Shipbuilding industry ready to grow?

South Africa’s shipbuilding industry could be on the path to potential growth despite what has been described as Transnet’s “extremely expensive” rentals. “This, of course, makes your costs that much higher and has made it difficult to expand our market in shipbuilding,” says Prasheen Maharaj, CEO of shipbuilding major, Southern African Shipyards (SAS). “And an added drawback is that Transnet does not maintain the infrastructure, like dry docks.” But the outlook is not all negative. SA’s shipbuilding industry will gain considerable benefit from the government’s Operation Phakisa, an adaptation of the methodology that was first successfully applied by the Malaysian government in the delivery of its economic transformation programme, said Maharaj. This initiative is initially being implemented in two sectors, the ocean economy and the health sector. And its primary benefit is to make SA a more conducive environment for shipbuilding, said Maharaj, who described the recent history of SA shipbuilding as being ongoing for some 30 years – but in a “stopstart” fashion, and currently capturing only one percent of the global market of ship repair and refurbishment. But, in its focus on infrastructure, Operation Phakisa is likely to improve the currently unsatisfactory environment, Maharaj added. And, as it has been put together in consultation with the industry, it should help to make it a more competitive beast. He added that, under the initiative, SA would be able to utilise its location and expertise to increase its share of the global marine manufacturing market – including shipbuilding and repair, rig repair and refurbishment or boatbuilding. As a lead-up to Operation Phakisa coming online, SAS won a contract in December 2012 to build nine new tugs for Transnet National Ports Authority (TNPA) – valued in excess of R1.2 billion, and the single largest shipbuilding contract awarded to an SA company in the last 20 years. Construction of the tugs began in early 2013 and will be completed over a 42-month period. And it is in this area that SAS intends to specialise, said Maharaj. “The global shipbuilding market,” he added, “is now exclusive to the Far East. We can’t offer any price advantages for the building of the larger commercial vessels, like container ships, bulkers or tankers. So we’re not going to venture into those vessel types. “But our niche market is speciality vessels, like tugs, oil & gas service launches, modules for oil/ gas rigs, patrol vessels, ferries, dredgers, trawlers, barges and the like.” INSERT 1% SA's share of global ship repair and refurbishment