South Africa’s Tag Yachts has gone into “business rescue” on the back of difficult trading conditions in 2017, the company’s managing director Tim van der Steene confirmed today.
St Francis Bay-based Tag, a specialist cruising catamaran builder, has been a prominent producer for over a decade and helped create a boatbuilding hub in South Africa's Eastern Cape province, which is also home to the Nexus Yacht factory in Jeffrey’s Bay.
However, stiff economic headwinds, dwindling local demand and currency volatility placed many local producers under severe pressure last year.
Van der Steene said he hoped Tag could attract the necessary investment to stay afloat. “The opportunity for European boatbuilding companies to JV with South African companies hasn’t really been explored yet,” Van der Steene said. “There are certain aspects of boatbuilding that are far cheaper here, and the high-end detailing can happen at the yard in Europe. I think it is an opportunity.
“The company is [currently] not operating, but it hasn’t been wrapped yet. There is still an opportunity for a JV or for somebody to buy. The business rescue process is running its course,” he said.
South African Boat Builders Export Council (SABBEX) chairman Bruce Tedder said Tag’s woes should be viewed in the global context of difficult trading conditions, although prospects had improved considerably in 2018.
“Not an easy industry right now that is for sure but optimism in the SA boatbuilding sector is high and order books are looking solid,” Tedder said in his monthly newsletter published this week. He noted similar international boatbuilding ‘casualties’ in recent months, such as Green Marine and Oyster Yachts.
Tag’s woes are likely to impact on plans to expand the boatbuilding footprint of the Eastern Cape, which had looked set to benefit from a new boatyard facility in Port Elizabeth harbour.
Van der Steene had secured a deal to build a 12,000sq m boatyard in the old harbour precinct of Port Elizabeth – a move seen as a huge step towards a new regional boatbuilding hub. It was hoped the facility would breathe new life into the harbour precinct.
However, industry commentators believe South African market conditions have improved in 2018, due partly to buoyant sentiment associated with rejuvenated political leadership under newly-appointed President Cyril Ramaphosa. Builders are also hopeful that an expanded Cape Town International Boat Show will attract more attention from serious buyers.