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America's Cup: $40m of superyacht business joins Challengers waiting for NZ border entry greenlight

by Richard Gladwell 9 Jun 13:44 PDT 10 June 2020
Superyachts racing in Bermuda before the 35th America's Cup © Richard Gladwell / Sail-World.com

With the America's Cup just over eight months away, the NZ Coalition Government's equivocation is set to cost the marine maintenance and refit industry tens of millions of dollars.

While it has been apparent for some time that New Zealand the COVID-19 epidemic under control, the Ministries of the tripartite government of Labour, NZ First and the Green parties have dithered over how to facilitate the passage of vessels and crews through the closed New Zealand border.

The superyacht entry issue is one of four that has been getting airplay over recent weeks.

The first was the entry of the fifty plus movie crew, who arrived in Wellington in late May via chartered jet, seemingly waved through a Border Exemption process that has suddenly become very problematic.

The latest issue involves superyachts turning away from New Zealand, a situation that has already cost the marine industry millions of dollars.

The high value traffic is headed for Australia and a new state-backed superyacht facility for which the Australian authorities are approving entry through their closed border. Australia (on a state by state basis) is at a higher level of COVID19 Alert than New Zealand.

Earlier, in a similar case, Nelson MP Nick Smith has asked several Questions in the NZ Parliament over the coalition Government's refusal to allow a South Korean fishing boat into its regular maintenance base in Nelson for $600,000 of work. The same boat had been allowed in a year earlier for $6.5million of work.

Smith asked the Questions after the NZ Ministry of Health declined permission to enter New Zealand despite the vessel having been at sea for several weeks - and had exceeded the 14-day supervised quarantine requirement for those wishing to enter the New Zealand bubble.

The America's Cup teams are also waiting on a decision on whether they will be allowed into New Zealand. The issue was canvassed in an interview broadcast on Monday evening on TVNZ's Q+A program, which featured the Opposition spokesperson for Economic Development, Judith Collins discussing the hiatus that has developed over opening exceptional access to New Zealand's closed borders, and the America's Cup in particular.

The Minister for Economic Development, Phil Twyford declined to appear on Q+A leaving Collins, a clear run for the whole segment. Collins is one of three women in the top four on the Opposition Front Bench, and is the Opposition spokesperson for Economic Development. She has a long history of locking horns with Twyford when he was Housing Minister in the Ardern-led administration and she was in the shadow-roll on the Opposition benches.

Sail-World understands that the issues of International Students entering NZ, Superyachts, and America's Cup crews have been lumped into one bucket to be addressed by a common policy, despite claims by the PM that each case has to be considered on an individual basis.

At the end of May, over 50 members of the Avatar movie production arrived in New Zealand. Their entry was granted under immigration exception criteria for foreigners deemed essential to a project of "significant economic value". Their group included family members of the production crew, and only came to the attention of the New Zealand media after producer Jon Landau posted on social media.

Many in the America's Cup bubble took the Avatar entry as being a permission-framework for other applications and looked forward to a similar decision. However they have been sadly disappointed, including the superyacht instance quoted by NZ Marine that has done the rounds of ministerial desks in Wellington for almost a month, with no decision being made. They have been given until Friday to confirm entry into New Zealand waters, and for a $5million refit to be undertaken in NZ.

At the time of the Avatar crew entry into New Zealand, the entry criteria was not published and when questioned in a media conference on a few days later on June 3, the New Zealand Prime Minister Jacinda Ardern said she could not recall how many criteria there were, "but it was only a handful".

"They were often specialist knowledge or skill that we could not access here [in NZ]. Or, if they are not here, possibly hundreds of thousands of jobs were affected."

A week later on the morning breakfast AM Show, on June 9, Ms Ardern said they had approved "roughly 2,000 people who had sought exemptions on humanitarian grounds.... we've had a couple of hundred under the economic exemption. That is where that crew have applied.. that needs to be worked through by MBIE and Ministers.

"We do have to apply criteria. It has to be a job that no-one else can do, and there has to be a knock-on effect for the New Zealand economy - which means that it is saving other jobs," she said claiming that "hundreds of jobs would have been gone if that [film production] wasn't able to continue."

A week later, on Monday, the Q+A Show's host Jack Tane, read out a list of the five criteria of which the last "very significant economic benefits resulting from the exemption" would be applicable to the America's Cup.

By MBIE's own assessment at the lowest scenario, 4,700 jobs would be created and $555million added to the NZ economy from the 2021 America's Cup and associated events.

Cup teams on hold

It is expected that a decision on the admission of America's Cup teams will be announced this week. The New York Yacht Club's team American Magic is the worst affected - having sent their first AC75 to New Zealand, having believed their visa applications were already being processed by the Ministry of Business, Innovation and Employment (of which Phil Twyford is the Minister) and Immigration New Zealand. That turned out not to be the case, and the applications were resubmitted under urgency.

While New Zealand went into the lowest level of COVID-19 alert on Tuesday, June 10 - there had been a lengthy countdown period with 17 days of no new coronavirus cases being notified, and with over 35 days elapsing since the last virus contact. There was plenty of time for the relevant Ministries to formulate policy for larger groups of film crew, America's Cup teams and superyacht crews to enter Fortress New Zealand - as evidenced by the arrival of the Avatar film crew in late May.

The added economic value (the closed-border exemption criteria under which the Avatar 2 film crew were admitted) of the America's Cup regatta and Superyacht refits had been known to the Coalition Government for over two years.

In December 2017, the Ministry of Business. Innovation and Employment (MBIE) commissioned a Economic Assessment of the 2021 America's Cup, which showed that in the lowest estimate that 100 superyachts would be in attendance for the regatta period of which 60 superyachts were the base number that usually visited New Zealand each summer.

By inference, a minimum of 40 extra superyachts would visit New Zealand for the America's Cup, and to have refit work undertaken during their visit. For insurance purposes

Previously NZ Marine have calculated that the average spend per superyacht in NZ is $2.7million. This average is likely to be an underestimate given that a new superyacht servicing facility is currently under construction at Site 18/Orams Marine Village - which is located adjacent to Westhaven Marina, the largest marina in the southern hemisphere.

Prior to the COVID19 lockdown, the "House Full" sign was up in Auckland after 120 superyachts registered interest in 75 available berths - which were quickly snapped up with hefty deposits paid. America's Cup organisers main concern was how to accommodate the overflow.

Massive superyacht facility constructed in Auckland.

"I hope that whatever happens here with the America's Cup, winds up helping the [marine] industry because the industry in New Zealand needs a shot in the arm, " North Technology President, Tom Whidden told Sail-World in December 2017 when the Site 18 Orams Marine Village was in the planning stage.

North Technology is the worlds largest marine conglomerate, owner of Southern Spars and North Sails which have large facilities in West Auckland and on Auckland's North Shore.

New Zealand owned Doyle Sails International also has a substantial facility in West Auckland. Doyles and Norths are the predominant sailmakers for the superyacht market. Southern Spars is the predominant mast maker to the larger superyacht fleet.

Twyford is the MP for Te Atatu electorate in West Auckland, and could not be unaware of the substantial footprint of the marine technology business, just over the border in an adjoining, also Labour-held, electorate, where many of his 3,000 vote majority work.

"Over the past four weeks, NZ Marine has been advocating to the Government to approve visiting commercial vessels and superyachts with pre-booked refit and maintenance work, to be allowed to enter New Zealand," NZ Marine said in a statement released on Tuesday. "We have informed the Government that quarantine of the crew can be done on-board the vessel as can COVID-19 testing be done prior to the crew disembarking on New Zealand soil."

"We have been frustrated at the Government's hesitancy to agree to these foreign-flagged vessels being allowed into New Zealand for refit and maintenance purposes," the statement continued.

NZ Marine also released an abbreviated version of a letter sent to Hon Phil Twyford on Friday 5 June in a release entitled "SOS - Border Controls putting NZ marine maintenance and refit industry out of business."

An abbreviated version of the letter sent from NZ Marine to Hon Phil Twyford on Friday 5 June was enclosed with the release.

Letter sent to Minister of Economic Development and Minister of Transport, Hon Phil Twyford

To Minister of Economic Development and Minister of Transport, Hon Phil Twyford,

Dear Mr Twyford

As the NZ marine industry representative body with 490 member companies nationwide, and the (Transitional) Industry Training Organisation for the marine and composites industries' 470 apprentices, we are sending you an SOS in regards to the now almost daily cancellations of maintenance and refit work booked in by foreign-flagged vessels.

These cancellations are due to our border controls (and recent international publicity of the same) of not permitting, even on a case by case basis, any of these vessels to enter NZ. Now that there is the option of these vessels entering Australia on a case by case basis (and getting approvals) business destined for NZ is now benefiting Australia.

With regards to superyachts alone, we are aware of 11 yachts that have cancelled works in NZ. We have however identified 33 other superyachts that have up to $40 million in maintenance and refit booked in with NZ boat yards nationwide, with the work contracts starting May to December 2020. Without a NZ Government process to allow yachts with pre-booked maintenance and refits (and complying with any COVID-19 health and safety rules entering NZ) a significant part of the world-acclaimed NZ marine industry will be lost to other more welcoming countries in this regards.

There is a calendar deadline of between December and April due to the regular hurricane season in the Pacific when vessels are restricted by their insurer of passaging during this period. The opportunity to salvage at least some of the spoils is disappearing if NZ does not provide a mechanism for these vessels and professional on-board crew to enter NZ and that this is advised to the vessels now.

We appreciate the great job you as our Government have done in stamping out/controlling COVID-19. Quarantine matters to protect NZ can be provided for on-board the travelling vessels, and the health and risk issues have been well thought through. We are confident there is no cost to New Zealand - there is only the upside in jobs and revenue, plus the utilisation of the facilities provided for by local councils, central government and private enterprise in port areas nationwide.

Over the past month we have been following the guidance of Ministry of Immigration, Maritime NZ and Ministry of Transport senior officials in regards to several applications for border entry of superyachts with pre-booked maintenance/refits that our organisation has been supporting. It is concerning to us that, even though we have been following the advised process, the application for example, from XXX Marine for the vessel S/Y XXX to enter NZ was sent to the Ministry of Immigration on 13th May, then to Maritime NZ before going to the Ministry of Transport this week and now, according to the Ministry of Transport, will not be processed by them but handed onto MBIE. We believe NZ is very likely to lose this vessel, and the $4 million to $5 million that would have been subcontracted to almost 40 trades based companies, if we cannot advise the vessel's captain by Friday 12th June that the vessel is allowed to enter NZ.

We make no apology to referring our call to you as a marine industry SOS as we are about to lose thousands of jobs and apprentices through not being able to inform the vessel S/Y XXX, and the other 30 or more vessels, of a mechanism of being able to enter NZ over the next few months to be serviced by our skilled tradespeople in NZ.

Chairman of Export New Zealand, Sir Ken Stevens, shares our concerns in regards to the jobs and foreign exchange earnings at stake in regards to the above matter and supports our call to you to assist in this matter.

We copy this letter to Minister of Small Business Hon Stuart Nash and CEOs of MBIE, Carolyn Tremain and NZTE Peter Chrisp as the implications for lost foreign exchange earnings and employment of specialist skilled tradespeople go well beyond the above referred $40 million contracts above. Refit and maintenance forms the largest sector of the $2 billion NZ marine industry and is primarily based on an export market that floats to our shores.

We look forward to your advice accordingly of a workable process by which we can process the application for the vessel S/Y XXX and then others to follow.

Peter Busfield NZ Marine Executive Director

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