Further confirmation of this came in January when South African firm St. Francis Marine won the US award for best cruising boat of the year with its 50-footer.
Another boost for the industry will be a South Africa entrant competing in the 2007 America’s Cup, the world’s most prestigious yachting event. Win or lose, Team Shosholoza and its locally built 12-metre yacht will serve as an ambassador for the country’s boat building industry when it takes to the waters off the Spanish port of Valencia, becoming the first African entrant in the more than 150-year history of the event.
Until only a few years ago, the South African boat building industry was a well-kept secret, growing, very much under the radar, into an industry now worth R1.2bn ($200m). South Africa has gained a particular reputation for the building of catamarans and is now the second-biggest producer of the boats after France.
However, the industry is not a one-trick pony. The Southern Winds shipyard, for example, builds sailing yachts of up to 120 feet, some of which sell for as much as €9m, with the company’s order books full until 2008
The industry has remained competitive despite a negligible local market – more than 80% of the boats built in South Africa are exported – and the increasing value of the rand.
Over the last 10 years, the weak local currency enabled the industry to maintain considerable margins while undercutting competitors in Europe, the US and New Zealand, though the very ease of the industry’s rise appears to have also bred a degree of inefficiency.
A stronger rand, while clearing out some of the weaker yards, has not taken away South Africa’s edge and may have even improved the vitality of the industry. By some accounts, companies have succeeded in shaving hundreds of man-hours off production schedules, adapting to new and leaner times.
“We have made huge efficiency savings,” said Alberto Del Cinque, managing director of Southern Winds. “We will be in an even better position should the rand decrease from its current highs.”
Another to see the ongoing advantages of operating out of South Africa is Rene Verboomen, managing director of Argo Boats, owned by the French company Blubay Yachts.
“It still makes sense to be here,” said Verboomen. “Labour is still a third cheaper here than in Europe or the US.”
The industry, which is almost entirely based in the Western Cape, has now attracted the attention of both the local and national government, which are keen to assist expansion.
The South African Boat Builders Council (SABBC) is now one of 26 export councils recognised by the Department of Trade and Industry (DTI). Through the SABBC, the DTI now funds a national pavilion at two international boat shows a year: one in the US and the other in Europe.
The Industrial Development Corporation (IDC), the DTI’s lending arm, is helping boat builders by financing up to 70% of the production costs between the customers’ deposit and the final delivery payment. This programme is designed to enable smaller yards to take on more orders and expand, which would otherwise not be feasible for an industry that has to carry large amounts of inventory.
“The government is getting the idea and they now appreciate that the Italian yacht parked in Monte Carlo was built in Cape Town. The IDC is funding expansion in two yards right now, but there are no hand outs or money for nothing,” said Bruce Tedder, managing director of the Cape Town Boatbuilding and Technology Initiative (CTBi).
Meanwhile, the city of Cape Town, together with the provincial government, has been increasingly proactive, funding the CTBi. This includes a new boat building school, which opened its doors to the first students in 2006. The industry employs 2500 skilled workers and, given the priority the current government has put on skills development, it will undoubtedly be keen to work with the boat yards in fostering further growth in this area.
Overall, it appears that South Africa’s boat builders have built a product and a market that can withstand currency fluctuation and continue to go from strength to strength.
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