High and dry: COVID-19 and SA boat building
27 May 2020 | Web Article Number: ME202019163
THIS industry perspective is provided by the South African International Maritime Institute (SAIMI)
On 17 February 2020, eight South African Boat Builders wrapped up a successful Miami International Boat Show in the USA. With eleven luxury recreational catamarans on display in the water and supported by the South African Boat Builders Export Council’s (SABBEX) new manager, Thina Qutywa, the South African manufacturers had an excellent show with over R300m secured in orders and a number of strong leads to translate into sales.
The impact of COVID-19 was only just beginning to be felt in South Africa and the Miami International Boat Show had over 82 000 visitors over the five days of the show. Six weeks later, on 27 March South Africa and many parts of the world were in full lockdown.
A survey was conducted by SABBEX early in April to assess the impact the COVID-19 lockdown had on staff and remuneration in the boat building and associated industries. Worryingly, just over half of companies could afford to pay full salaries for the anticipated 21-day lockdown and there were concerns about accessing the UIF and TERS assistance.
Members also indicated they were unable to pay suppliers and other creditors. A few retrenchments were taking place although, in general, most companies were making staff their number one priority and trying to get help from all available quarters. The overarching feedback was a need to get back to work.
Over the next few weeks, the disruption to the local and global supply chain started to become a stark reality. It quickly became evident how companies in the boat building and marine manufacturing sector have carved out very particular niches for themselves.
As a relatively small sector, the complex supply chain that surrounds boat building has afforded SMMEs an opportunity to craft a particular niche and with cash flow drying up, these SMMEs were and continue to be under immense pressure.
The massive disruption of lockdown rippled through this complex supply chain, followed by new gazettes and marine notices and other pieces of legislation that everyone had to engage with and try and interpret as accurately as possible.
SABBEX, as an industry body, had a vital role to play in ensuring only accurate and verified information was given to members to guide their decision-making and planning processes. The value of collective representation to government was demonstrated through letters of appeal to The President and the Minister of Trade Industry and Competition from SABBEX.
This was closely followed by a submission to COGTA requesting that the boat building and ship building industries be allowed to open up at 50% staffing under Level 4, along with the automotive manufacturing industry.
With a conservative estimate of R2.7bn of confirmed recreational and commercial boat building export orders that need to be completed, the appeal to COGTA was considered and the ship and boat building sector was able to phase in opening at 50% as of 1 May with stringent and government compliant health and safety measures in place.
SABBEX was supported by various government departments and entities that included in no particular order: Wesgro, the Department of Transport, the Department of Trade Industry and Competition, the Department of Economic Development and Tourism WC, the City of Cape Town, the Public Private Growth Initiative and Invest Cape Town.
Robertson and Caine, the only production boat builder in South Africa and employing 1800 people, took a strong lead in lobbying with government and leading by example with risk mitigation assessment and health and safety guidelines. Safety measures are in place in all production facilities and the industry continues to share best practices to continually improve their response to COVID-19 and to minimise any risk to their staff.
There remains an urgent need to return to 100% production. With the daily screening of staff, segmented work processes, shift work and ensuring social distancing is observed from boat lay up to final QA, the number of “man hours” to produce a boat have increased significantly. “Man hours”, as they are spoken about in the industry, are a baseline number of hours that are factored into the pricing of a vessel and they determine production scheduling and sales forecasts.
The industry will now need to recalibrate those hours, factor in the increased cost of input items, delays in customs clearance and the time taken to get permits to transport and export boats. All of these and more affect the bottom line of the business, so a 50% return to work is in reality a much lower figure.
What has become clear in the last couple of months of “flattening the curve” is that companies that stay “ahead of the curve” in business are the ones that will survive and hopefully in time, thrive. The can-do attitude of South African boat builders will stand them in good stead as we navigate these turbulent health waters and find our feet in the “new normal” of conducting safe business under COVID-19.