Strong military demand and a diverse customer base have cushioned the hovercraft sector from the worst of the crunch. Griffon Hovercraft's Matthew Gibson speaks to Anthony Beachey about the fundamentals impacting his business.
Transforming the build of the hovercraft to mirror that of boats instead of aircraft was the eureka moment of Griffon Hovercraft (GHL) founder Dr EWH Gifford. In the early 1960s, Gifford had been asked to help set-up the world's first hovercraft operation by inventor of the vessel, Sir Christopher Cockerell. The early models were powered by gas-turbine engines but Gifford took a step away from this precedent and decided that petrol engines were the way forward – inaugurating his company around this principle in 1976.
In 1984, GHL became the first company in the world to install a diesel engine into a small- to medium-sized hovercraft. After this move all subsequent craft have been equipped with diesel engines and GHL has invented many systems and modifications – such as ducted propellers and skirt shift – that have since been copied worldwide.
Based in Hythe, Southern England, GHL claims it produces the largest range of amphibious, diesel-engine hovercraft available in the world today. Matthew Gibson, head of sales and marketing, speaks to Anthony Beachey about the latest industry trends.
Anthony Beachey: GHL is extremely busy despite the economic downturn, where is most of your business coming from?
Matthew Gibson: About 90% of our business stems from paramilitary and military customers, as well as coastguards, rescue services and areas such as the oil industry. These are areas which have not been as affected by the credit crunch as, for example, buyers of hovercraft in the leisure industry. Our customers tend to be working on long-term projects with long-term budgets. For instance, a government order may take three years from start to finish and the budgets for capital equipment such as ours are not being cut at the moment.
We certainly have contracts in hand at the moment. We are working on PASCAT and we have a new contract from the UK Ministry of Defence for a new type of craft known as the 2400 that is a replacement for their existing 2000 model.
AB: Do your orders come from all around the world?
MG: Yes, about 95% of our business comes from outside the UK. During the past year or two we have sold to South Korea, Kuwait, Pakistan, Venezuela and the USA, including Alaska, which is pretty typical. A lot of these orders have come from government organisations, such as coastguards, navies and other public-sector areas.
We have also just sold a hydrographic survey craft to the Venezuelan government. This is being used to survey shallow-water areas on Lake Maracaibo for oil – something that they've not been able to do in the past.
We're now experiencing greater demand from niche markets such as the oil industry. Companies increasingly have to search for oil in less-accessible areas and this is driving demand for our products.
Of course, the oil price has recently fallen but again many of the projects are long-term and not dependent on short-term fluctuations in energy prices.
AB: Has the fall in the value of the UK currency been good for your export competitiveness?
MG: Yes, it has been good news. It has only happened in the past couple of months so the benefits have yet to be felt, although we do expect the low pound to boost overseas sales going forward. Certainly, someone buying a hovercraft today with dollars, for example, is going to get a much better deal than just a couple of months ago.
AB: Conversely, will the weak pound have an impact on your input costs?
MG: Yes, that will affect us as we have equipment coming in from overseas. We buy engines from Germany, for example, but overall the weakness of sterling is certainly a positive for us.
AB: Outside of the military and conventional commodity sectors, in what other disciplines are your customers placed?
MG: A small number of hovercraft are bought by the leisure industry but this is not an area we have targeted. We focus on commercial sectors such as hydrographic and seismic survey craft. We also sell to organisations such as the RNLI (a UK lifeboat charity), which has seven of our craft, as well as to passenger-ferry customers and areas such as civil engineering support.
Additionally we target aircraft crash rescue businesses, where we have sold craft to Shannon, Ireland and Dundee, Scotland airports as well as airport authorities in South Korea. The airport authorities need hovercraft because airports are often located in marshy areas or next to the sea and there is a legal requirement that the airport operators must have the ability to rescue passengers should an aircraft crash.
For example, a Griffon 8000 hovercraft sits at the end of Changi Airport in Singapore in case an aircraft overshoots the runway. If the tide is out it becomes the only vessel that can rescue passengers.
We also provide cricket-pitch covers all round the world. In England, we supply covers to Test grounds such as Trent Bridge, Old Trafford and Lords. We have also supplied rice sprayers and pickers for paddy fields – these hover across the field and don't damage the crop.
AB: Are the ways a hovercraft can be used expanding all the time?
MG: Yes and one area we are looking at expanding into is coastal radar surveillance whereby the hovercraft is used as the radar surveillance platform. This has significant advantages over conventional boats that patrol out in deep-water seas and can be picked up by other potentially hostile surveillance systems or land-based systems that are also easily identifiable. By contrast, the hovercraft can be deployed in shallow areas or between islands. It can hide in the radar clutter and can't be picked up by other radar systems. It can also move very quickly, operating hundreds of miles down the coast from where it was patrolling a few days earlier.
Using the hovercraft as a radar surveillance platform can also reduce costs as clients do not have to put in fixed systems all around their borders. Furthermore, there can be huge savings in terms of operating systems. Unlike a conventional boat, which is using up fuel all the time it's on the water, a hovercraft can simply go up on land and use its surveillance systems while its engines are switched off. There is huge potential for this in areas such as Saudi Arabia and India that have huge borders to patrol. We are now developing the concept with Marine Electronic Systems.
AB: Are you getting a lot of demands for patrol craft?
MG: Yes. The world is changing rapidly and governments increasingly want to monitor areas that they might previously have ignored. For example, we recently sold four craft to the Pakistan navy as it wants to patrol the Kutch – an area which lies between India and Pakistan. The Pakistan government wants to prevent people moving through shallow waters and across its border. In addition, we're building five craft for the Kuwait coastguard as it wants to patrol its border with Iraq, particularly around Bubiyan Island.
We've also spent a lot of time in Indonesia in areas affected by the Tsunami in 2004 where people are increasingly concerned by freak climatic conditions.
Their worry is that they don't have any equipment to rescue people and they are looking at deploying hovercraft should another Tsunami occur.
Meanwhile in the UK we've sold a 380TD hovercraft to the Avon Fire and Rescue Service. There are more and more floods in the UK and Avon Fire and Rescue is seeking to address the threat by using hovercraft. The craft is also to rescue those caught out on the huge sand flats along the coast.
AB: Are there any technological developments that are driving demands for hovercraft?
MG: We're moving greater payloads than we have ever done before, particularly in the oil sector. For example, we're supplying craft to oil companies in Kazakhstan and the Caspian Sea that want to move large numbers of people or equipment to platforms in the oil fields. We are also seeing demand from wind-farm operators – in particular those in shallow waters.
The first thing we say to any potential customer is: "If you can use a boat, buy a boat." This is because there are hundreds of thousands available and they do a good job in deep water. If you can use a land vehicle, do so. However, if you are operating in an area that we call the 'transition zone', where you can't use a land vehicle or a boat, the hovercraft comes into its own.
In the past hovercraft got a bad name. They were seen as a super-high-speed vessel that would replace all the boats. When marketing the hovercraft we've now realised that it has to be aimed at a specific use. It is a purely amphibious, shallow-water, all-terrain vehicle.
We're looking at areas where its potential can be exploited such as in Venezuela where they're looking at using the hovercraft as a mobile hospital or for medical evacuation. The Amazon-basin is an area where a hovercraft can prove effective as it is difficult to move across the river network with its logs, sandbars and shallow waters. We're also working with charities and aid organisations to get mobile hospital units into these areas where people haven't necessarily thought of using hovercraft.
On the military side there is a wide array of uses – from amphibious assault to fast-attack craft. The British Royal Marines have a fleet of four vessels that it is in process of replacing with the Griffon 2400. This model has a logistical role and it can get troops to the shore very quickly. It has been used in the Iraq War to get the Marines across the shallow waters.
Hovercraft also offer a vital advantage in being impervious to sea mines. The Royal Navy tested this many years ago by driving a hovercraft over a mine. Our models give off a very low cushion pressure and therefore virtually no acoustic, magnetic or pressure signals into the water. This is obviously a key advantage when operating in unknown waters.
We were the first people to put diesel engines into hovercraft and obviously these have developed immensely over the intervening period. We can now generate immense power from a very small unit while reliability, durability and economy have improved greatly. This makes the hovercraft more comparable to a boat than was previously the case. We always say: "We're not aircraft technology, we're boat technology." Hovercraft are simple – they have no gearboxes and they benefit from low maintenance – despite the common perception that they are very expensive and complicated to run. Typically, they cost the same to run as a small boat.