Vietnam’s fledgling shipbuilding industry has its sights on going higher. Although it is still some way behind South Korea, Japan and China, DNV management agree that Vietnam will move higher in the world shipbuilding league table.
The Vietnamese state shipbuilder Vietnam Ship Industry Corporation (Vinashin) has ambitions to become the world’s fourth largest shipbuilder over the next decade, compared to 10th slot now, and US$ 3 billion is being invested in its develop-ment over that period.
Indicating the explosive growth of Vietnamese shipbuilding, Vinashin, which controls the majority of the country’s shipyards, has registered an annual growth in excess of 30% over the past 10 years. It also recently reported that it had secured export contracts valued at a total of US$ 4.5 billion this year. The contracts are to build cargo vessels with loading capacities ranging from 5,300 to 56,000 tonnes, and are mostly signed with international shipping clients.
Significant contracts secured recently include the US$ 1 billion deal to supply eight car carriers to Israel. State oil company Petrovietnam has also signed a letter of intent with Vinashin for three Aframax tankers. The three 105,000dwt vessels are valued at around $65 million each and will all be delivered by 2009.
“There is ongoing development and fundamental change at most Vietnamese shipyards and I firmly believe they will expand their capacity and win the confidence of even more overseas owners in the future,” said Mr Nguyen Quoc Anh, Vice President of Vinashin.
Business milestone
Vietnam shipbuilding came under the spotlight when Vinashin, in 2004, entered into an agreement with the UK’s Graig Group for the construction of 15 DNV-classed, 53,000dwt bulk carriers. The US$ 322.5 million contract was split into two, with Nam Trieu shipyard (Nasico) in Hai Phong building six ships and sister company Ha Long shipyard in Quang Ninh building the remaining nine.
“The shipbuilding industry in Vietnam is still lagging behind other countries,” said Mr Anh. “To bridge the gap, Vinashin is investing millions of dollars to improve its shipyards through modernization and increased efficiency and rationalisation.”
He continues, “Advanced technology and international cooperation are top priorities for Vinashin. Only through the application of advanced technology and cooperation with well-reputed international companies like DNV can the shipbuilding industry in Vietnam see further development.”
The Ha Long shipyard launched its first Graig vessel, dubbed ‘Diamond 53’ ships, in September, with delivery expected later this year and subsequent deliveries expected at five-month intervals. “The Graig deal marks our largest vessel order from an overseas customer, and it will hopefully bode well for more such orders from abroad,” says Mr Nguyen Duc Than, General Director of Ha Long shipyard.
The wide-hatched, double-hulled bulk carriers are the largest and most sophisticated vessels yet built in Vietnam. “It’s been a challenging project but it’s gone well, thanks in the main to Graig’s operating know-how with dry cargo tonnage, and DNV’s direct input on structural and regulatory issues,” says Mr Than.
Expansion plans at the Ha Long shipyard are already underway with a new slipway and dry dock under construction. The yard also plans to increase its workforce from 3,000 to 5,000 over the next three years. “We have expansion plans and this includes attracting and training our workers to ensure an adequate level to meet the increasing workload,” says Mr Than.
Bright outlook
“Given the current booming shipping industry, we also see a bright outlook for further development,” says Mr Tran Quang Vu, General Director of Nam Trieu shipyard, which recently launched the first of its series of Diamond 53’s.
“Business is going well for Nasico and we have firm orders up to 2010. We are now negotiating with Japanese and German clients for contracts to supply 8,700 to 30,000 tonne capacity cargo vessels and container ships with 900 to 1,100 teu,” says Mr Vu.
Nasico is currently upgrading and ex-panding its facilities with a new slipway (50,000dwt) and a 300 tonne gantry crane. In addition, Nasico is focused on training its personnel and using advanced technologies to improve its efficiency.
“We aim to shorten the construction time and further enhance our product quality through the use of advanced technologies, and specialised training for our labour force. To this end, we believe DNV will continue to play an important role for us – and the industry as a whole,” says Mr Vu.
Follow on from China
DNV some time ago identified Vietnam as a potential growth area for shipbuilding to follow on from China, especially as China became mainstream. “DNV has the technical know-how and managerial capability to help the yards improve their shipbuilding capabilities,” says Ragnar Hansen, DNV Maritime’s regional manager for South East Asia. “We also find the skill sets of workers in Vinashin yards to be high, and there is a willingness to learn and invest in new technology.”
“Vietnam’s shipbuilding industry took a giant leap forward in 2004 when Graig Shipping placed an order with Vinashin for its bulk carriers,” said John Marshall, DNV Maritime’s country manager in Vietnam. “Since then, Vinashin has invested heavily in its yards and secured an ever-increasing number of orders, the majority of which are to DNV class,” he added.
According to Marshall, DNV represents probably the most important classification society for Vietnam’s fast expanding shipbuilding industry, accounting for approximately 70% of the country’s total order book. “DNV’s order book will surpass 1 million dwt by the end of the year and we expect the number of orders to DNV class to reach 45 vessels in 2008. In an effort to meet the increasing workload and better serve the growing market, we will undertake an expansion in the recruitment of surveyors,” says Marshall. “We have employed 10 the last 18 months, and more than 20 new surveyors are likely to be taken on over the next two years.”
Class training programme
Hansen adds: “In addition to beefing up our own resources, DNV is committed to further developing Vietnam’s shipbuilding industry to ensure its products satisfy international rules and standards. To this end, we have jointly developed a 3-year training programme for all Vinashin shipyard staff. Supported by Norad (the Norwegian Agency for Development Cooperation) more than 1,200 people each year will be trained in different aspects of shipbuilding.”
“Such initiatives are important for Vietnam’s shipbuilding industry. We look at DNV as our class partner for the future,” says Mr Anh.
Commenting on how Vietnam is able to build ships that are competitive in quality and price, Mr Anh says Vietnam is in a better position today compared to previous years. “In the past, we had to import spare parts and equipment,” says Mr Anh. “Importing increased the price of our products, and slowed our production schedule. We were unable to complete in price and efficiency.”
He continues, “Today, the situation is different and about 40% of our parts are now manufactured domestically. We will invest US$ 600 million in our support industries to further increase this proportion to 65% by 2010.”
Vinashin last year invested US$ 107 million in projects in the northern coastal province of Nam Dinh as part of its developments plan, which will make the province the country’s third-largest shipbuilding centre after Hai Phong and Quang Ninh by 2010.
“Last year, we posted a production value of US$ 690 million (up 46% over 2004 figures) and we remain bullish on our prospects for the future, especially has we have invested heavily in our yards’ capacity and efficiency,” says Mr Anh. “And with the help of international partners like DNV, we are confident that we will be able to reach our goal of becoming the world’s fourth largest shipbuilder by 2015.”