Shipbuilding
China, Vietnam Poised to Take Shipbuilding Lead
Europe was at one time the shipbuilding center of the world but Japan and then South Korea took over. China will likely be next. This movement of shipbuilding centers has an impact on shipyards in secondary shipbuilding nations. Shipyards face increasing costs of materials which, along with other factors, causes them to shift their location to regions of lower costs which impacts the price of newbuilding projects. Besides the recently increased cost of main engines, machinery and auxiliaries, the drastically increased cost of steel (US $ 100 increase since January 2006) greatly impacts the price of a newbuilding. The biggest portion of the price structure of a newbuilding vessel is materials cost which is about 60 to 70 % of the overall price. The actual steel itself is about 15 - 20 % of that material cost. In terms of a vessel's weight steel composes 74% of the total tanker's weight. The second biggest portion of shipbuilding cost is labor. This cost stands out as significant - 12 to 30 % of the overall cost structure, depending on the shipbuilding nation. The labor component has two parameters: productivity and man-hours. As productivity increases the number of man-hours decreases causing the actual overall price of labor to decrease with the output remaining the same. This methodology applies to shipyards with highly skilled and experienced staff. Thus the high cost of labor in Korean and Japanese yards balances by high productivity. Emerging shipbuilding powers such as China and Vietnam will generally have lower labor costs. However, in order to use that to their advantage the productivity curve must increase. Technological innovations have also contributed to increasing productivity rates. For instance, Samsung Heavy Industries used to build a large ship from many separate blocks. These blocks would be worked-on simultaneously to be then assembled and form a vessel. Recently the company announced a new method ("tera-bloc" building) for building large vessels comprised of only two blocks. This increases productivity by reducing the assembly time and therefore allows for 10 extra large ships to be built at the same facilities over a year. In 2015 China is expected to overtake Japan's 12 million compensated gross tons (CGTs) capacity and become the world's second largest shipbuilder after South Korea with a total capacity of 13m CGT. At the same time Vinashin, the Vietnamese state-owned shipbuilding group, has made no secret of its intentions to become one of the world's largest shipbuilding powers. With such an aggressive approach from these countries, smaller shipyards across Europe and the Americas are forced to
Maritime Reporter & Engineering News
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