example in this instance would be welders, who work within the marine industry, but also the automotive and energy industries, so caution is warranted in the reliability of absolute numbers using census data. Also, the census data can not ascribe all occupations to industry. For example, an accountant in a boat building company does not get ascribed an industry. The census allows for a count of the commercial and defence marine workers occupations. Overall, 5,001 people in the Auckland region were identied with occupations associated with the marine industry (see Appendix 2 for details of the industry classications). Notwithstanding the caveat above, at the 2006 Census, most workers associated with the marine industry were male (92%) and in full time employment (94%). The number of hours worked in marine occupations was higher than that for the average of all Auckland occupations, and the majority of marine workers (64%) worked between 40 and 49 hours per week.

14

Training and Skills

The highest formal qualications obtained by people associated with Aucklands marine industry are given in Figure 5, alongside the highest qualications for all occupations. It is acknowledged, as with any attempt to measure skill level, that formal qualications are not the only indicator of skill level, as many skills are developed through experiential learning and working on the job, which this data set fails to capture. A slight disproportionate number of people in Aucklands marine industry had no formal qualication (16%) than all workers in the region (14%), but the difference for tertiary level qualication is signicant. Twenty three per cent of all Aucklands workers have a tertiary degree, whereas only 6% of these are working in jobs associated with the marine industry. A Level 4 certicate was the most common qualication (24.7%), while 37% of Aucklands marine occupations had between Levels 1 to 3 certication.

The industry is continually investing in skilled staff, despite the economic conditions experienced in 2009. Marine industry training is coordinated and assisted by the Boating Industry Training Organisation (BITO), which is a division of the Marine Industry Association. A system of apprentice training is in place, led by industry employers transferring skills and knowledge to trainees, while assisted by the BITO. In 2007, the Auckland region had 57% of modern apprentices in the boat building industry, and 61% in 2008 (Table 5). This is a clear concentration in the Auckland region, the majority of these in Waitakere city.

Figure 5

Highest qualication obtained by workers associated with Aucklands marine industry

Not Elsewhere Included All Occupations Marine Occupations

Overseas Secondary School Qualification Doctorate Degree Masters Degree Post-graduate and Honours Degrees Bachelor Degree and Level 7 Qualification Level 6 Diploma Level 5 Diploma Level 4 Certificate Level 3 Certificate Level 2 Certificate Level 1 Certificate No Qualification 0% 10% 20%

30%

Source: Statistic New Zealand Census 2006

15

Table 5

Modern apprentices in boat building by territorial authority.

Territorial Authority Auckland region Auckland region Auckland region Auckland region Auckland region Auckland region Bay of Plenty Bay of Plenty Bay of Plenty Canterbury Canterbury Central Central Central Central Eastern Coast Eastern Coast Nelson/Marlborough/West Coast Nelson/Marlborough/West Coast Northland Northland Southern Southern Southern Southern Waikato Waikato Wellington Wellington Total New Zealand Total Auckland
Source: Tertiary Education Commission, 2008

2007
14 26 11 92 37 0 2 15 4 3 9 3 10 1 0 2 4 5 3 3 24 1 12 1 2 26 1 1 6 316 180

2008
16 28 10 110 53 1 2 14 2 3 8 2 16 1 1 0 6 2 7 5 22 1 12 1 2 24 0 1 3 353 218

Auckland City North Shore City Rodney District Waitakere City Manukau City Papakura District Taupo District Tauranga District Whakatane District Banks Peninsula District Christchurch City Manawatu District New Plymouth District Wanganui District Palmerston North City Gisborne District Napier City Malborough District Nelson City Far North District Whangarei District Dunedin City Invercargill District Southland District Timaru District Hamilton City Thames-Coromandel District Hutt City Wellington City

However, the BITO has a signicant number of non-modern apprentices, indicating the entry of over twenty one year olds into the apprentice system. Table 6 shows gures for non-modern apprentices also, which are signicant, as they constitute nearly half of all the apprentices.

The BITO has reported an increase in the interest of trainees to date in 2009. This is to be expected during economic downturns, when training becomes a viable option if jobs are not readily available. As can be seen from Table 6, there are 14 different certicates or training programmes under the broad heading of boat building. Training is also offered in marine retail and distribution and composites.

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Table 6

Training in the Auckland Region (July) 2009

Domain

Strand

Non-Modern Apprentices
(ITF) 34 4 17 2 14 22 0 8 0 11 5 5 7 1 30 0 0 0 0 3 1 4 3 0 3 9 12 6 18

Modern Apprentices
52 7 35 5 52 40 0 6 1 8 6 18 22 0 57 0 1 1 5 3 0 3 0 1 3 0 1 0 0

Total

% all apprenteship
13% 2% 8% 1% 10% 9% 0% 2% 0% 3% 2% 4% 4% 0% 13% 0% 0% 0% 1% 1% 0% 1% 0% 0% 1% 1% 2% 1% 3%

BOATBUILDING a) Single Strand Registrations

Composite Boatbuilding Wooden Boatbuilding Alloy Boatbuilding Steel Boatbuilding Marine Cabinetmaking Marine Systems Engineering Metal Sparmaking Composite Sparmaking Marine Rigging Marine Painting Marine Electrical and Electronics Composite Production Trailer Boats Alloy Production Trailer Boats Fill and Fair Marine Substrates

86 11 52 7 66 62 0 14 1 19 11 23 29 1 87 0 1 1 5 6 1 7 3 1 6 9 13 6 18

b) Double Strand Registrations

Composite Boatbuilding Composite Boatbuilding Composite Boatbuilding Composite Boatbuilding Engineering Composite Boatbuilding Wooden Boatbuilding Wooden Boatbuilding Alloy Boatbuilding Alloy Boatbuilding Engineering Composite Sparmaking Metal Sparmaking

Wooden Boatbuilding Composite Sparmaking Marine Painting Marine Systems

Marine Cabinetmaking Marine Cabinetmaking Marine Painting Steel Boatbuilding Marine Systems

Marine Rigging Marine Rigging

MARINE SALES and SERVICES FIRST LINE MANAGEMENT COMPOSITES Totals

Marine Retailing (not MA approved) Marine Retail and Distribution Boat Sales and Brokerage First Line Management (not MA approved)

Composites

60 279

16 343

76 622

12%

Source: Boating Industry Training Organisation database

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In addition to the services provided by BITO there are other facilities such as Unitec and the Auckland Traditional Boatbuilding School that provide boatbuilding training to students. Aucklands universities and polytechnics have designed courses specically for the marine industry, to provide the trade skills the industry requires.13 Selected examples of these are the New Zealand Maritime School, as part of Manukau Institute of Technology; the current development of the Yacht Design School at Auckland University; School of Transport Design, Massey University and the maritime courses delivered at Mahurangi Technical Institute.

13

AucklandPlus (2009) Auckland Marine Industry Feasibility Study. Report prepared by Beca Applied Technologies Ltd. July 2009

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Industry Business Units

Statistics New Zealands Business Directory database provides details of the number of business units according to industry. As with the employment gures, the marine industry is not classied as a separate discrete industry in Statistics New Zealand classication, so the number of business units was estimated according to the same methodology used for employment gures.14 The number of businesses (geographic units15) is estimated at 884 for the recreational marine industry in February 2008 (Table 7). The largest, 40%, of these business units were boat building and repair services, followed by marine equipment retailing businesses (125) and thirdly marine clothing manufacturing (86 geographic units). Table 7 Marine industry business units, February 2008

Industry ANZSIC 06 Boatbuilding and Repair Services Marine Equipment Retailing Clothing Manufacturing Other Water Transport Support Services Electronic and Precision Equipment Repair and Maintenance Cut and Sewn Textile Product Manufacturing Rigid and Semi-Rigid Polymer Product Manufacturing Other Repair and Maintenance Other Polymer Product Manufacturing Paint and Coatings Manufacturing Shipbuilding and Repair Services Scenic and Sightseeing Transport Other Professional and Scientic Equipment Manufacturing Other Basic Polymer Manufacturing Synthetic Fibre Textile Manufacturing Natural Textile Manufacturing Rope, Cordage and Twine Manufacturing Total

Number of Geographic Units

347 125 86 69 61 48 32 31 23 20 19 7 6 4 3 2 1

884

Source: Statistics New Zealand, Business Demography database 2008

14

It is based on the Marine Industry Association survey of 2008, which was then calibrated within the Auckland regional Economic Futures Model to estimate proportions of each ANZSIC 96 industry classication the marine industry comprises of. 15 A geographic unit is used in Statistics New Zealands Business Demography data, and is dened as a separate operating unit engaged in New Zealand in one, or predominantly one, kind of economic activity from a single physical location or base. This is not the same as a count of enterprises, or companies.

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Figure 6 shows the change in the number of certain business units directly associated with the marine industry in the region between 2001 and 2008. The industry classication (ANZSIC) of boat building and shipbuilding by Statistics New Zealand differs from that used by Market Economics and the Marine Industry Association up to this point in the report. The Shipbuilding industry consists of units mainly engaged in manufacturing or repairing vessels of 50 tonnes and over displacement, submarines or major components for ships and submarines, whereas boat building is classied as under 50 tonnes displacement. A volatility in the number of businesses in the industry is evident. For example there was an increase in the number of boatbuilding and repair service rms between 2001 and 2006, with a decline in 2007 and 2008. Similarly there was an increase in other water transport support service rms between 2000 and 2007, with a slight decline in numbers in the year to February 2008. However, there has been a marked decline in the number of shipbuilding rms in the region over the period 2000 to 2008.

In the year 2000 50% of Auckland boatbuilding rms employed 60% of total New Zealand employees. This ratio changed by 2008, when 49% of boatbuilding rms were located in Auckland, employing 52% of all boatbuilding and repairs employees, indicating either a relative reduction in employee size in Auckland rms, or a relative increase in employee size in other areas of New Zealand.

Figure 6
100% 80%

Change in the number of marine industry business units in operation in Auckland

Other water transport support services Shipbuilding and repair services Marine equipment retailing Boatbuilding and repair services

Annual percentage change

60% 40% 20% 0% -20% -40% -60% -80% -100% 2001 2002 2003 2004 2005 2006 2007 2008

Year
Source: Business Demography database 2008

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Drivers of the Marine Industry in the Auckland Region

There are a number of factors that drive the Auckland marine industry, ranging from quality underpinning this manufacturing sector, to the personalities that comprise the industry, to the international demand for boats and services. These will continue to shape the industry in the future, as will the inhibitors that the industry has faced in the past and is currently working to overcome. Global growth in the recreational marine industry is forecast in the next decade, and how Auckland and New Zealand capitalise on this opportunity will determine the industrys fate. Table 8 Projections for the Auckland Region Recreation Marine Industry to 2020

Marine Database Category Equipment Rets RHIBs Race Yachts Services Superyachts Trailer Power Boats Yachts and Launches TOTAL

Domestic Turnover (2008$m)

119.4 118.1 12.1 9.6 212.8 0.1 23.8 40.1

Import Turnover (2008$m)

39.5 8.2 20.7 7.9 20.4 64.3

Export Total Turnover Turnover (2008$m) (2008$m)

165.6 80.6 35.5 46.2 3.1 538.2 0.7 21.4 358.6 330.0 84.5 64.6 286.9 538.3 49.1 129.4

Consumer demand and forecast growth

The international and domestic market for boats and equipment is highly competitive, sensitive in some segments to price, in others to quality, innovation and craftsmanship. New Zealands producers of superyachts and racing yacht are internationally competitive and carved out niche markets within global markets. It is estimated that New Zealand is the tenth largest producer of superyachts globally, with an estimated market share of less than 2%. However, within the superyacht category, Auckland has 16% of the global market share for sailing superyachts, making it the third largest player globally.16 In 2007, the global boat industry was estimated to be worth approximately NZ$35bn, with expectations of reaching NZ$54bn by 2013. North America has historically been the largest boat market, but for the rst time in 2007, the European countries collectively exceeded the North American.17 It is clear that there is huge growth potential in the global market for recreational boats, with an emphasis on larger and expensive boats. Additionally, there is growth potential in the ret industry, with vessels in need of maintenance and repair.

536.0

161.0

891.3

1,841.5

The Auckland region recreation marine industry is forecast to increase its turnover to $1.8bn by 2020 (Table 8).18 These forecasts are based on the Marine Industry Associations national forecast gures, and reect the recent downturn in the global economy and the nancial crisis. However it is assumed that any losses would be recouped, as pent up demand is realised from 2012 onward. The marine industry in the Auckland region is expected to make up a higher share of the national total in 2020 than in 2008 as the Hobsonville Marine Precinct and the Wynyard Quarter redevelopment come on line. It is assumed that marine companies will look to concentrate around those clusters. The forecasts are therefore dependent on those developments proceeding according to plan. It is also assumed the growth in the industry will be primarily export led. Growth in domestic turnover and imports is driven by population growth.

16

Ireland, A. Satchcroft, A. Maysion, B. and Janzarik, M. (2009) New Zealands Marine Cluster. Report prepared for Microeconomics of Competitiveness: Harvard Business School. 17 Retrieved from Reuters website press release on: Research and Markets (2008) Global Recreational Boat Industry Analysis and Forecast 2008-2013.

18

Market Economics Ltd (2009), based on Marine Industry Association forecasts.

21

Figure 8

Boat ramps and mooring areas in the Auckland region

Source: Auckland Regional Council

22

Reputation
New Zealand has the reputation as a sea-faring nation, given a strong historical shing past. The marine industry has established a high level of international brand recognition, based on successful superyacht design and international sailing events and NZ audited Boat Building Standard Compliance Plate Certication (CPC) programme for trailer boats between 3.5 and 8.5m. The Auckland region has natural physical attributes that make it a desired location for the marine industry. Along with favourable conditions for sailing, the southern hemisphere offers ret and maintenance alternatives during the northern hemispheres off season. Over the years, the industry has gained a reputation for high quality design, construction and re-t, while approaching work with friendliness and exibility, offering a customised approach to each client. The proximity of most of Aucklands marinas to the central business district, with accompanying tourism, recreation and business facilities is an attractor for visiting crew and owners of vessels. Thus, Auckland as a destination becomes important in the choice of conducting marine business and links with the tourism industry are evident.19 is perhaps more accurately described as a supply network the core activity centred on the supply of materials, components and services to manufacturers, with the wider value chain centred on the supply of materials, components and services to manufacturers. The industry spans a variety of diverse skills and technologies, and has been successful to date in coordinating this diversity into tradeable commodities.

Innovation
The innovation system in the Auckland marine industry occurs in many different ways, and it was observed that most companies drive innovation, rather than relying on customers to request it. This approach has been described as somewhat informal, as oftentimes a dedicated innovation budget or strategy may not be in place. Much of the innovation is generated in-house and is project based, and stems from experience, inquiring minds and practical problem-solving.21 Nevertheless, innovation is present in the industry, reected in the range of new products and materials used within the industry and in the diversity of design in the customised approach to boat-building.

Extended value chain

The ability of the marine industry to continue to integrate the extended value chain will ensure that the sector evolves, and remains innovative. As a review of Aucklands innovation system noted, the sector requires input from designers, engineers, mechanics, architects; skilled carpenters, surveyors and painters; divers and drivers; specialised insurance assessors; computer programmers and chefs. It has major impacts on the New Zealand economy, creating demand for products such as sails and ropes, tments and accessories; ne leather, foodstuffs, wine, furniture, plumbing ttings, linen, upholstery and carpets; pool chemicals and excursion craft. It involves regular and extensive ret and repair activity.20 It
19

Social Capital
Communities of practice have become increasingly important in industries dependent on learning, exibility and innovation for survival and growth, and are cited as a dening feature of the New Zealand boat building industry.22 This led to a rich web of social connections and shared capability necessary for industry learning. A case study on the New Zealand boat building cluster concluded that after a long history of successful international yacht racing, and particularly after the second Americas Cup victory in 2000 it was noticeable that managers and employees
21 22

Deloitte and Walker Projects (2008) Auckland Regional Innovation Systems Review. Report commissioned by the Ministry of Economic Development. June 2008 20 Ibid.

Ibid. DeFillippi, B., DeFillippi, R., Arthur, B. and Lindsay, V. (2006) Knowledge at work: creative collaboration in the global economy. Ch 5. Industry knowledge at work .

23

Marine culture
of the industrys leading companies were passionate boaties. The community of practice evolves from an individual sense of knowing-why tied to a communal spirit of joint enterprise23 and can be benecial when harnessed by an industry. This industry cooperation became formalised in various industry bodies as the need arose in Auckland and New Zealand, including the Marine Industry Association and New Zealand Marine Export Group. Industry members voluntarily devoted time and effort to establish these industry groups, impacting greatly on the growth of the industry. The Marine Industry Association is located in Westhaven marina, and has 22 sector groups, with more than 170 people on their committees. It is estimated that these individuals contribute 16,000 hours of voluntary time per year representing the industry24, which is a signicant commitment. The marine industry has reached a level of maturity in terms of governance. Although the industry spans diverse businesses at times in competition with each other, a level of cooperation is evident in the industry, leading to increased lobbying and bargaining power, raising the prole of the industry and the emergence of industry partnerships with local and national government. This enables the creation and maintenance of social capital in the industry, enabling efciencies for the industry in terms of information sharing amongst businesses while being attractive for clients, given this extended support in the industry. In 2008/2009, the Auckland Marine Industry engaged with local government, central government and associated stakeholders to deliver a common vision for achieving the industrys growth forecasts. The output of this process was a feasibility study, which identied the (current) barriers for growth in the industry.25 There is a high boat ownership rate in Auckland. It was estimated in 2006 that 17% of Auckland households owned a boat.26 The Auckland Regional Councils Environment Awareness Survey in 2006 included a question on boat ownership. Although this was a sample survey of approximately 2,000 households, and is subject to sampling biases, it was estimated that out of the 242 surveyed boat owners, 40% of people had motorboats, 15% owned a yacht and 14% were launch owners (Table 8).

Table 8

Type of boat owned or part owned (%) by Auckland households 2005/2006

Sample size = 242 Motor boat Yacht Launch Dinghy Canoe/kayak Run about Jet ski Sail boat
Source: ARC Environment Awareness Survey 2006

%
40 15 14 13 7 4 3 3

The description of Auckland as the city of sails is an important factor in tourist activities within the region. At least 5% of activities undertaken by domestic visitors to the Auckland region were related to marine activities, including boating, canoeing and other water activities.27 The major recreational boat routes are shown in Figure 7, and the location of boat ramps and mooring areas shown in Figure 8.

23 24

Ibid. Ian Cook (2009) Mia News. Marine Industry Association Presidents Report. Spring 2009 25 Auckland Plus (2009) Auckland Marine Industry Feasibility Study. Report prepared by Beca Applied Technologies Ltd. June 2009.

26

Auckland Regional Council (2004) Hauraki Gulf State of the Environment Report 2004. 27 Ministry of Tourism (2008) Domestic Travel Survey (year ended September 2008)

24

Figure 7

Aucklands major recreational boat routes

Recreational Boat Routes Recreational Boat High Useage Areas Recreational Boat Destinations

Source: Auckland Regional Council

25

Conclusion
In the Auckland region there are 4610 moorings, currently located within specically designated Mooring Management Areas (MMAs) and 5000 marine berths. In addition, there are about 450 unconsented moorings outside the MMAs. These gures include only known moorings and are, therefore, likely to underestimate the actual number of moorings. A 2006 Harbourmaster study found that demand for moorings within the inner Waitemata Harbour MMAs declined between 1995 and 2006, by approximately 1472. This reduction was attributed to marina berths and other more convenient facilities becoming available. However, along the Rodney coast (including Kawau Island), and at Waiheke Island, Rakino Island and Great Barrier Island, the number of mooring sites increased over the same period. Pressure on the coastal management area (of the region) for moorings and marinas is predicted to increase with additional subdivision and development. This industry snapshot has focused on the recreation marine industry in the Auckland region, while acknowledging that it is integrated with both the commercial and defence marine industries sharing services and activities across the other two. The recreation sector is important, due to the considerable export component of its output. It is also important given the growth potential identied for the sector over the next decade. Aucklands marine industry has experienced casualties during the 2009 recession, with a number of businesses exiting the industry. Nevertheless the industry as a whole is resilient, with many businesses switching their focus during the year particularly from new build boats to ret activity. Thus the industry is adaptable and has strength in the networks and social capital that it has developed over the years. Governance within the marine industry and with external agents (such as local and central government) is increasingly based on cooperation. It is expected that such cooperation will manifest in positive economic growth and development.

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Appendix 1 Time series comparison: Marine Industry Association Survey 2005 and 2008
2005 Auckland
Marine Database Category Equipment Rets RHIBs Race Yachts Services Superyachts Trailer Power Boats Yachts and Launches TOTAL Domestic Turnover ($m)
163.6 59.9 11.5 4.0 121.5 30.2 39.2

2005 New Zealand Total

Import Turnover ($m)
16.2 6.2 14.3 64.6

Export Turnover ($m)

141.5 29.0 19.0 10.0 4.4 147.0 1.4 34.1

Marine Database Category Equipment Rets RHIBs Race Yachts Services Superyachts Trailer Power Boats Yachts and Launches TOTAL

Domestic Turnover ($m)

198.6 83.0 17.1 4.6 266.8 5.0 125.7 65.8

Import Turnover ($m)

40.5 15.4 35.8 129.1

Export Turnover ($m)

195.1 51.6 19.5 15.5 4.4 195.5 7.0

46.3

433.2

101.2

395.6

774.8

220.8

557.8

2008 Auckland
Marine Database Category Equipment Rets RHIBs Race Yachts Services Superyachts Trailer Power Boats Yachts and Launches TOTAL Domestic Turnover ($m)
129.5 88.6 11.6 7.6 192.7 0.1 36.9 64.0

2008 New Zealand

Import Turnover ($m)
42.8 19.9 7.1 31.6 102.7

Export Turnover ($m)

147.9 28.7 22.8 18.9 2.2 232.2 1.0 33.1

Marine Database Category Equipment Rets RHIBs Race Yachts Services Superyachts Trailer Power Boats Yachts and Launches TOTAL

Domestic Turnover ($m)

202.2 101.0 25.8 8.9 305.9 24.3 142.6 83.0

Import Turnover ($m)

271.9 22.1 7.1 7.0 62.9 124.3

Export Turnover ($m)

277.2 49.0 24.4 38.5 7.5 248.6 16.4 55.1

531.1

204.2

486.7

893.7

295.4

716.8

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Appendix 2 Occupations associated with the marine industry: recreational, commercial and defence from Census 2006.
Occupation at Census 2006 Welder Defence Force Member - Other Ranks Boat Builder and Repairer Mechanical Engineering Technician Ships Engineer Ships Master Deck Hand Communications Operator Surveying or Cartographic Technician Small Engine Mechanic Marine Designer (NZ) Boiler or Engine Operator Materials Engineer Shipwright Ships Ofcer Cartographer Marine Transport Professionals nec Ships Surveyor Total Marine Industry Occupations Total All Occupations Number of People
1,146 1,137 1,038 498 348 156 147 93 78 78 72 60 36 30 27 27 15 12

5,001 627,834

The information and analysis used in this report were provided by various sources. Contents are for information only, are subject to change and are not suitable for commercial judgement or professional advice. The Auckland Regional Council accepts no responsibility for any errors or omissions or for any loss or damage resulting from reliance on, or the use of, information this report contains.

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