Vietnam is a rising shipbuilding nation. Vietnam's shipbuilding industry is ranked the 5th in the world, up from 11th in the world five years earlier [though this achievement is perhaps less impressive than it might first seem, since the top three countries produced 100 times Vietnam's total tonnage].
Ship building is transferring from developed to developing countries. The Vietnamese Government has decided to make shipbuilding a key export industry. Low cost, skilful and abundant labor force is strength for the Vietnamese shipbuilding industry. If the industry can enhance its productivity and efficiency, it has clear competitive advantages over the neighboring countries. Skilled labor includes the technical competencies of the employees at production, management and design levels. Management is a scarce resource which requires special attention from the industry and a need for training on large scale, in order to cope with the increasing demand.
The "Shipbuilding Industry Development Program 2001-2010" boosted the industry. The program extended the building capacity to container ships of 1500 TEU, cargo ships of 100,000 dwt, oil tanker of 100,000 dwt and ship repairing of 400,000 dwt. To construct such large ships, the industry needed new equipment and construction facilities; docks; design expertise; staff and skills, while absorbing large sums in working capital. This opened up opportunities for manufacturers to export relevant machine, equipment, components and knowhow related to ship building and repairs.
Ships of some kind or other have been built in Vietnam for a very long time. However, the domestic shipbuilding industry is still in its infancy. In spite of the fact that Vietnam is a nation with well over 2,000 kilometres of coastline, its shipbuilding industry lagged behind many countries in the region. In attempting to find a shortcut in development, domestic shipbuilders are discovering their own methods. The challenges they face are, how to develop a domestic market, enter more export markets, raise capital for production and business expansion, unite all internal forces and concentrate investment capital to insure the industry's sustainable growth. Of equal importance are the needs to constantly improve infrastructure facilities, to carry out appropriate research to improve designs, and to invest in human resource training and development to meet modern requirements.
The industry witnessed a high growth rate of more than 30 percent per year in terms of total output production value in the late 1990's. And the industry's revenue grew phenomenally in the first three years of the 21st century. Revenue in 2002 grew 93 percent compared to 2001. Exports were US$51.5 million in 2002, twice the figure of 2001. Growth of revenue is partly due to the recognized need to develop domestic shipping fleet. However, the Vietnamese shipbuilding industry has begun to attract foreign clients now because of its increased quality and attractive prices. The shortages of worldwide shipbuilding capacity further helped Vietnam to enter international shipbuilding.
The industry built a number of 6,500 dwt cargo ships and 3,500 dwt oil tankers. Domestic shipbuilders had been unable to build heavy-tonnage vessels because of limited technology, modern machinery and capital. From 2006 to 2010, the industry focused on integration and competitiveness and hired non-Vietnamese experts to make large ships for export and a project to build a 100,000 dwt oil tanker was under preparation.
The Vietnamese government has taken a strong position in supporting and promoting the Vietnamese shipbuilding industry. Vietnamese shipyards have succeeded in building increasingly large vessels. Vietnamese-made ships have in the meantime been exported to several countries. Whereas initially yards were mainly able to build smaller tonnages, now priority is granted to the building and repair of larger ships. Lately this has resulted in starting to build large ships such as container and bulk vessels with a carrying capacity of 30,000 to 50,000DWT and oil tankers with a carrying capacity of 100,000DWT.
The shipbuilding industry is one of the main priority sectors of the Government of Vietnam. The country has more than 60 shipbuilding and repairing yards owned by the Ministries of Defense, Fisheries and Transport. The Ministry of Transport owns the largest number accounting for more than 70% of building capacity of the sector under the umbrella of Vietnam Shipbuilding Industry Group (Vinashin). Due to a recent huge financial, management, and dept crisis in the state group, Vinashin has had to split up into several separate organizations, and the outcome is still unclear. But Vinashin seems to remain its control of the majority of shipyards in Vietnam in the years to come.
Vinashin builds bulk-carriers, container ships, oil tankers, car carriers and cement carriers. The biggest shipyards Nam Trieu and Halong in northern Vietnam and Dung Quat Shipyard in the Centre are able to build tankers up to 150,000 DWT and vessels up to 105,000 DWT. The group is employing more than 80,000 people. Vinashin has capabilities in repair, conversion and modification of all double hull ship size. Hyundai-Vinashin shipyard, a joint venture between Korea’s Hyundai Mipo Dockyard and Vinashin has the capacity to repair ships up to 100,000 DWT. The joint venture is now the largest ship-repairing yard in Southeast Asia.
Vinashin is developing support infrastructure and industries to reduce its reliance on foreign imported marine equipment and accessories. Products vary from steel, welding materials, gen-set, crane, deck equipment and interior equipment. Several cooperation agreements with Danish companies have been made, including main engines assembly with MAN Diesel, boilers with Aalborg Industries and control panels with Callenberg.
Due to massive mismanagement in Vinashin and the impact of the global financial crisis on the shipbuilding industry, the shipbuilding sector had difficulties attracting foreign investors and exporters. In the future, however, there might again be good opportunities for Danish companies in this sector. The economic downturn made a grave impact on the shipbuilding industry in general and Vinashin in particular. Orders from foreign ship-owners decreased sharply in 2008-09. In the summer of 2010 grave financial problems and lack of the group’s ability to take care of unpaid debt was uncovered involving mismanagement in the top and involving the political leadership in Vietnam. Vinashin had unpaid debts of more than 10 times its ownership capital. Top management has now been fired and is being prosecuted due to financial mismanagement, and the group is undergoing a restructuring process.
Foreign shipyards include Strategic Marine (Australia) and STX Europe. Strategic Marine’s 136,500sqm facility at the Dong Xuyen Industrial Zone in Vung Tau, Southern Vietnam employs more than 1,100 staff including fabricators, welders, production supervisors and management staff. The yard, which has nearly 20,000sqm of workshop and machinery shop space has been fully equipped to produce sizeable steel vessels. The facility has manufactured the steel base pontoon of the AUS 57 million Australian Marine Complex’s floating dry dock and has won orders for two 143m Diving Support Vessels and one Well Stimulation Vessel from Singapore company Marfield Limited. The yard is also building a 23.9m new generation compact tug from the Port of Napier in New Zealand – the company’s first ever tugboat signing and MODEC FPSO refit.
STX Europe officially announced in January 2007 as a joint venture between STX Europe (70%) and Amanda Group (30%). STX Europe is an international shipbuilding group comprising 15 shipyards in Finland, France, Norway, Romania, Brazil and Vietnam. Its headquarter in Norway is holding 100% share of STX Europe. STX Europe invests USD 16 million in a shipyard in Vung Tau.
Though Vinashin is still in the middle of a crisis and has to overcome a financial and management crisis, the Group claims to be planning upgrade and expansion of its existing shipbuilding facilities with the aim to build crude oil tankers of up to 300,000 DWT, bulk carriers with capacity up to 180,000 DWT, container carriers of up to 5,000 TEU and rig oil platform as well as Floating Production, Storage and Offloading (FPSO). Whether and when this might happen remains to be seen.
In the future, Vietnam is again likely to be a promising market for shipbuilding and technology transfer. So far imported equipment generally consist of marine diesel engines, electronic-hydraulic steering gear, cranes up to 120 ton, air compressors, crankshaft grinder, plasma cutting machine, welding machines and other equipment on board. By 2011, Vinashin aims to strengthen support industries such as steel, paints, speed engines, hatch cover, crane, mechanical products and blasting plants. Technology transfer in the sector is another common cooperation with foreign partners that local shipyards see as an option to improve themselves.
Source: Fairplay Solutions (June 2009)
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