Guangzhou Shipyard to expand production

PUBLISHED : Tuesday, 02 September, 2008, 12:00am
UPDATED : Tuesday, 02 September, 2008, 12:00am

Guangzhou Shipyard International, the largest small to medium-sized tanker producer on the mainland, says it will expand production by a third in three to five years, disregarding concern by some analysts about an oversupply of vessels.

The Guangzhou-based shipyard is planning to reduce production bottleneck by searching for a site to expand its ship block production.

A 38,000-deadweight tonne (dwt) tanker produced by Guangzhou Shipyard comprises at least 150 ship blocks - sections that need to be assembled at the dock.

Short of land to produce larger ship blocks, which would reduce the number required for each vessel, the company needs 85 days to assemble each ship while Korean shipyards need only 35 days.

The longer the vessel stays in dock, the fewer vessels can be produced.

'We are now subcontracting 60 per cent of our block production to smaller shipyards,' vice-chairman Han Guangde said yesterday in Guangzhou. 'But if any of the subcontractors falls behind schedule, it has a domino effect on the production chain.'

To address the problem, Mr Han said the company was searching for a new site to expand block production. Nansha, Panyu, Dongguang and Chongshan are on the company's radar.

The company also said it would increase the proportion of specialised vessels it makes to cope with the rise in steel costs.

These include roll-on-roll-off passenger car ferries, semi-submersible heavy-lift vessels and military ships.

The company experienced a setback in production of specialised vessels in 2002 and 2003 when it delivered two passenger ro-ro vessels, only to incur losses of more than 100 million yuan (HK$114.4 million) per vessel.

But the company overcame technical problems to making them cost effectively and has received four orders for 1,400-seat passenger ro-ro ships from China Shipping Group and one for a 50,000 dwt semi-submersible from China Cosco Group.

'We are aiming to increase the proportion of specialised vessels to 20 per cent of our total sales by 2015,' said Mr Han.

The shipbuilding industry would face more stringent environmental regulations in the near future, said the company.

Guangzhou Shipyard delivered its first tanker deploying a more fuel-efficient 'green stream' system yesterday. The 38,500 dwt tanker was ordered by Norden, one of the biggest tanker companies in Europe.

Guangzhou Shipyard has received orders for 30 ships with environmentally friendly specifications from shipowners in Denmark, Switzerland, Italy and Greece.

Guangzhou Shipyard has 66 vessels, which translates to 2.8 million dwt of production, in its order book.

Bottleneck solution

Guangzhou Shipyard plans to increase ship block production

Korean shipyards need 35 days to build a ship while the company needs: 85