Bangladesh ferry purchase disregards benefits of NZ made
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/