Survival through Exports
BVT, the national shipbuilder of UK has plans to stabilize its internal UK business using its guaranteed work load to derive value for money. This will allow BVT to expand its capabilities into a through life support business, which will, in turn, enable more success in the export markets. BVT has already secured export orders for building OPVs for Thailand, Oman and Trinidad and Tobago. BVT has also obtained export orders for building Super Vita fast attack craft for Greece. BVT has recently signed a Joint venture (JV) with Abu Dhabi Shipbuilding for service and support network in the Middle East region. This is just one of the international partnerships that BVT is pursuing.
DCNS, the national shipbuilder of France has large order book to sustain its operations in the short term. It is also aggressively expanding its operations beyond European shores to reduce its reliance on domestic orders. Presently, It has export orders for SSKs from India, Malaysia, Chile and Brazil. DCNS has recently received export order for FREMM frigate for Morocco. On 13 may 2009, DCNS signed a MOU with Singaporean Shipbuilders ST Marine for the through life support of six new Formidable-class frigates of the Republic of Singapore Navy. It has also set up a subsidiary office in India for targeting second line of SSK construction.
Fincantieri, the national shipbuilder of Italy, has also been exposed to the downturn in commercial shipbuilding. The yard is engaged in domestic orders from the Italian navy for ten numbers FREMM frigates and Type 212 SSKs. Fincantieri has bagged export orders for two anti submarine Corvettes for the United Arab Emirates, two Fleet Tankers for the Indian Navy, four patrol boats for the Iraqi Navy. Fincantieri has also been engaged in the propulsion system integration for the Air Defence Ship for the India.Thyssen Krupp Marine Systems (TKMS), the national shipbuilder of Germany, has had down trends in commercial building; however, military shipbuilding has remained stable and also secured export orders through overseas acquisitions. TKMS continues to rely on internal orders from the German Navy. Presently, TKMS is engaged in Type 125 frigates, K-130 corvettes, K-131 future generation corvettes. The wide spread export market for TKMS includes MEKO range of frigates and OPVs, Type 214, 212A, 209 SSKs and Dolphin-class submarines. TKMS owns Kockums shipyards in Sweden and Hellenic shipyards in Greece.
Russian shipbuilders have export market comprising Aircraft Carrier and frigates for India, SSKs for China, SSKs for Algeria, SSKs for Iran, Hovercraft for Korea, and corvettes for Vietnam.
Survival through Diversification
China has set up a large number of new shipyards and they have acute problem with decline in world shipbuilding. They are diversifying their product range. Presently they are benefiting from captive cargoes and State projects like LNG, iron ore and oil imports, semi submersible drilling units. Focus is also on conversions and ship recycling. Some of the new inexperienced yards will have to close down.
The other alarming fact is that the Indian overseas trade carried by Indian owned vessels is only 13.7 percent”¦
In Japan, the shipyards are most efficient and they would like to keep an edge over the technology and know-how. They are limiting the product range and specialising.
In Korea, the focus is shifting to offshore work, military ships and ew products like compact drill-ships, FLNG.
Southeast Asian Shipyards are concentrating on Mobile Offshore Drilling Units and Offshore Supply Vessels.
Indian and Vietnamese Shipyards are making all purpose ships. The available capacity and low costs of production are being tapped by European owners for niche vessels.
Plight of the Indian Shipbuilding Industry
It must be realized that labour intensive, cyclic in nature shipbuilding industry requires active support from the respective State governments for the shipbuilding industry to grow, sustain and meet the challenges of survival due to global economic crisis. All the leading international shipbuilding industries in Korea, Japan, China, Europe and Russia, enjoy the full support and directions of their respective governments and decisions are taken in their national interests.
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However, the Indian Shipbuilding industry is not so lucky. India does not have a Shipbuilding Ministry in the Central Government to steer, support and direct shipbuilding in the national interest. Indian shipbuilding industry is like a ship sailing without a rudder or without a captain or the gyro. The Indian shipbuilding has survived through captive Navy customer and some European owners have utilized the facilities for some niche vessels. It may be alarming to note that that the Indian owned Fleet (7.75m GT) of foreign going vessels is even less than one percent of the total world 810m GT.
The other alarming fact is that the Indian overseas trade carried by Indian owned vessels is only 13.7 percent and the balance 86.3 percent is carried by foreign vessels. India needs to take effective and immediate steps to create a Shipbuilding Ministry with professionals at the central government to address the issues of this industry and take midstream corrections as we go along to cope with the changing economic environment.
The issues of survival and growth through Mergers, Consolidation, Diversification, Exports and focus on emerging technologies need active support and directives from professionals in the central shipbuilding ministry when formed.
Conclusions
Shipbuilding is in a transition stage. The world order book which had peaked in November, 2008 will continue to decline with deliveries outpacing new orders. The delivery slippages will continue to increase and some deferred by owners. The cancellation of orders are expected to continue. New ship prices will continue to decline with some shipyards going out of business. The shipbuilding industry is facing enormous head winds with no significant relief in sight. The new orders have been sparse even with falling prices. Many existing orders are in peril due to lack of financing and tight credit.
The Greenfield shipyards are at risk and expansion plans are cancelled. The owners are renegotiating terms, pressured to delay or cancel existing contracts. The offshore sector is the only bright spot near term though comparative volume is low. There is time available for emerging technology projects around the world i.e. Floating CNG concepts, Innovative gas unloading system and sub-sea cryogenic pipes etc. Time is also opportune to focus on military vessels specially those required for vigil and watch at sea round the clock to meet new threats of terrorism and piracy at sea. The declining order books and ship prices will create huge challenges for shipbuilders, fundamentally changing the shipbuilding landscape over the next decade. Mergers can to some extent reduce idle capacity and provide optimum utilization of resources.
Mergers can create National Champions. Mergers and Consolidation of shipyards within national boundaries have proved successful and useful. Mergers and acquisitions across State lines have substantial obstacles but need to be pursued and attempted at least amongst friendly and like minded entities with mutual benefits in their economies.
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