30 June 2006
	Boat building BREAKTHROUGH FOR ATLANTIS By Sven Lünsche

Exporting luxury boats to the US has made Cape Town-based Admiral Yachts one of the more successful companies in SA's emerging yacht building market. Its 40-foot Admiral 38 catamaran was nominated for a 2005 Boat of The Year award in the US and exports to the US have been steady despite the strong rand. But now the group wants to boost its export order book, says Admiral Yachts CEO David Bird. To double its exports over the next two years - from its present level of 10-12 boats a year - and expanding its geographic reach from the US to Europe and the Middle East - the group is moving to a custom-built building in Atlantis, north of Cape Town. The new building has been funded by a mortgage loan from the Industrial Development Corp (IDC) and because 20 new jobs have been created in an area of high unemployment the company benefits from the pro-SME job scheme established by the IDC last year. "We are paying prime minus 5% which is a very competitive rate. If it hadn't been for the favourable rate, we could have gone to other commercial banks, but the IDC also showed a good understanding of our requirements," says Bird. The repayment period though, at seven years, is shorter than the 10- year norm for mortgage funding. Duncan Macleod, head of the IDC's metal, transport & machinery products unit, says Admiral Yachts meets a number of the development criteria that are essential to receive funding from the pro-SME job scheme. "Crucially, he is creating jobs in Atlantis, which has high unemployment," Macleod says. Bird does express some concern about the funding processes by the IDC, particularly the relatively long period it takes to have funding approved. Echoing concerns by other borrowers, Bird says that too many departments at the IDC appear involved in the process of making a funding decision, each of them have a chance to give their input, thus delaying the decision. "We were delayed by the need to complete an environmental impact assessment for a number of weeks, before it was established that the building didn't require one because it was below the financial threshold." Bird also believes that the IDC should trust entrepreneurs more in valuing deals. "I had just completed four factories and knew how to value Admiral's new Atlantis building but this was disputed by some officials in the corporation. There is quite a bit of red tape," he says. Overall, though, Bird is impressed by the knowledge and dedication of the IDC staff. The low rate charged remains the main attraction because it enables him to pay off the debt earlier, releasing greater cashflow that can be invested back into the business.