Yards fall back on traditional expertise

Although several shipyards in South America are acquiring new skills, economic conditions and the lack of a clear shipbuilding strategy make further progress uncertain.

Well known for their expertise with small ships such as fishing vessels, yards in countries such as Chile, Brazil and elsewhere in South America are now making good progress with the construction of more complex vessels for the offshore industry, largely based on Norwegian designs.

Demand is also increasing for sea/river vessels capable of using South America’s extensive network of rivers. River trade — particularly in Argentina and Paraguay — is being developed.

In spite of technical advances, however, the economic uncertainties over the past 18 months, combined with a lack of political support, have compounded long standing problems that have held yards back for many years.

Brazilian yards have experienced a sharp drop in orders over the past year. At the end of last year newbuildings on order at Brazilian yards amounted to a tiny 6,000 dwt, a level 95 per cent lower than the total at the end of 1997. Fewer than 2,000 personnel are now employed by the yards.

The recent devaluation of the Brazilian currency, the Real, may have the effect of making Brazilian yards more competitive on the world market, but could also lead to renewed inflation and thus drive up costs. The devaluation is also having a knock-on effect elsewhere in South America, particularly in Argentina where there is little newbuilding activity.

One beneficial effect of the devaluation of the Real has been to make Brazilian shiprepair yards more competitive, a fact not lost on state-owned oil company Petrobras, which recently opted to repair more than 20 different vessels in Brazil rather than go overseas.