Interview with CEO of Admiral Yachts
Riding on a wave of success: local boatbuilder opens offices abroad
Richard Bowker
Posted on:Fri, 23 May 2008

Boatbuilding has become a niche manufacturing sector in South Africa with boats designed by local companies finding favour in export markets. Richard Bowker spoke to David Bird, CEO of Admiral Yachts, to find out about their investments in this industry and their plans to open more offices abroad.

When did the business start? Where is it based?

Admiral Yachts started in 1999. We’re now based at Atlantis, outside Cape Town. We have offices in Fort Lauderdale, Texas, in the USA and are about to open an office in the Algarve in Portugal. We are also in the process of finalising a transaction to open a joint office in Jeddah in Saudi Arabia.

What is the core business of Admiral Yachts? What are its products?

We build luxury catamarans. We started off building a 38-foot sailing catamaran and, while we still produce these, we have introduced 40-foot and 50-foot versions too. All of these are in production.

We have also launched a new product: a 42-foot power catamaran, which is of a different design, with high speed and high power for either sports fishing or military use.

What are your core markets?

Traditionally our core markets have been the USA and Europe. Over the last three to five years there has also been a trend towards purchasers coming from the Middle East. We sell locally too and make up a small percentage of the boats in the Indian Ocean and the Caribbean, but these tend to be American-owned in any case.

What was it about the local environment and the global market that made Admiral Yachts a viable business proposition?

South Africa typically has harsh sea conditions for which robust boats are required. Our catamarans are built to handle these conditions and this is a feature that has gone down well internationally. Further, Cape Town – the ‘tavern of the seas’ – has a long tradition of boat building and we host three of the world’s four main yacht races here.

There wasn’t much help initially when we were setting up the company but since 2000 we have taken advantage of the Department of Trade and Industry’s SMME incentive grant. Recently the Industrial Development Corporation has started showing interest and we have been able to get loans from them at prime minus 5%.

There is not yet much of a supporting industry in South Africa, only a mast-building and a sail-making company. All our other components are imported, from the USA, Europe and the Far East.

On the whole though, what we did from the beginning was to fulfil a global demand.

What investments into the business have taken place?

Most of our investment has gone into increasing our product range. Recently we also moved to the new premises in Atlantis, which is the largest purpose-built catamaran factory in the southern hemisphere.

How successful has the company been thus far?

Well, as I said, it was quite difficult to start the company as ten years ago the industry wasn’t recognised to the degree it is now. It’s very capital-intensive and banks were scared to take a chance on a new thing.

In our first year we built one boat – everything was founded on that. It was difficult with a new product and a new company, but I think that I pricing structure was correct – slightly more cost effective than boats from the USA – and we were offering good market value. We took the first boat over to the US and sold it there. At the time South African boats were not taxed going into the US. Our turnover for the first year was in the region of US$169 000.

After that orders started coming in – and now we get walk ins. In the last ten years we have built about 90 boats, and are currently producing 12 per year. Our annual turnover now stands at US$6-million.

How does Admiral Yachts intend expanding in terms of the size of the business, its products and its markets? What are its plans for the future?

In the next five to 10 years we are going to focus on the charter market as well as developing military and coastguard vessels. We are in talks with the South African National Defence Force as well as a number of other countries about this.

What is the potential for the growth of the industry in South Africa?

At the moment it’s limited as we have largely run out of skilled artisans and are drawing from a small pool of skilled labour. I foresee a struggle in the short term, the next three to five years, as we need to build up these numbers. This could affect expansion programmes. However, the establishment of the Boat Building Academy should effect a positive outcome here.

 Read more about the boatbuilding industry in South Africa here.