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Shipbuilders flourish on small vessel orders

Star Business Report
Local shipbuilders are banking on the ongoing recession to carve itself a position in the global market, as the demand for smaller vessels has increased, shipbuilders and analysts said yesterday.
"Orders for small ships have gone up because of the global financial crisis," said Sakhawat Hossain, managing director of Western Marine Shipyard Ltd, an export-oriented shipbuilder.
“Giant shipbuilders cannot capitalise on this new market demand, as their projects will prove to be unfeasible because of the high overhead costs they bear," he said.
He was speaking at the BFTI National Shipbuilding Conference', organised by Bangladesh Foreign Trade Institute (BFTI) at Sonargaon Hotel, where analysts and shipbuilders focused on Bangladesh's potential to secure a position in the global shipbuilding market.
Shipping Minister Shajahan
Khan, Head of European Commission Delegation to Bangladesh Stefan Frowein and Danish Ambassador Einar Hebogaard Jensen were present, while BFTI Chief Executive Officer ProfMATaslim chaired the event.
Khan said the government will facilitate the shipbuilding industry to allow it to excel.
Analysts observed that Bangladesh has the scope to emerge as an export based shipbuilding nation within a decade because of advantages like cheap labour, a presence of nearly 1,00,000 skilled and semiskilled workers and industry related educational and training institutes.
A long history of maritime activity and a favourable geographical location also placed the country at a favourable position, with about 200 shipyards and workshops to cater to the domestic needs for water vessels.
However, Bangladesh's opportunity to emerge as a shipbuilding nation under global standards was created in the last couple of years,
as other traditional shipbuilding nations showed little interests in making small ships.
Two leading local shipbuilders -Ananda Shipyard and Slipways Ltd and Western Marine Shipyard Ltd — have bagged orders to make over 40 small vessels worth about $0.6 billion mainly from European buyers.
Including these two shipbuilders, according to analysts, about 10 local shipyards are capable of making ships up to 10,000 DWT as per international standards.
But capacity upgrades and expansion are needed for a majority of them to compete in the global arena with shipbuilders in other countries, such as Vietnam. Indonesia and India.
"By 2012, the world will need more than 10,000 vessels, mostly small to medium sized,” said the Western Marine MD.
His remarks came at a time when some local shipyard operators took a go-slow approach in expanding yard capacity to make ships of international standards, as recession drastically cut demand for new
shipbuilding orders in 2009.
"But this is of little relevance to the Bangladeshi shipbuilding industry, as the market for certain sections of small-ships and vessels of various types is unaffected by recession," said Dr Abdullahel Bari, chairman of Ananda Shipyard, which pioneered in winning orders to build ships for export.
Prof KhabiruI Haque Chowdhury, head of the Department of Naval Architecture and Marine Engineering of Bangladesh University of Engineering and Technology (BUET), said recession has caused a drop in demand for large vessels.
"Shipbuilding recession will have to end. Orders will be activated, may be of different sizes," he said, suggesting yards go for expansion and upgrades Io win export orders.
Citing examples from South Korea, he said in the past recession, the country expanded its capacity instead of reducing business scales. “They succeeded," he said.