Iain Murray A.M. seen (right), with Premier Morris Ienna, is a yacht designer, property developer and a director of Australian yacht builder Azzura Marine Group. He is also on the Australian Boating Industry Association team that is implementing an Action Agenda to promote Australian companies.

AG-C: How important are overseas markets to the Australian industry?

Iain Murray: I guess our company’s a bit diversified, in as much as we build several different types of products in Azzura Marine and things have a different significance. In the case of Sydney Yachts, for example, where we have primarily been building boats for the Australian community, it hasn’t been a high priority. Shipping relatively low cost production yachts out of this country is an expensive operation, because we’re competing against cargo going to places where we would typically sell the yachts, as opposed to going back to Asian countries, where we import a lot from and the ships go back empty.
As we’ve progressed with Azzura Marine and entered more and more in the luxury market, certainly the overseas market is a bigger and bigger part of that. Even with an Australian buyer, it is more than likely that the boats would be kept out of this country, anyway. So, to answer your question generally, the overseas markets for the large Azzura boats are certainly very important for us going forward.

AG-C: Do you see the emerging Asian markets taking priority over USA, EU and Arab?

IM: For us the answer is ‘not at this stage’. The Asian market, from where I’m standing, is risky. I’m seeing large marine complexes being built, in Malaysia and places and I’m trying to compete in the Olympics, in China, and there been several marinas built there. They are magnificent facilities, but I haven’t seen any boats yet.
I’ve seen quite a large education process, particularly for the Chinese people to become familiar and comfortable with the water; probably more so with sailing boats than with motor yachts. Down the road, I can see it will be a very important market for us, but right now we’re trying to cater for people - Americans and Europeans primarily - that have inquired about the products we do and have the skills to build, which are sailing boats, or motor yachts and, particularly, motor yachts that have a character feel to them. We import a lot of building skills and bits and pieces and that’s our immediate future; more in the custom boat building. That’s where it is from my point of view, but I’m sure that, in 5 years time, it will be a different story.

AG-C: Can you see the Australian industry ever competing, globally, against large EU & US Groups, such as Bénéteau & Brunswick?

IM: It’s very difficult for us to compete in the EU and USA, simply because of the cost of getting craft to those markets. As I said, those markets are where Australian commodities are purchased and shipped, so we are competing for space on very heavily laden boats. For us to send a boat to America is, probably, going to cost us 25% of the cost of the boat, which is too large a burden. So, unless we are prepared to be like Bénéteau, which has gone to America and set up production, efficient as we might ever get in this country, we are never going to get to a point where we could be a large production group, selling in large numbers to America or the European nations, simply because of the shipping costs.
When we get to the superyacht standard it becomes a different thing. It travels on its bottom, it might even start life down here with its owner cruising, which is getting more popular, so shipping is far less of a factor.

AG-C: The Caribbean and Mediterranean are easily accessible to high net worth potential charterers. That has helped the luxury yacht industry in the USA and Europe. Do you foresee a similar Australian effect?

IM: It is happening; not in anywhere near the way the developement of the charter industry has happened in Europe, in particular, and also in the Caribbean, but it is happening. Certainly, we don’t have the permanent base of these boats yet, but there are more and more travelling down here, probably in private use, and stopping off. Coming down through the Pacific and doing a bit of cruising in New Zealand, then the Great Barrier Reef, and maybe stopping for a refit in Australia, then continuing on their way.
Some of these boats are doing some charters, whilst they’re here and people like Nigel Burgess see great opportunities for Australia and the Barrier Reef and round the top in the Kimberlies. We see the True North boat and the boat we built, Cambria 2, heading there; the big catamaran, Seafaris, is up there. So, we are seeing high quality boats operating under international charter and attracting overseas people, by providing a quality service and these boats are getting bigger.
There’s lots of potential for tourist charter and not just with superyachts. From my association with the Oatley family, in Hamilton Island, I know they have very much in mind that there’s a large amount of business and that Australia has a lot to offer, in terms of exploring this part of the world. Not only are the charter boats getting better, but I think the land based facilities are coming up now, so we’re not much behind the Caribbean in a lot of ways. There is a long travelling time to get here, but we’re talking about very wealthy individuals, with chartered or private jets, so I guess it’s part of the adventure.

AG-C: Australia produces pleasure craft suitable for European waters, yet we hardly ever see them at boat shows. Is that just because of the price of shipping?

IM: I think it’s something that big manufacturers like Riviera are probably struggling with, every time they build a boat. Bearing in mind they build 4 or 5 hundred boats a year, the average length is probably 45 feet. They’re not super boats, but they’re now building boats up to 70 feet, at several million dollars in cost, but the issues I’ve spoken about of the cost of getting them out of here is just as big an issue for them as it is for me. It’s not until we get to the larger sizes that eases.
We had a very focussed manufacturer in Oceanfast here and they did attend all the boat shows, they did sell internationally and had offices in Florida and Monaco. They marketed themselves hard and then they were absorbed into another company and it was decided it was more profitable to build commercial boats, so that presence has now disappeared.
I guess our business, Azzura, is the one that’s following up behind, building bigger and more detailed motor yachts and trying to go where Oceanfast had gone before. We’re slowly chipping away and I hope that, with our Australian superyacht group, we will have more of a regular presence, particularly at the Fort Lauderdale and Monaco shows. Like New Zealand, we have to establish our presence, our industry ought to work harder together and represent our country as a whole, for the services we can offer, rather than as individual contractors and lead contractors and yacht builders as such. It’s something a lot of people are working hard on, in this country, and, obviously, we’re developing facilities to build those boats. We’re developing our own superyacht facility, in Newcastle, and Sensation Yachts is coming to Newcastle as well and we’ve seen North West Bay ships develop in Tasmania. We’re a little bit regionalised, but we certainly have all the basics of what we need to build those boats here and we intend to be building them fairly shortly and be represented around the world quite regularly. There’s a big moving forward for Australian constructors at the high end of the market.

AG-C: What’s the future for the Azzura brands?

IM: The Sydney brand has primarily been a racing focused brand over its long time; a strong one design racing class boat. Our current boats, the cruiser racer boats, are sort of all things to everyone; boats that race quite boldly and are also capable of taking a family out, to provide them with pleasure activities, yet robust enough to compete in the Sydney Hobart, or whatever. That’s what a Sydney Yacht is all about. It’s never going to be a mass produced Bénéteau boat, because our signature is more of a robust hand built boat as opposed to a factory produced boat. That’s not something we are trying to change; we are trying to keep our racing edge and mixed use capability. The smaller boats, the 36 footers, we are able to build reasonably efficiently. We built them in significant numbers and that’s about the limit of the size that get on ships at a reasonable price. So we are having a run of exporting those boats to America right now.
We acquired the Marten brand last year for a number of reasons. Steve Marten did a terrific job in putting a marine business together and building a very unique, beautiful yacht and we saw this as an opportunity to up-skill ourselves and up-equipment ourselves and walk into a brand that he had spent a considerable amount of time and research putting together, but didn’t quite finish the job. We are delighted to have Steve Marten with us; he brings a huge wealth of boat building skill and knowledge and is a general good guy with it. It’s been terrific for us to have the opportunity to build these boats and it’s helped the Sydney range, dramatically. It’s given us another brand in an entirely different direction. In a coordinated marine business we have to keep all sorts of activities busy, in terms of design and manufacture of cabinetry work, stainless steel work and various forms of composite construction. The people are building a fairly production boat to custom boat standard with the latest materials and that is what Steve Martin has brought to us; the way to build a Porsche or an Audi and it has been a terrific opportunity for us.
Then we have the Azzura boat that started out as a requirement to build boats really for our own use and developed into building purpose build factories and getting quite a large team together to deal with being able to build a shipyard and that’s a large amount of project management, design skills and machinery of computerised cutters and bits and pieces. To pool all that together we actually built a purpose built factory in Queensland to be able to do that we are now going into Newcastle with a purpose built shipyard to regard all of the facets of building these boats and also the ongoing service with it and to that extend we have entered into Woolwich Dock in Sydney Harbour to provide service and repair and maintenance facilities as another string to our bow of servicing our customers and so we have a base and a very nice Superyacht dock down at Sydney Harbour and we have Newcastle and Queensland. Then, obviously, having three groups together allows us to have all these skills under one ownership and allows us to have proper purchasing systems, accounting systems, employment, occupational health and safely. It allows us to run a business properly because we have enough momentum amassed to do that.

AG-C: How big is Azzura going to get?

IM: When Newcastle opens it could well be that the size of our group could more than double. It’s fair to say, with Newcastle building boats, we will be approaching 400, maybe 500 employees and that is starting to be a fair organisation. We are, currently ,just under 200 hundred employees, so it’s something that has come a long way in the last few years, since I have taken control of all of these groups. So, with our combined marketing and branding and efficiency that we are starting to gain and get a cross polarisation of ideas, project management, design skills and you look at the boats, the brand new Martin 49 outside me here and you say it is defiantly starting to pay dividends.

AG-C: Would you consider opening a manufacturing facility in China?

IM: The Sydney Yachts brand is probably most likely to go into manufacturing, in a country like China. It’s not hard focus for us right now, we are very much trying to build the other end of what we are doing.
We are only a small group and we can’t expand on all fronts and right now our focus is on Newcastle and the bigger boats. That said, we have new models planned for Sydney Yachts, but I’ve seen many go to China and into joint ventures, over the last twenty years, and many of have retreated and its something that we only have so many hours in the day and we think they are best used into making our own operation here work harder and more efficient at this stage rather than sharing other opportunities in other countries.

AG-C: You have taken ten world sailing championships. Are there some lessons you could pass on to young sailors today?

IM: I started being sponsored from the age of 14. I had some early success, with the help of my mother, and it wasn’t very long after winning my first Australian championship, at the age of 14, that I sailed in boats that were sponsored; those days in the skiff classes. I didn’t come from a wealthy family and for me to progress my sailing career I needed to attract sponsors. So, at a pretty early age I was on the sponsorship trail and I think, in many ways, that was a very good thing, because it added a lot of responsibility and some understanding and acknowledgment that corporate life was probably going to have to play a part of developing my sailing skills. It also introduced me, at a very early age, to a lot of older people and probably made me grow up faster.
I think the opportunity of sponsorship is there around sailing, much more than it was in my days, and the advice is get in early, start your sailing career, get some achievement in small dinghies and, obviously, your parents have to help you with that and then get your words on paper and get out there, sell your story and get to the next level.

AG-C: You have competed in four America’s Cups, how do you see the benefits of America’s Cup sponsorship?

IM: The last time I competed was in 1995 and we had a budget of around AU$30 million, US$25 million and it was a remarkable achievement to get that amount of money for the America’s Cup. That was more than our national rugby, cricket or any other teams had been able to put together, relative to that time? I look at the America’s Cup today and the amount of money they are spending and say that the America’s Cup is not commercially viable as a sponsor driven event.
Look at the top teams - Prada, New Zealand, Alinghi and Oracle all those groups have a beneficiary adding a substantial amount of money. if it isn’t an individual, it’s a Government. You take those individuals and the New Zealand Government out of those four teams and I would say what’s left is, probably, the commercial reality of the America’s Cup and that’s a long way short from the budgets they have got. So, where we would struggle, in this country, is that we don’t have a government that wants to match dollar for dollar, we don’t have Rupert Murdoch wanting to do it, or a Larry Ellison or a Bertarelli. We don’t have anyone that is so passionate about the America’s Cup that they are prepared to do it on non-commercial terms. Look at BMW Oracle; obviously BMW is a very commercial company, they are looking for their ‘bang for buck’. They are getting a good billing with the Larry Ellison challenge, but I guarantee they won’t be paying half of what it’s costing.

AG-C: Can you see the cost of preparing and running a high tech boat starting to limit entries?

IM: I think we are seeing that in the America’s Cup already. I compete in maxis, where Alfa Romeo sponsors a boat, and I think the sponsorship is purely driven by their commercial return, so if it gets to the point - as it is in the America’s Cup - where the research and development and everything else takes campaign cost to beyond commercial viability, it could mean no money for research. What then? Do people do less research, do the builders, the crew get paid less. I’m not sure where it will go, but it would be sad for the sport to make itself uncompetitive against other sports and lose out.
Sailing is simply not a sport you can put on TV and people go “Well, I’ve got so many minutes of air time and I’ve got my monies worth.” It’s a participation sport, because it’s a difficult sport to watch, so the sponsors have to make out of it in many, many ways and feel good, so I worry about some aspects of where our sport is going and the cost involved.
It’s got events popping up all over the world; in the old days it used to be what was the Whitbread - now the Volvo, the America’s Cup, the Olympics and maybe the Admiral’s Cup. Now we have this round the world race, that round the world race, the America’s Cup, the World Sailing League, International Match Racing circuit, Farr 40s; there’s dollars being chased up everywhere and, obviously, sailing has attractions to a lot of sponsors, in the demographics, but there is a limit to what sponsors will pay for it.

AG-C: Are we are getting to a situation where so many races are diluting the impact?

IM: I think the America’s Cup is still right up there, particularly in Europe; it is a very major event and I think it is still seen as the pinnacle of our sport and a lot of people are going to watch it. Whether the sponsors are getting good value for money I can’t judge; the contest is too far away and obviously the sponsors make their own judgment on that. For the rest, the Volvo, the Geelong races etc, I think a lot of people are confused as to what race is what.

AG-C: What sail racing are you doing now?

IM: I’m back to basics, involved in running an 18ft skiff boat, here in Australia with the Channel 7 company, which is a very Sydney Harbour orientated type of thing. I’m currently trying to win a place in the Australian team for the Olympic Games and I sail on Wild Oats in most of the Maxi races, with the Oatley family. That’s sort of the limit of my competitive sailing at this stage. That’s actually a lot of time, but there is no Australian America’s Cup challenge at this time and I can’t actually see one in the foreseeable future.

AG-C: Thank you for talking to BYM News.