Repair yards remain confident

Competition from the Middle East and China has intensified leading to a further drop in turnover for Singapore?s ship repair sector. Yet the nation?s shipyards continue to win significant repair and conversion contracts; on the basis of their ability to deliver quality results in a timely fashion, according to the Association of Singapore Marine Industries (ASMI). The latest ASMI statistics show that revenue from ship repair activity is still the dominant contributor to Singapore?s marine industry turnover. In 2000, the S$1.68 billion ($0.92 billion) earned by the yards represented 61% of Singapore?s total marine industry turnover. However this is a significant decline from the sector?s 1999 earnings of S$2.16 billion. Placed alongside statistics from the Maritime and Port Authority of Singapore, which indicate a small rise – from 4,552 to 4,596 – in the number of vessels specifically calling at Singapore for repair, it would indicate yards have taken contracts at much reduced prices. In his annual review of the Singapore marine industry, Heng Chiang Gnee, president of ASMI, acknowledged that “? cost competitiveness remains a perennial item on the shipyards? agenda. Other internal constraints? are high land and labour costs. These constraints have forced the bigger yards to rationalise, restructure and re-position themselves. Strategies adopted include mergers of shipyards and companies, consolidation of operations, niche marketing as well as setting up facilities in lower cost countries to complement operations in Singapore.” Jurong Jurong Shipyard, a subsidiary of SembCorp Marine, has recently taken a 70% stake in a Brazilian shipyard – Maua Jurong SA. Through this venture it is targeting the offshore conversion markets in the Gulf of Mexico and West Africa. The investment, worth S$16 million, is the first by the group in a shipyard outside Asia. A second could come through it realising a stated objective of investing in a shipyard in the Middle East. The strategic move “? is to preserve our market share in shiprepair as well as ship conversion and offshore engineering, and to position ourselves for longer term growth,” says Tan Kwi Kin, the president of SembCorp Marine. Jurong is presently engaged in the conversion of the 270,000 dwt VLCC Stena Continent into a floating production, storage and offloading (FPSO) vessel, to be named Petrobras 43 (P-43). Sembawang Jurong?s sister company Sembawang Shipyard is expected to deliver the floating, storage and uptake unit (FSU) Soorena in the third quarter of 2001. The FSU is being converted from the VLCC Lanistes. Sembawang has formed alliance agreements with UK?s Shell International Trading & Shipping, UK?s BP Shipping, Australia?s BHP Transport & Logistics and Jo Tankers of Norway. The alliance with BP Shipping, for instance, covers the drydocking/refitting of all BP Shipping?s S-class tankers trading in the Far East. But cruise ship repair and refurbishment has been the hallmark of Sembawang, which has a 95% market share in Singapore. Three luxury cruise liners were stemmed in the first four months of 2001, including the 34,242g Crown Odyssey operated by Orient Line (see The Cruise Ship, May 2001). A major refit and refurbishment of the luxury cruise ship New World Discoverer for German owner Discovery Reederei is scheduled to commence later this year. Keppel Hitachi Zosen has a wide range of jobs on hand, including the conversion of a 24,515 dwt container ship Maysora into a livestock carrier for Blue Ice Shipping. According to KHZ, a recent e-auction, conducted for the sourcing of steel, had resulted in significant cost reduction. KHZ is part of an offshore and marine industry initiative to set up a vertical portal to source for direct materials, parts and equipment. An on-line registration for suppliers and contractors is also in the pipeline. Pan-United Shipyard reported a lower shiprepair turnover last year “due to poor market conditions”, according to its latest annual report. The yard repaired 215 vessels in 2000. As with other Singaporean yards, Pan-United sees lots of work in the offshore sector. Other work includes the upgrading of the seismic survey vessel Sagar Sandhani, completed in June. ST Marine, a member of government-linked engineering conglomerate ST Engineering, repaired 343 vessels last year- a rise of 9.6% compared with 1999. The yard has the competitive edge as the sole contractor for the repair/maintenance of the growing fleet of the Republic of Singapore Navy (RSN ). It has also established a reputation as a specialist in the repair of dredgers. n