Biggest challenges: delivery and quality

Elenoa Baselala
Kiribati is well-known for its outrigger canoes, said to be the fastest in the Pacific with their asymmetrical narrow knife-like hulls.

But in the near future, it may also be known for its high quality crafts.

Kiricraft Central Pacific, which is under the Kiribati Foreign Investment, has formed a business relationship with Seacrest Marine of Queensland, Australia, to develop a commercial boat building industry in Kiribati.

“This is the first time high quality boats have been constructed and exported from Kiribati,” says Kiricraft managing director, Michael Savins.

“Leo Bax of Seacrest Marine has 40 years of commercial business experience and with my 31 years of commercial boat building—we have evolved into a successful export boat-building business on Abatao islet.

The plan started when Bax and Savins first met in 2005. However, the venture did not begin until February last year when they started building of a 10.5-metre catamaran. The catamaran is  now completed and exported to the Gold Coast on January this year.

Prior to this, Savins and his i-Kiribati wife, Riteta, had been running a boat building business in Kiribati but only concentrating on domestic fishing vessels and passenger cargo vessels.

Once they had completed the orders, they returned to Australia where Savins upgraded his skills in boat-building working on high quality pleasure craft construction.

“While working in Australia between 2003 and 2005, I realised that a great opportunity existed in building high quality boats for export from Kiribati as overheads in Australia are so high compared to the Pacific.

“Being married to an i-Kiribati and having lived in Kiribati for over 20 years, you learn that the country struggles to survive in a highly competitive world. Hundreds of youth leave school every year and there are just no jobs or sustainable industry that can either generate employment or foreign exchange.

“A big plus for Kiribati is its extremely stable political situation,” Savins says.

“The biggest hurdle, in any business is finding clients who want boats and who are also prepared to take the risk of having their boats built on the small remote Pacific island.”.

As Savins recounts, there were quite a number who pulled out when it came to putting money down for the boats.

The other major challenge was to prove to clients who gave the company a chance, that their boats would be built to export standards and delivered on schedule.

“We started on 1st February, 2006 and have built a boat shed, moulds for hand laying epoxy composite and able to export our first boat by January 26, 2007.

“We also have a second larger boat scheduled to be exported on April 2. It is a 12-metre catamaran and the third vessel—a 14-metre sailing catamaran—is due for export in September. Two more 11-metre catamarans are one month into construction. We have been building a business at the same time, so I think we have proven it can be done,” Savins says.

The boat shed has now been extended to allow the company to be able to build six boats per year—one in every two months.

At the moment, Kiricraft employs 24 people with different skill levels but the growth of the company has seen the recruitment of another Australian boatbuilder.

“We are building boats just for the Australian market, however we realise that the American market is also very accessible. Tarawa to Majuro is only over night by boat and we can use this opportunity to ship boats direct to the US mainland which is a distinct advantage for Kiribati with the US market. 

“I would love nothing more than to see other investors establish other boatyards and to  realise the opportunity to develop an export boat building industry in Kiribati.

“We are able to build epoxy composite power or sailing catamarans to a high standard and land them in Australia for approximately 15 percent less than similar Australian-built design boats.

“Shipping costs of materials from Australia to Kiribati and then the shipping costs of completed boats to Australia are our major concern. Kiribati being a remote island nation has to live with expensive shipping costs as a fact of life,” Savins says.

A 10.5-metre catamaran will cost approximately AS$350,000 if it was built in Australia but it would cost approximately between A$50,000 to A$70,000 less if it was built in Kiribati.

At the moment, the company is just charging clients the cost of making the crafts; it has not factored in a profit margin.

This, Savins believes, is important, as they need to prove first that they could make quality boats. All materials for the boats are imported and would cost about 60 percent of the total cost of making the boat, shipping costs would be around A$25,000 for  smaller boats (shipping in of materials and shipping back of finished boat) and about A$40,000 for the bigger boats.

“It was a challenge in the beginning but now there are more orders coming in and we will slowly put in a profit margin,” Savins says.

But apart from all these challenges, Savins says there is a need to develop skills if smaller islands nations are to compete with more developed countries.

The lack of skills has meant a lot of hard work for Kiricraft but Savins says the clients were satisfied with their end product.

“We are very happy with the progress of the projects and particularly for achieving our aim of building high quality boats.”