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Ship repair: What's ahead?

source: Marine Log, December, 2000 issue (by Alan Thorpe)

The immediate outlook for the world’s ship repairers is currently an interesting one.
In the wake of incidents such as the Erika and the Ievoli Sun, various regulatory bodies, including classification societies, port state control agencies and the Salvage Association, are all toughening their individual approaches to ship standard levels. Keeping ships up to the standards dictated by international conventions inevitably means spending more money in the ship repair yard.
Then there’s the forthcoming ban on TBT-containing antifoulants. Less efficient antifouling coatings, of course, spell more visits to the dry dock.
This is all good news for the ship repair industry with contract values seeming sure to increase.
The one drawback is whether the strength spoken about so confidently at head office level will be reflected at the sharp end of the industry—the ship repair yard. Most yards in most regions continue to face plenty of competition.
Still, the overall outlook for the industry seems better than it has been for quite a while.
Following many years where the industry saw a downward trend in workforce numbers, a somewhat different trend has become apparent over recent months. The latest trend has seen many larger yards look to take over smaller or less successful yards, thus being able to offer a more international service. Examples of this have included Cammell Laird’s move to a more global status with the takeover of CMR, in Marseilles, France, planned acquisition of Cascade General in Portland, Oregon) and persisting rumors about a take-over at the new yard in the Bahamas.
Keppel FELS has also been on the acquisition trail with a recent announcement that it is to take a majority share in Rotterdam’s Verolme Botlek. Spain has also seen a massive re-organization with Bazan taking over Astilleros Españoles’ (AESA) two repair yards at Cadiz and Ferrol.
Today’s price levels play an intricate part in the future of any shipyard, some yards pulling out of the market as cheaper prices still dominate the owners’ thoughts.
An example of this was the withdrawal of Belfast’s Harland & Wolff from the general repair market. The company initially said that it wished to concentrate on large-scale repair and conversion projects, then return to the general repair market. However, after a brief comeback, the company again decided to withdraw.
One reason behind this indecisiveness is the competitiveness of former eastern bloc countries, especially Poland. Polish shipyards currently pose the biggest threat to northern European shipyards, price levels in Poland are some 25% lower than the more traditional ship repair nations. When Polish shipyards , in particular Remontowa SA, Gdansk, first made themselves felt on the international scene not so long ago, it was widely believed that Polish yards were better at basic steel repairs then the more demanding machinery or electrical repairs.
However, Poland in general, and Remontowa in particular, have proved otherwise, undertaking a large number of successful repair contracts covering the full range of activities and some very complicated conversion projects.
Other ship repair yards in the Baltic region (located in Latvia, Lithuania and Estonia), have now entered the international market with price levels below those being put forward by Poland.
On a worldwide basis, mainland China is without doubt the cheapest area in which to carry out steelwork. Recent price levels have been quoted at less than $1/kg, compared with Singapore at $2-2.5/kg. That huge difference has resulted in Singaporean yards not entering the quoting process for simple steelwork when a mainland Chinese yard has tendered.
Recent news coming out of China is that competition within mainland China has forced the price down even further. Sources from the Middle East have recently said that a very large crude carrier went to China for alongside repairs and the steel renewal price was down to $0.64/kg. If this is true, then there are some worrying times lurking around the corner for all those yards in southeast Asia and the Far East competing with China.

Copyright 2005 Remontowa