Leveraging Marine Trades

The marine trades industry is a critical part of the Water Counties’ regional economy and culture. Its firms contribute significantly to the regional economy by generating business earnings and providing a supply of year-round, well-paying jobs. [1] Through employment in the industry and by use of its high-quality boat-related goods and services, the industry has developed strong relationships with the Water Counties’ citizens. The industry is thus a living part of the region’s maritime economy, history and culture.

Although the region has a well-established boat-building cluster, with a critical mass of firms and experienced workers in the marine trades, this study identified a variety of challenges that may undermine the cluster’s competitive advantages. It also identified strengths that could be leveraged to strengthen the growing Marine Trades cluster in the Water Counties. Three challenges in particular stood out in our firm interviews and technical analysis: (1) the loss of waterfront access for boats, (2) a shortage of qualified workers, and (3) low levels of collaboration among those connected to the industry in the Water Counties. Based on our study’s findings, these problems are already starting to undermine the production efficiency of the industry’s firms and could erode the desirability of the region as a place for consumers to purchase boats and engage in boat-related activities that support the industry, unless addressed quickly.

Because the key challenges facing marine trades are regional in scope, individual firms are limited in their ability to improve conditions. Collaboration between industry stakeholders, which includes both the private and public sectors, is necessary to target issues relating to land use and the workforce. This report suggests, as an overarching recommendation, that marine trades businesses start the process of building collaboration by unifying themselves as an industry, and a regional ‘brand,’ and coordinating with local and state governments and training centers to target the industry’s regional challenges. Of course, collaboration requires a long process of developing shared trust and recognizing common mutual dependencies. To initiate this, the study begins with two successive recommendations:

1. Leaders should strengthen the relationships between firms by involving the industry’s business owners in group-centered strategies. This can help build the level of trust necessary to facilitate collaboration on a greater scale. Specifically, this study recommends that leaders implement a regional branding strategy as a group-building exercise. As the next sections describe in greater detail, a regional branding strategy would create a variety of positive outcomes: greater efficiencies in the use of local resources, such as NC MARTEC and the region’s training centers, improved effectiveness in marketing for individual firms and increased regional, state, and national awareness of the Water Counties’ boat production and boat-related activities. This latter outcome could assist in expanding the coverage of existing marketing initiatives and capture greater spending by consumers and tourists from other regions.

2. As an outgrowth of the stronger relationships developed in step one, leaders should establish a business association that broadly represents the interests of the Marine Trades industry. As discussed in the following sections, a business association can assist individual firms in a variety of capacities. It can coordinate with training centers, such as NC MARTEC and community colleges to improve the ability of existing programs to build the industry’s workforce. As a representative association, it can also give individual firms a stronger voice in local and state government policy decisions that influence waterfront accessibility.

The study consists of five sections that elaborate further on the current state of the industry. Section one provides an economic development analysis that profiles the industry’s related firms and identifies regional industry trends. Section two analyzes the state of the industry’s workforce in terms of labor supply and demand and the conditions at local training centers. Section three focuses on the working waterfront, identifying its role in the industry and how current waterfront conditions are negatively affecting the industry. In section four, the concept of regional industry collaboration is more deeply defined. A specific example of collaboration in a Marine Trades industry, taken from Washington State, is provided. Finally, the fifth section concludes with a summary of the study’s findings and key recommendations.

The study offers specific recommendations in each section. Overall, the recommendations offered by this study are in the following.

ü The Marine Trades are critical to the economic health of the Water Counties. These counties are already home to 20 percent of Marine Trades firms in North Carolina (SBTDC) and 40 percent of Marine Trades employment (NCESC). Our economic base multiplier analysis suggests that as many as six jobs will be created in the wider economy for every one at a highly competitive and productive Marine Trades firm. Deepening the capabilities of the region’s Marine Trades industry has the potential to boost the regional economy.

ü A potential first step for the Water Counties is leveraging the networks of the EDCs to engage important stakeholders and key players in the Marine Trades in each county to better understand their business challenges and needs. While the data and interviews suggest some level of industry cooperation, there seems to be great opportunity to maximize the industrial capacities within the cluster. In a region that is crossed by inland waterways and smaller highways, it is important to actively cultivate networks of industry, policy and workforce development leaders and resources.

ü Industry stakeholders should consider supporting local businesses and attracting new firms within all of the counties. Onslow and Craven should also support the expansion of existing business operations, or attracting, incubating new firms, as they have the highest unemployment rate in the region and could thus benefit from an expansion in employment opportunities.

ü The cluster’s value chain analysis shows that significant complementarities exist between the regions’ five counties. Each county has key advantages, and redundant capacities across multiple counties are all in industries that create more value like boat building, sales, and transportation. Thus, despite Carteret having a majority of all firms, there are opportunities for each county to further develop their specialized industries. For example, Craven and Onslow have engineering firms in an industrial space has the capacity to expand without saturating demand. Jones can work to link its specialized freight firms with manufacturers and distributors to go along with its potential to provide human capital.

ü Economic developers should discuss with boat manufactures whether design and engineering resources are used within the region or contracted from outside sources. Successful cluster development strategies for marine trades could include the formation of many sub-networks of value-added suppliers and service providers. In addition, a directory of naval architects and engineers could link regional manufactures with regional designers.

ü Ship and boat building, and marinas are a clear competitive advantage of the Water Counties, with a proportion of industry activity well above the averages for North Carolina and the U.S. and are an important source of local leadership.

ü Local leaders in the boat dealership industry should be included in the formation of any trade association or working groups to discuss strengthening of the Marine Trades cluster. This seems to be an industry adept at generating revenues and capturing profits within the Marine Trades and should be included in any strategic planning efforts to strengthen the cluster.

ü Similarly, marine cargo and salvaging, though a relatively small portion of Marine Trades employment in the Water Counties, has one of the highest average wages. It would be useful to understand the geographic range of these firms, the competitive nature of the field, and what the linkages are between salvage and maintenance and repair operations.

ü An audit of transportation firms and their capacity to manage Marine Trades freight may yield information useful to existing firms, as well as to firms considering locating in the region. This is also a capacity that is spread amongst the counties, with Craven having the highest proportion of specialized freight carriers, and offers the opportunity for more intra-county industrial collaboration.

ü There is significant anecdotal evidence to support the idea that although industries are physically located in a given county, the labor force is mobile and inter-county commuting is a factor in dispersing wages among the counties. Further inquiry should be made into commuting patterns of the Jones county labor force to better understand the relationship of its labor to the Marine Trades sector.

ü Demand for labor skills in each area of the value chain should be investigated in more depth, as there may be additional workforce development opportunities via NC MARTEC or the Community College system in general.

ü A business association should regularly monitor the labor needs in the industry association through formal communication with businesses; based on the results, the industry association and the local education institutions can develop continually updated strategic training programs.

ü Businesses, as part of a business association, should also explore more informal connections with their future workforce. Plant tours, sponsored sport-fishing clubs are both ways that companies could reach out. These actions could help spotlight the importance of the marine trades industry as a driving economic force of the region, potentially helping to build support for some of the state- or county-level land use changes that could be needed.

ü A business association should work with high schools to make boatbuilding a “career pathway,” and develop relevant curriculum, internships, and apprenticeship programs to prepare high school students for either businesses or advanced NC MARTEC courses once they graduate. A business association should also seek more informal ways of connecting with high school students through an increased presence in the school system, through clubs or sponsorships.

ü The business association should coordinate with community colleges in the Water Counties to develop basic and soft skills training courses that will prepare workers for the boatbuilding industry and for courses at NC MARTEC.

ü NC MARTEC and the regions’ other community colleges should collaboratively diversify their training niches to prevent an overlapping of programs. If necessary, the colleges should split FTEs to ensure equitable funding (FTEs are elaborated on further in the following section).

ü NC MARTEC should immediately develop and offer more generalized courses for boatbuilding workers, in areas such as joinery, electrical and mechanical skills. It should reserve individual courses for specific companies only for very specific tasks. Ultimately, the long-tern sustainability of the boat-building industry relies on the ability of a wide swath of workers to benefit from generalized boat courses.

ü The business association should supplement instructor pay to make NC MARTEC a competitive industry through pooled funding.

ü Firms should develop internal job ladders that promote internal hiring in order to both keep qualified workers and encourage skill formation.

ü Work with local jurisdictions that have zoning codes and waterfront property to make changes requiring waterfront development to provide boat access for every x number of feet of waterfront and a minimum number of public boat slips for every x number of residential units in subdivisions.

ü Gauge the community’s interest in a “no net loss” policy. Begin with no loss of public access.

ü Begin a process of identifying and convening stakeholders, in addition to Carteret County, who have a vested interest in pursuing a larger Jarrett Bay Marine Industrial Park or a second marine industrial park location. The list should include public, private, and non-profit sector interests and expand beyond the political boundaries of any one jurisdiction. This group can then begin to move forward identifying strategies for funding a project.

ü Contact appropriate staff at the four educational institutions in Carteret County, national parks, and any other public agencies, to discuss if there is land suitable for a public boat ramp.

ü Apply to the North Carolina Department of Commerce for funding for further commercial site development.

ü Apply to the North Carolina Park and Recreation Trust Fund for funding public access points.

ü Meet with the North Carolina Coastal Land Trust, public sector agencies, and private sector interests to discuss partnering to buy land or purchase development rights for a conservation easement.

ü Work with local taxing authorities to prepare educational literature on the various options for commercial waterfront property owners regarding ways to reduce taxes and preserve the working waterfront.

ü Gauge political and community will in the region for passing a general obligation bond for purchasing waterfront property for building more boat ramps.

ü Investigate if there are examples in North Carolina of expediting state permitting processes if a public good is provided above minimum standards. If there are examples of this use them as templates for pushing state legislative action to expedite commercial waterfront property permits.

ü Research the various permits required in different situations for waterfront development, specifically in the Water Counties and write a helpful guidebook on the completing the procedures correctly, effectively, and efficiently.

ü Lobby the state with partners in the region and other coastal communities in North Carolina to authorize local jurisdictions to tax commercial waterfront properties in a similar fashion to agricultural land or at use-value, rather than market value.

ü Lobby the state with partners in the region and other coastal communities in North Carolina to provide more state funding for commercial waterfront and public water access programs.

ü Industry stakeholders should develop a trade association for the marine trades and boatbuilding cluster. Stakeholders should promote industry-wide forums to bring together key firms and other industry actors and establish closer relationships built on collaboration.

ü Any approach should start off in a focus area like Skagit County in the Washington State example. But, to enjoy any real long term success the local effort must be transferred across a larger area. Such an expansion is required if the effort is to receive the state level backing and legislative pull needed to really flourish. Use the focus area to develop a template that can be quickly applied in other areas. Focusing the effort in the Water Counties is a good start, but the campaign should be extended to other similar areas like Wilmington and the Outer Banks.

ü Within the Water Counties’ cluster, stakeholders should anchor a business association strategy around NC MARTEC. According to Blueford, who is aware of the boatbuilding industry in the Water Counties, NC MARTEC has untapped potential. She recommended using the facility as a neutral place for bringing together competing businesses.

ü Industry stakeholders should consider having an outsider coordinate the business association and broader collaborative-strategy. As demonstrated in the Washington example, a nonnative perspective can bring in new ideas and approaches to an old problem.

ü Organizers of the business association should encourage a broad membership base that includes the region’s small, medium and large businesses that engage in activities related to the industry.

ü Membership should not only include boat builders, but also encompass marina operators, selected retail outlets, affiliated suppliers, educational organizations, and government agencies.

ü Organizers of the business association should attract potential members by basing the strategy on their shared interests and challenges. To develop the membership base, organizers must prove that the organization will serve their needs.

ü One possible product of a trade association could be the formation of a regional brand. The creation of a formal brand can serve as a unifying force among cluster participants as well as helping to increase overall awareness regarding the region’s industry. Even without the presence of a formal logo, establishing a collaborative organization like a trade association can really help to forge a regional identity that more or less serves as a brand, as can be seen in the New Zealand boat building industry.

The Marine Trades industry contributes significantly to the Water Counties’ regional economy and culture. First, the industry provides a supply of good jobs to local residents and represents a variety of diversified businesses that generate business earnings. Also, from the spending of business owners and their employees, the industry indirectly generates local economic activity that supports local businesses in other industries. It also requires relatively lower expenditures for public services relative to residential developments, while also generating sales tax revenues. Finally, the industry, and boating in general, has an inextricable cultural and historic connection to the region’s coastal community. Thus, it is deeply embedded in both the region’s economic base and heritage.

The analysis of the Marine Trades industry identified two central concerns: the loss of waterfront access and the shortage of qualified workers for local firms. The regional nature of these problems requires collaboration among firms to implement effective strategies. However, as demonstrated by our firm visits, collaboration among firms is currently weak. In addition, there are low levels of coordination between firms and with other industry stakeholders that directly influence waterfront access and training. These groups include local and state governments and training centers. Based on these findings, this study identifies collaboration as a prerequisite for implementing strategic policies with a regional scope.

[1] The Water Counties, for the purposes of this study, include: Carteret, Craven, Jones, Onslow, and Pamlico counties in Eastern North Carolina.

Meenu Tewari

Assistant Professor

New East, CB 3140

Department of City and Regional Planning University of North Carolina at Chapel Hill

Tel. 919 962 4758

Fax 919 962 5206

Email: mtewari@unc.edu