Australia's biggest boatbuilder trims down
By IBI Magazine/David Lockwood
After weathering the storm for several choppy years, Australia's biggest boatbuilder has finally caught a cold. Responding to a cooling market, Riviera announced 136 redundancies of its full-time workforce effective immediately this week.
The reason for the cuts is that demand for its award-winning flybridge cruisers, sport yachts and sports cruisers is down on previous years. The Gold Coast boatbuilder says it usually has about 85 orders placed each quarter. But in the first three months of this year there were 71 and it expects sales to fall further.
Consequently, Riviera is projecting a 14 per cent downturn in revenue for 2008-2009. Following the restructure, the company's workforce will total 950 at the Coomera site. Redundancies would come from across the company's entire operation and several external contracts were brought back in-house.
Riviera chief executive officer Wes Moxey said: "The company is actively rebasing its business to meet the changing market and to maintain our global competitive edge. We continue to make efficiencies through the introduction of new technologies [injection moulding], systems and processes."
Riviera has been hit by the languid American economy. The yard exports roughly half of the 300-odd boats it builds each year. At the same time, it's expecting the European market to soften further. But going against the trend, riding on the back of strong oil prices, are emerging Middle East markets.
Meanwhile, business confidence has plummeted in Australia this year, sending shockwaves through the boating industry. "Most of our buyers are business people, and for all of this year they've been flat out looking after their own affairs without worrying about getting out on the boat," said Moxey.
Demand for its smaller boats has also been hit by the strong Aussie dollar. Increasingly, imported craft are stealing market share, especially in the competitive arena of sportscruisers. Sales of Rivieras under AU$500,000 are slow and, tellingly, the price of its best-selling boat, the 47 Open Flybridge, is more than AU$1 million these days.
Of course, rising interest rates and high petrol prices have contributed to declining boat sales. And an unusually wet summer was cited as a reason for fewer people going boating on the East Coast of Australia.
Yet Riviera is on track for its scheduled new boat releases this year. These include a new 70 footer costing from AUS$4.75 million. There were four confirmed forward orders for the flagship at the time of writing.
"Riviera remains a robust company with a clear vision for the future. We have strong forward orders on a number of our most popular lines. We will launch six new models during 2008, we are opening new dealerships around the world and our new aftermarket facility at the Coomera site opens in mid-May," said Moxey.
(1 May 2008)
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