Mumbai: Increased political tensions are the great hidden beneficiary to troubled shipyards around the world, with defence spending escalating, argues the boss of a leading Indian shipbuilder.
Arindam Ganguli, who runs Shoft Shipyard located in Gujarat on India’s west coast, is well-versed in lean times for shipbuilding having been in the industry for more than 40 years, starting off as a naval architect before getting involved with Shoft, which started operations in 1987.
Ganguli says he’s experienced far worse recessions before.
“There is one difference in today's downturn,” he says. “Today, the demands of the defence sector have grown very significantly. That is helping shipyards, at least Indian shipyards, to stay alive. One may draw a parallel – though not a very happy parallel – to the great surge in shipbuilding during the last world war.”
Ganguli has a point. When one considers that 90% of ships built are now done so in Asia, with China, Korea and Japan to the fore, the various spats over maritime boundaries that have flared in the region lately have seen plenty of sabre rattling and no shortage of talk of naval buildups.
The 36-acre Shoft Shipyard has experience in the widest range of ship types among all India’s mid-sized yards. Typically, it builds between nine and 12 ships a year of up to 135 m in length.
Among new vessel types Shoft is marketing are water injection dredgers, which Ganguli says can be a highly cost effective way of maintenance dredging but only in certain specific types of location.
Ganguli reckons newbuild prices have now bottomed out. “If shipyards try to grab orders by going any lower then they will only hasten their own bankruptcy,” he says, adding: “Similarly if speculative buyers think that driving further bargains today will be to their advantage, they will soon realise their mistake. Ships are not a packet of detergent which one can afford to throw away if found unsatisfactory and replaced by another brand. Bad ships acquired at bad prices can ruin a shipowner.”
Wise words from someone who has been in enough shipping cycles to know. [26/03/13]