New Zealand Marine Industry Association
Media release
13 January 2014
Government’s ferry purchase from Bangladesh disregards benefits of buying New Zealand-made
The decision by the Ministry of Foreign Affairs and Trade to commission a US$6.6 million (NZ$8 million) ferry to be
built in Bangladesh rather than by a New Zealand boat builder has disappointed the 450-plus members of the New Zealand
Marine Industry Association (NZ Marine).
The 43-metre vessel is a replacement ferry for the New Zealand territory of Tokelau and capable of carrying 60
passengers and 50 tonnes of freight. Twelve shipyards from Australia, Bangladesh, China, New Zealand, Poland and
Singapore submitted tenders with the Bangladesh firm Western Marine Shipyard selected. Not only will it be built
offshore, it was designed by Danish firm Knude E Hansen.
During 18 months of talks between NZ Marine and MFAT, the department confirmed there are no instructions to consider any
economic gain to New Zealand from having this vessel built here versus by an overseas yard.
Peter Busfield, executive director of NZ Marine, says: “We believe the Government’s procurement requirements are
fundamentally flawed as the process does not factor in the economic gain to the country of buying ‘New Zealand made’
versus importing.
“We are aware of the new regulation which came into effect in October 2013 that requires government officers when
procuring major equipment to give New Zealand suppliers every opportunity to put forward a tender. We have confirmed
with government officers, including Mr Jonathan Kings of MFAT, that this new regulation does not require the government
to consider any economic gain to New Zealand for buying in New Zealand.”
Several New Zealand companies have the capabilities to build the specified ferry and most recently, Nelson’s AIMEX Ltd
indicated that, based on the design criteria, they believed they could build this vessel in Nelson for NZ$14-15 million.
Following further discussions with MFAT, AIMEX was advised that unless they could provide a quote in the region of
NZ$9.5-10 million, they were wasting their time.
Busfield continues: “What really concerns us as New Zealand taxpayers and representing one of New Zealand’s largest
manufacturing sectors, is that the New Zealand Government is not considering the total picture for the procurement of
the Tokelau ferry. We have sought the advice of highly-respected economic advisors Market Economics Ltd which advised
that the government procuring a vessel from New Zealand for the sum of NZ$14 million would generate an additional NZ$9
million in GDP and sustain the equivalent of 127 employees for one year. We believe the New Zealand Government procuring
the vessel from a New Zealand ship builder would be a net cost to New Zealand of NZ$5 million versus the currently
planned NZ$9.5-10 million that MFAT intend to spend purchasing this vessel offshore, allowing for travel and
communications costs on top of the actual vessel cost.”
Countering the disappointment with the MFAT purchase, Busfield notes that NZ Marine works with New Zealand Trade and
Enterprise, Auckland Tourism, Trade and Economic Development, and Tourism New Zealand to encourage and promote the New
Zealand marine industry globally.
“We value our partnerships with NZTE, ATEED and Tourism New Zealand to promote New Zealand as a destination for
superyachts and cruising yachts and as an excellent country in which to build new yachts, new commercial vessels and
have refit and maintenance work completed.
In a letter to the Right Hon. Murray McCully, Minister of Foreign Affairs and Trade, about the Tokelau ferry purchase,
Busfield writes: “In addition, it is painful for the New Zealand marine industry to have the New Zealand Government,
that requires a New Zealand boat-building company to have high standards of health and safety in the workforce, human
rights and other protective rights for employees, to purchase a vessel from a country that has very little in this
regard and is also likely to be paying employees less than $5 per day.
“We also cannot see where MFAT has considered the lifelong servicing costs in their decision-making process. We are
confident that a New Zealand-built vessel would have the lowest lifelong service cost compared with the offshore ship
building company considered.
“The New Zealand marine industry has been in survival mode since 2008 and some companies are currently walking the
narrow line between economic survival or not. The purchase by the New Zealand Government of the Tokelau ferry from a New
Zealand ship builder would assist the chosen company and its many contractors and suppliers, helping them continue
trading and employing tens, if not hundreds of staff. Furthermore, the contract would have provided an excellent example
to the world of the company’s capabilities of building vessels of this nature.
“Currently and in the past, New Zealand companies have built vessels for other countries’ local and national governments
such as Australia’s State of Victoria recently ordering a police boat from Whanganui’s Q-West Boat Builders. It is
ironic for the New Zealand Government has now purchased a vessel from another country.”
NZ Marine has a member group dedicated to the commercial boat sector, called the Ship and Workboat Group, currently
chaired by Dave Hopkins of the highly successful exporter CWF Hamilton & Co Ltd, manufacturers of the HamiltonJet. From 2011 industry analysis figures prepared by Market Economics Ltd, New
Zealand’s ship and workboat sector had an output of NZ$330 million, employed a total of 2,041 full-time equivalent
personnel and expected to grow to an output of NZ$574 million by 2021. NZ Marine’s Ship and Workboat Group has recently
published a directory of commercial boat building, design, engineering, ship repair, maintenance, equipment supply and
services companies – downloadable in a PDF format via this link – highlighting the capabilities of this valuable sector.
“We think the New Zealand Government needs to amend its procurement policy to ensure that the potential economic gains
to New Zealand are considered when making major equipment purchasing decisions,” Busfield concludes.
ENDS/
Background information:
Western Marine secures contract to build vessel for New Zealand
The Daily Star, Bangladesh
http://archive.thedailystar.net/beta2/news/western-marine-secures-contract-to-build-vessel-for-new-zealand/