Singapore’s millionaires are not best suited to build rigs

The obituary for Singapore’s shipyards has been written many, many times. It’s Indian summer – roughly 2006 to 2012 – in which an insane number of rigs were ordered, now feels a long time ago, unlikely ever to be repeated.

The most read story of the week here at Splash was actually one from last Friday – Keppel’s news that it is closing three yards at home and laying off another 2,620 staff. Amazingly, more than 23,000 of you have read that so far.

As I have stated countless times, the business of shipyards is actually one of the most simple, most base of any sector in maritime. It is the ultimate arbitrator of supply and demand as well as a keen adherent to demographics.

I’ll always recall a taxi driver proudly telling me how Singapore GDP per capita now far exceeded its former colonial master’s – a fact he was quite rightly proud about, with a wide smile etched across his face. The gap between the UK and Singapore’s average GDP is now approaching $20,000. Indeed, at around $57,000 per person, only Qatar and Luxembourg are now richer than the Southeast Asian country, the republic’s ministry of finance crowed in a recent posting on its website. By 2020, it is estimated that an astonishing one in 30 Singaporeans will be US dollar millionaires.

The streets of the Lion City are a homage to consumerism; the world’s chicest brands opening ever more flash stores in the endless kilometres of shopping malls that seemingly stretch from one end to the other of the little city-state.

This is all well and good – but combined with a strict immigration policy – it makes the future of those in heavy industries very hard to fathom.

Add on top of that the fact that there is simply no demand for new rigs whatsoever for the coming year – or years – and you can see that the pain is going to grow at Keppel and Singapore’s other major yard, Sembcorp Marine – the argument for the two rivals to merge will only intensify.

The death of shipbuilding, while I admit being sad, should actually be seen as a nation’s evolution up the economic ladder. It wasn’t all that long ago that Sweden could lay claim to being the world’s second largest shipbuilder, for instance. Even once mighty Mitsubishi Heavy Industries is now having to question whether it’s worthwhile building vessels anymore as we reported today.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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