Last month, a roundtable discussion was held in Palma , sponsored by TARGOBANK, to

look at the status of the large boating industry in the Balearics, the facts, the difficulties it must face and its huge growth potential. The meeting was attended by many leading nautical business owners and managers as well as representatives of the Balearic Port Authority .

This is a real industry, and if the boating industry is a spur for the economy, large boats are an engine that Mallorca must look after and provide with fuel, for the sake of their relationship with the island and because of their notable economic impact, quantitatively and qualitatively, and because they counter the seasonal trade effect. A large boat works like a small enterprise and as such creates economic activity. In the winter, because it provides work to the repair and refit businesses and in the summer, because its movements and stopovers cause economic activity in the leisure, shopping, food or hospitality industries. But there is fierce competition in the Mediterranean and therefore our authorities must be sensitive to what is at stake. The powers that be in Madrid unfortunately don’t seem to see the importance of the industry or the revenues it could bring to the table.

 

A 70% portion of the boats of this type from throughout the world sail in Mediterranean waters, but only 1% fly the Spanish flag. A telling statistic. For permanent berths we are competing with Monaco, Italy and France; for transients, with Malta and Greece; and for maintenance and repair, with Barcelona or Valencia, among other ports. And so we have to be more competitive because we are putting at risk our ability to grow in a business that has a huge ripple effect as a creator of jobs. And we will not achieve this while we have worse conditions due to a higher tax bill –for registration tax and VAT – ; more legal procedures and an obsolete and extremely slow bureaucratic system.

 

Like all industries, the Balearic boating industry has had to ride the economic storm, but it has held up well and strengthened its leadership by building up its currently-existing solid positions. Today it is the only business able to create stable highly-qualified jobs, with salaries that in many cases are three time higher than in other industries. Yacht repairs have been responsible for 3,000 jobs in Palma between direct and indirect employment. But the paradox is it is hard to find qualified workers, even in these times of job scarcity, from mechanics to electricians or woodworkers.

 

The only reason is the lack of appropriate training. This is one of the adjustments needing to be made, vocational training centres must be brought into line with demand and real needs. There are some crushing figures: in Italy 700,000 people work for the industry; around 350,000, in France; and in Spain, around 100,000.

 

Large boating also faces the challenge of ending the ignorance that is observed among the local population in relation to this world and its economic value. It is as if it were a restricted elite group of people that cannot make society as a whole see the importance of the activity in terms of the economic growth, jobs and wealth it brings. Every single person in The Balearics receives some benefit from this industry.

 

The largest threat, however, the rocky seabed able to scare recreational and luxury yachts away from the Balearic coastlines is the heavy tax burden placed on them. It is much higher than they find in Italy and France, for example. The registration tax of 12% does not exist in any other European country. The VAT alone charged on these activities in the Balearics is twice as high as that charged in the islands’ largest competitors for boating tourism. This circumstance plainly needs to be remedied, along with the legal certainty or the excess red tape that is causing some boats to go to Barcelona for their document procedures.

 

Antonio Zaforteza voiced his criticism with humour and firmness, using an example of the crazy Spain that the boating industry is having to live with: “Here we have no berth register, but it is compulsory to be registered. How can you explain to a German that he has to be registered on a register that does not exist and if he fails to register his boat will be taken off him?

 

The government has an obligation to take the appropriate steps to ensure that everything that the boating environment and the boating industry moves can continue making a decisive contribution to economic expansion and the growth of employment in the Balearics. There is much to be done because in both this region and Madrid there is a huge amount of ignorance among political leaders in relation to this up and coming sector.

 

DIEGO COLÓN DE CARVAJAL

CHAIRMAN OF THE ASSOCIATION OF SUPER YACHTS. GENERAL MANAGER OF SHIPYARD ASTILLEROS DE

MALLORCA

“We are concerned about the image of the industry. We have a similar impact on society to that of high quality tourism”

Colón de Carvajal took part in the creation of the Spanish Association of Super Yachts to modernize a tax and legislative framework that had forgotten about the industry. Now they are recognized, but he regrets that society still has prejudices about sailing. He recommended having lower prices that bring the sea within the reach of Mallorcans, argued in favour of lower taxes that would make the industry more competitive and expressed his belief in the potential to create shared wealth from an activity that today is rowing on its own.

 

JOSÉ MARÍA CAMPUZANO

CEO of shipyard STP

“We have a coastline, facilities, additional services and a potential that no one else has in the Mediterranean”

In his job he has seen how repair and maintenance services in Mallorca have caused a threefold increase in staff and companies over only six years, and he has perfect knowledge of the competitors in boating and large yachts. But he warned: having the best conditions is not enough, the island needs to be competitive, which will come when the load has been removed such as a harsher tax

system than competitors and red tape that hinders business.

 

ANTONIO ZAFORTEZA

CHAIRMAN OF THE ASSOCIATION OF MARINAS AND NAUTICAL INSTALLATIONS OF THE BALEARIC ISLANDS AND CEO OF PORT ADRIANO

“A boat is not just a boat, it is an SME that creates more jobs than many conventional SMEs”

Zaforteza explained that the taxes are scaring large yachts away along with the millions they spend on land and in the marinas and he recalled that boats are now enterprises that drive the creation of jobs and wealth. For that reason he asked for less red tape hurdles, a tax system equalling that of the countries that are Mallorca’s competitors in the Mediterranean and greater governmental

sensitivity when it comes to protecting the industry or training the professionals working in it.

 

ALBERTO PONS

OUTGOING CHAIRMAN OF THE BALEARICS PORT AUTHORITY

“Both in Madrid and here we have to take into account that this is a powerful industry and they have an enormouspotential”

In one of his final acts as chairman of the Port Authority Pons lamented the lack of sensitivity that boating funds every time it wants to be heard in Madrid. He shared the views of the rest of the sector that removing tax hurdles will not only increase revenues, but also cause business and jobs to multiply.

 

MARTA IGLESIAS

BROKER AT CAMPER & NICHOLSONS

Of the ten largest companies engaged in the sale and rental of large boats, six are in Mallorca

It has an office in Palma, but the Balearics section of Camper & Nicholsons operates throughout the world from here. That is the appeal of Mallorca for boating. Despite the taxes. Iglesias gave an example: the registration tax has just been reformed for it not to be paid either by boats for rental that are over fifteen meters long (until a year ago it was paid by them). The effect? There are 800

large boats around the Mediterranean and without the tax the 20 that were in Mallorca has now increased to become 60.

 

MIGUEL ÁNGEL SERRA

LAWYER AND ECONOMIST AT GARRIGUES

“The tax situation is absurd: we are gaining nothing with our higher taxes, because if they don’t come they don’t pay taxes”

Serra is one of the prominent lawyers in the boating industry. He has been toiling for years to change a tax system with charges such as the registration tax, which is only collected in Spain. It only brings 20 million in annual revenues, 1.6 million in the Balearics, a laughable sum in comparison with the hundreds of millions in investments that are being scared away and the tens of millions in public revenues that a greater amount of activity would generate without this registration tax, he argued.

 

TONI SALOM

CEO AND FOUNDER OF NAUTIPAINTS

“Mallorcan society has for many years turned its back on the sea and we have not been concerned about what might happen”

Toni Salom, business owner, entrepreneur, executive CEO and founder of NautiPaints, believes the time has come for Mallorca to turn and face the sea. He touched on the tax threats and threats to competitiveness, but he believes that there are issues, such as specialist vocational training, which would also contribute to making Mallorca an important hub for the boating and shipbuilding industry throughout the Mediterranean.

 

FRANCISCO JAVIER GEFAELL

GENERAL MANAGER OF TARGOBANK

“To us the industry has a surprising amount of potential. A boating culture must be encouraged.”

The financial institution is engaged in a large-scale expansion drive throughout Mallorca. It already has twenty offices in the Balearics, where it wants to take an active part in its economic development. And this development will involve, they say, industries such as the boating industry and shipbuilding ancillary industries: “The industry has a surprising amount of strength and potential. Its problem is one of visibility. A boating culture must be encouraged like they have in France or Italy.”