NZ Herald on boat building contract

The Herald editorial:

The local boat-building industry says it is outraged that it was not awarded a government contract to build a ferry which will link the New Zealand territory of Tokelau to Samoa. On almost every level, its anger is odd.

The 43-metre vessel will be built in Bangladesh for $8 million. According to this country’s Marine Industry Association, the cheapest price for building it here would have been $14 million to $15 million. Awarding the contract to a New Zealand company would, therefore, have involved what amounts to a substantial handout to that boat-builder. In such circumstances, it is puzzling that the local industry feels even the slightest bit annoyed.

Yet Labour is also outraged that taxpayers did not pay three times as much for the boat.

Clearly, the Government was mindful of the pluses that would come from building the ferry locally. It indicated there was some room for manoeuvre by telling a Nelson boat-builder that its quote would need to be in the region of $9.5 million to $10 million. But the lowest bid from a New Zealand company, according to the Government, was about $23 million. That is almost three times the price of building the ferry in Bangladesh. For all the talk of the gains from buying New Zealand-made and of a new Government procurement policy that aims to create more incentives for local manufacturers, this was simply too wide a gap.

You go local when the prices are close to each other, not when one is three times the other.

Other criticisms of the awarding of the contract are similarly misplaced. Chief among these is the perception that any ferry built in Bangladesh will not be up to the task of making the often dangerous voyage across the Pacific. This disregards the fact that Bangladesh has a long tradition of boat-building. While best known more recently for breaking up ships, it has now become a major constructor of small ocean-going vessels as Asia’s traditional builders, such as South Korea and China, focus on larger container ships and tankers.

Western Marine Shipyard, which will construct the Tokelau ferry, is one of its most successful ship-builders.

I think the editorial is right that there was an inherent belief by some people that a Bangladeshi company can’t possibly be any good.

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