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Old 10-01-2012, 14:31   #1
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Maritimo Eyes USA as Production Base as Costs Soar in Oz

More evidence that Australia has lost it.
Australia used to be THE place to get a luxury build done, but not any more.

Maritimo eyes USA as production base
Nick Nichols, business editor | December 29th, 2011

THE United States is emerging as the most viable option for Maritimo's proposed new production base as costs continue to soar in Australia.

The Gold Coast-based luxury boatbuilder, headed by Bill Barry-Cotter, is still weighing up its options for a new factory in Asia or the US as a spike in production costs over the past two years has weighed heavily on the company's competitiveness in global markets.

"The problem purely is Australian," Mr Barry-Cotter said.

The issue was not confined to the strength of the Australian dollar, he said, but it was exacerbated by a surge in material costs and rising power bills.

Mr Barry-Cotter said the cost of powering his factories was being felt at the bottom line for the first time in his 40 years as a boatbuilder.

Electricity costs, the scourge of Queensland households in recent years, added between $8000 and $10,000 to the cost of a boat.

"This is the first time in my career that I am looking at electricity as a major cost," Mr Barry-Cotter said.

He said power costs at his Coomera factory had risen from $220,000 more than two years ago, when Maritimo was ramping up production with 480 employees, to $260,000 in the past year with a workforce of just 100.

Price rises were being felt across the board for the marine industry, with increases for engines and components ranging from 9 to 14 per cent and materials between 8 and 10 per cent over the past year.

The cost of transportation also had risen from about $50,000 to $100,000 between Australia and the US, Mr Barry-Cotter said.

"There's going to be a real issue of competitiveness for this country (if this keeps up)," he said.

The US, in contrast, was shaping up as a strong contender to provide a more efficient production base for Maritimo.

Mr Barry-Cotter said while Turkey, Thailand and Taiwan were on the radar, the US held a significant advantage due to low wages and the availability of skilled employees.

Mr Barry-Cotter said materials were cheaper in the US than Asia in some cases.

Maritimo's US option has been buoyed by the growth of American boat exports this past year.

According to Maritimo's US boss David Northrop, the American market was improving for new boats at the expense of used boats -- some of which are being dumped in the Australian market and depressing prices here.

The softening US dollar had helped lift export numbers for luxury boats to about 50 per cent of production in the US compared with 10 per cent a few years ago.

Despite the continued global economic gloom, the US posted record new boat sales in June this year marking a turnaround in sentiment there, Mr Northrop said.

"We are cautiously optimistic. We are talking to multiple buyers every single day," he said.

"It's not like the good old days but we are trying to live with the new normal."

Europe remains challenging, with Mr Northrop describing the situation as "just sick".

Mr Barry-Cotter said despite the cost pressures, he remained confident Maritimo could improve its operations domestically.

"I'd rather get a lot smarter about what we do," he said.

Maritimo's strategy for 2012 will be on product improvement, while it undertakes a major overhaul of its range with new models to be launched in 2013.

Mr Barry-Cotter said the new styles and layout were designed to meet new expectations from buyers and build on the company's reputation for performance.
Maritimo eyes USA as production base Local Business | | Gold Coast, Queensland, Australia
"Money can't buy you happiness but it can buy you a yacht large enough to pull up right alongside it"...............David Lee Roth
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