A delicate balancing act
01 May 2005
The date on the letter was April 1, but the news it contained certainly wasn't an April Fool's joke. It told members of the British Marine Federation (BMF) their subscriptions were going to rise more than three times the current rate of inflation.
Any comment on the letter sent out by BMF chief executive John Clarke advising this increase in subscriptions should be tempered by a touch of sympathy. One likely contribution to the BMF's financial dilemma is the move from Earls Court to ExCeL.
When this decision was made, Tony Beechey was in charge.
As we've said before, John Clarke received what rugby players might call the ultimate "hospital pass". ExCeL was a "fait accompli" - he and his team had to catch Beechey's ball and somehow run with it.
Before considering the "large expansion over recent years in the representation that the industry has needed and the extensive range of services that we provide to members" referred to by John Clarke, it's worth comparing fees levied by other marine federations, such as France's FIN and the USA's NMMA. UCINA gave figures that were . . . Italian. So we haven't used them.
USA and UK federations charge fixed dues per escalating turnover band. The higher the band, the bigger the dues. The Americans pay less (translated to percentage of turnover) than UK companies on turnover from above around $500k up to the equivalent of UK's top £20m band - thereafter the tables turn. The French pay 0.07% on turnover - giving a lower cost compared to the UK up to the equivalent of about £4 million turnover. Above £4million, UK companies pay less. According to FIN, its average subscription is ?300 - around £210.
The German BWVS told BB its average subscription is ?450 - around £315.
According to John Clarke, the UK average sub is "around £550". The higher the company's turnover the better it does: big is beautiful.
But the BMF business plan might "revise membership categories" - so as well as "inflation plus" increases, there could be other surprises.
The NMMA runs 23 consumer boat shows and two trade shows - occupying around 50% of its 132 staff. FIN owns three shows (Paris, Cannes and Maritima) run by Reed Expositions France. FIN takes a cut of the profits. These shows, FIN says, are very competitively priced and the main source of its revenue - supported by member subscriptions.
Modest number
This sub-contract route could explain the modest number of permanent staff members at FIN - just 11 in Paris and seven in the regions.
The BMF, employing 45, runs two consumer shows (ExCeL and Southampton) through its National Boat Shows (NBS) arm. Its Marine Trade Show is currently on hold.
Most federations offer discounts on show stand space fees to their members. Cynics might call this an "add it on to knock it off again" exercise - pressurising marine traders into joining their federations.
But apart from organising boat shows, what do federations offer their members?
PR officer Nathalie Bigaignon said FIN maintains contact and negotiates with "les institutions" - be they regional, national or European.
It puts the case for the marine trade and its interests - at all levels - and assists members on technical, judicial, social, fiscal matters and items relating to insurance and company formation.
It also acts like a central PR agency, feeding information to public and media alike. And it's required by the Industry Ministry to monitor marine industry trends and statistics.
FIN's export initiatives help members to penetrate new markets - recent examples include a 2004 mission to Thailand and a French Pavilion (with 30 French companies participating) at the 2005 China Boat Show.
To promote boating, FIN originated the annual "Fete du Nautisme" week held in May.
This takes place in around 500 locations in France, introducing "le grand public" to "nautisme" through a variety of joint initiatives in a cross section of boating activities. In 2004, more than 900,000 people came along. Spectacular.
No wonder there's such huge awareness of and interest in all things nautical in France.
Belgium recently adopted the same scheme to run at the same time. UK next? (Plug: visit www.fetedunautisme.com) The NMMA's "mission statement" is similar. CEO Thom Dammrich states: "We focus our efforts in five main areas: public policy advocacy, promotion of boating (including boat shows and our Discover Boating program), quality assurance (including the NMMA Boat & Yacht Certification and Marine Industry CSI), industry research and statistics and communication."
Members are owners
He went on to add: "The members are the owners. Our mission is to create, protect and promote an environment where our members can be financially successful through excellence in manufacturing, selling and servicing their customers."
The BMF offers much the same. Having been a member of the SBBNF-BMIF-BMF for around 30 years before selling a boatbuilding company, I've long been in a position to "take advantage of the information, representation and member services available" - as John Clarke summarises the reasons for renewing membership in his letter to members.
In the BMF's Business Plan it highlights RCD issues, the new Blue Green agenda, technical issues, export initiatives using (reduced) UK T&I funds and training. The BMF website majors on Health and Safety, LPG legislation and efforts to influence MPs against damaging legislation like the proposed removal of tax concessions on red diesel.
The excellent Export Department - now rebranded as International Business Development - arranges overseas BMF stands, trade missions and PR exercises, such as the inward mission of foreign journalists.
The BMF initiative with the new "Splash Camp" TV reality programme should attract newcomers to the sport. But did the "Try a Boat" days produce dividends? I suspect getting all those volunteers together was hard work and I much prefer the imaginative idea of France's annual "Fete du Nautisme" - with its 900,000 visitors.
Most BMF members are only too aware of the armlock exerted by boat show discounts. The discounts are too powerful to risk trying to break free. Indeed, one exhibitor claimed he received a surcharge this year because his member's discount came to more than his dues!
The only large manufacturer we were able to trace who dared decline membership is Luhrs Marine in Dorset. As we discussed the price of fish and boat shows at ExCeL 2005, Stephen Cutsforth said: "Our UK distributors Opal Marine exhibit Legends at UK shows.
They are BMF members, so we are not." He presumably didn't consider other services offered by the BMF to be worth the fee.
And are they?
The BMF offers a lot of services. But these have to be paid for and the BMF's payroll is increasing - from around £1.8 million in 2003/4 to £2.1 in 05/06 (Business Plan budget). The BMF's plan estimates an 04/05 overall loss of around £100k (following a £50k 2003/04 loss), then a profit for the next 12 months of around £200k - after hiking subs and show space by well over the current rate of inflation. Members would doubtless love to demand similar price increases in their businesses - but it's less easy without a captive market.
Not making money In spite of these increases, John Clarke says the federation is still not making money.
"If you add up the last four years' accounts, we are not in the black."
So the federation needs money. And while the cash cow for the federation is the NBS boat shows, John Clarke makes it plain in his letter that "The contribution the organisation receives from our Boat Shows is a critical factor, and this financial contribution has increased by 70% over the same (7 years) period. Although the Management Board continues to set the NBS Board challenging targets, it is considered that to continue to rely so heavily on this source of funding is no longer acceptable."
"If we just keep plodding along at inflation or thereabouts, " Clarke told BB, "we are leaning year on year heavier on boat shows for our income which, in the council's view not necessarily the best way of doing it. And we can't keep shifting the burden across."
And the way boat show attendance is moving, reliance on them is not a good idea.
Static or falling numbers of boat show visitors aren't a unique UK phenomenon and NBS cannot be blamed for this.
Hamburg 2003 attracted 131,000 - down from 145,000 in 2001. Paris 2003 attracted 275,000 - down from 300,000 in 2000. Earls Court brought in 173,000 in 2000. Now it seems ExCeL 2005 might claim under 155,000 - well short of its 170,000 targets.
And all this with and increasing workload.
Over the last five years the turnover of the marine industry has grown by over 50%, says Clarke, and what we're seeing is an increasing call for diversification of services reflecting that change.
As a result, the BMF staff has increased by 15% over the past seven years.
Warming to his subject, Clark went on: "I can give you a lot of examples of how we've had to bring in more staff. Our new manufacturing manager - Adrian Waddams - started at the beginning of the month.
Why have we recruited him?
Because there are all these competitiveness and lean programmes sitting in these RDAs which we don't think our members are getting the best of, so we've got to try to make sure we get our share of the cake. But we haven't got anybody to do it, so we have to hire someone."
Expanded enormously Clarke went on to describe how the Export Department - now known as International Business Development - has expanded enormously. "Why?
Because exporting is so important to our members that we've had to increase our exporting game."
Clarke says when he came to the BMF four years ago it handled most of its inter government work with offices in London. "Now the government's decentralisation agenda means we're having to deal with RDAs, devolved agencies, marine clusters, marine networks, marine taskforces - you name it."
Added to that, says Clarke, there's been a lot of stuff going on with Europe and there are increasing calls for legislation - it doesn't matter where you look. RCD, licensing regimes and so forth. "We've had to engage much more strongly not only in the UK but in Europe and Brussels as well to make the marine business case. So that again has resource implications."
In the meantime, Clarke says, BMF subscriptions are in the lower quartile of trade association fees.
Which is why, two years ago, the BMF council asked for the entire subscription policy to be reviewed. A working group of members was set up and chaired by the late Frank Fish.
"They were looking into subs policy in the main, " said Clarke, "but it also concluded that we should be looking to increase subscriptions."
OK, so Clarke makes the case for a subscriptions increase very well.
But in addition to the subs increase, NBS will be hiking its space costs next year - charging 6% more (5% net of discount) at ExCeL 06 - whilst the show will be shortened by one set-up day and one public day. So: less for more. Southampton increases by 4% net.
The ExCeL 10 year rent deal applies RPI increases each year until the contract ends in 2013.
Why then is NBS asking members for an RPI ++ increase?
Clarke told BB: "There's quite likely to be a huge increase from ExCeL at the end of the 10 year contract. The boat show board is getting ready for 2013."
But where's the extra money going in the meantime? "It's going to fund the federation. We spend virtually every penny we've got, " Clarke told us.
That the BMF offers its members a huge number of services cannot be doubted. That the BMF is involved at all levels from grass roots to top government in a bewildering array of issues cannot be doubted. That it is hugely influential organisation cannot be doubted.
But it seems there's a delicate financial balancing act going on over at Egham.
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