China is beginning to flex its shipbuilding muscles. The China State Shipbuilding Corporation (CSSC) and China Shipbuilding Industry Corp (CSIC), the conglomerates in charge of most of the country's shipyards, plan to reach the summit of world shipbuilding by 2015 through shipyard modernisation and increased efficiency and rationalisation.
China's leaders are confident that the country can overtake Asian shipbuilding rivals Korea and Japan by 2015. Indicating the explosive growth of Chinese shipbuilding, its output has more than doubled in the past three years, and the number of ships ordered from China so far in 2003 is twice the number ordered last year. Chinese-built vessels are today sold to 40 countries on all five continents, with Germany, Greece, Canada and Hong Kong as the major customers.
"There is ongoing development and fundamental change at most Chinese shipyards and I firmly believe they will expand their capacity and win the confidence of even more overseas owners in the future," said DNV maritime's regional manager for Greater China, Andy Westwood.
Improved quality
According to Westwood, those overseas shipowners who have invested appropriate newbuilding supervision for projects in China, have come away with good quality ships at very competitive overall cost. He used the NITC VLCC orders as an example: "Whilst the build time for the first of these ships (first-ever VLCCs in China) has been almost two years, the pace of construction is quickening, and NITC's management is very pleased with the performance of the delivered vessels.
"Generally speaking, the larger Chinese yards have a very good track record for standard ships, but owners should be more careful about work done by smaller yards where design and particularly supervision become more critical," said Westwood, and added, "Some yards can also have problems with first-time construction of high-specification/complex vessels."
Focus on efficiency
In spite of these imperfections, Westwood believes the real reason for the recent success of Chinese yards is improved steel-cutting and shipyard-layout and management practices.
"New production lines have been installed in old Chinese facilities, thereby improving the way steel is moved in order to be made into blocks," he explained. According to Westwood, the improved use of steel and workshops leads to bigger blocks being used in assembly work, thus shortening the construction time in the berths.
"A major bottleneck is berth space," said Westwood. The problem of berth space is greater in China since most yards still use old-style slipways rather than gated dry docks. Dry docks allow shipyards to transfer ships to outfitting docks after the major work has been completed."
Two competing strategies
A decision was made by the Chinese government to divide the two main shipyard groups (CSSC and CSIC) and create more domestic competition. These organisations have since adopted two competing strategies in their efforts to add large containerships, VLCCs, ro-ro vessels, FPSOs and more recently, LNGs to their bulker/tanker portfolios.
CSSC's ambitious plan has been to expand its current 4m dwt capacity to over 14m dwt by 2015. To achieve this, along with other major developments, the Group is scheduled to build the world's biggest single yard at Changxing Island, allowing it to become the world's number one shipbuilder by 2015.
The more conservative approach adopted by the CSIC is to expand its 1.8m dwt production in 2003 to 9m dwt by 2015. Although VLCC docks are being expanded at CSIC's Dalian New Shipyard, the company's growth strategy is focussed more on restructuring its production capacity. Up to five ship-assembly plants will be built in Dalian, Bohai, Shanhaiguan, Tianjin and Qingdao ( Behei ) City. The group is also committed to developing further as a block assembly operation.
Both shipyard groups agree that if China is to succeed in specialist market sectors and become a dominant force in world shipbuilding, management systems, quality assurance, automation and design software must be developed to maximise opportunities created by expanded yards.
Realising its vast potential
"This nation (China) has still to overcome some obstacles, but that said there's a growing realisation around the world that Chinese yards, by and large, build very decent ships at competitive prices."
Westwood summed it up this way: "The fact is, there's a train coming through here and you have to ask yourself, do you stand on the platform and watch it, get on as a passenger or get in and help drive? It is my experience that the majority of Chinese yard managers are quite willing to ask for help, readily accepting that their productivity and yard-management skills are still not as good as those of South Korea and Japan. They are also applying market economy principles when building and staffing new, more productive facilities that will relatively soon have an enormous capacity."
Text by Stuart D. Brewer.