Feature: Business Milestone for Vietnam

Monday, March 08, 2004

By David Tinsley

Vietnam's fledgling shipbuilding industry has raised its international profile by entering into a seminal agreement with the UK's Graig Group for the construction of a series of double-hulled bulk carriers. Cardiff-based Graig's bold move, potentially entailing 15 vessels of the Diamond 53 handymax type, draws on its experience in assigning a similarly extensive program, for 14 examples of the 53,000-dwt design, to Chinese yards. For the industrially-ambitious Vietnamese, who have already made substantial investments in modern shipbuilding equipment and practises, the Graig deal has particular appeal not only for its promise of serial production of one of the most well-considered, future-oriented bulker designs, but also for the broader package which the firm brings to the project.

Having been conceived at a time of heated discussion within the marine industries as to the merits and demerits of double-skin bulkers, the Diamond 53 was the first issue of the joint venture firm set up in Shanghai by Graig and Carl Bro, a Danish specialist in naval architecture, marine engineering and project planning. Graig's operating know-how with dry cargo tonnage, arising from both shipmanagement and shipowning activities, helped shape the new breed, while Det Norske Veritas had a direct input on structural and regulatory issues. Most of the bulker newbuilds entrusted to China have been purchased by shipowning companies other than deal-maker Graig. As one of the first marine groups from outside China to realize the potential of the Chinese yards, it has to date been contracted to supervise nearly 50 newbuilds there, of various types, on behalf of owners worldwide as well as for its own shipping interests. Unquestionably, the decision to take the original Diamond 53 program to China, coupled with a pragmatic design approach and Graig's development of a financial package, had brought double-hull construction within the bounds of commercial possibility. An extra cost premium would have been entailed, at that time, in having such ships built in Japan. Keen price is, of course, fundamental to viability and to ordering decisions in the intensely competitive bulk shipping sector. Graig is looking to repeat the formula in Vietnam, leveraging the reputation gained in China. In addition to the attractive delivery positions conferred by the commitment with Vietnamese state shipbuilder Vietnam Ship Industry Corporation (Vinashin), the agreement offers broader longer-term benefits to all parties. "We can help the Vietnamese yards with the design, with procurement, with finance and with all-important quality control," said Graig chief executive officer Hugh Williams. "Our experience of working with yards in China to build series of ships means we can help the yards to develop, and give confidence to our partners that Vietnam can provide them with high quality tonnage," he added. Graig intends to open an office in Vietnam to serve the project. The geared, wide-hatched bulkers, it is claimed, will be the largest and most sophisticated vessels yet built in Vietnam. The first of the firmly-booked quintet is due to be handed over in January 2006, and construction of the series has been assigned to the Halong yard in Quang Ninh province, and to Namtrieu Shipbuilding Industry Company in Haiphong. In the meantime, the first of the Diamond 53s from China is scheduled to be commissioned into service this year.

Industry's New Latin Quarter

As a major new investment in Latin America in the means of constructing lightweight fast ferries, Rodriquez Cantieri Navali do Brasil is set to reach an early milestone at the end of May 2004 with the launch of the first of an extensive series of commuter ferries for Rio de Janeiro services. Design, materials, and shipboard equipment as well as manufacturing know-how from the diversified, parent Rodriquez organization in Italy has provided the foundation for the Brazilian yard, inaugurated last year. Occupying a site of 13,000-square metres, of which 5,000-sq m is under cover, the yard is cutting its teeth on seven catamarans of 1,300 passenger-capacity and three smaller craft of 200 passenger-capacity. The program's leading edge will see the delivery of the first of the larger series, the CityCat DE52-type, quickly followed by the first of the CityCat 29 class. The aim is to complete the subsequent newbuilds at a rate of one per month. The double-ended, 52-m CityCats will each be equipped with two azimuthing propulsion systems, fore and aft, designed and made by group company Rodriquez Marine System, well known for its high-speed vessel stabilization and maneuvering products and design technology.

'Made in Germany' — a New High

Despite the problems posed for indigenous production by Europe's marine engineering industry due to the loss of critical mass in European shipbuilding, through the accelerated gravitation of shipbuilding activity to eastern Asia, MAN B&W Diesel's Augsburg works has hit a new high. From its landlocked location in southern Bavaria, the Augsburg marine engine division secured the largest order volume in the parent company's history in the anniversary year 2003. The most telling aspect of its achievement was the predominant export orientation of the new business, providing a further demonstration of the worth attached to the 'Made in Germany' label.

The company attracted contracts for a total 680,000-kW of medium-speed, large-bore diesel engines for manufacture at Augsburg, the fountainhead of the design technology embodied in that machinery. The power total is represented by 76 engines, destined for containership, ferry, ro-ro vessel, chemical tanker, bulk carrier, FPSO(floating production, storage and offloading) unit and tug applications during 2004 and 2005.

Some 60-percent of the engines will be supplied to shipyards in China, South Korea, Japan and Vietnam, and a further 15-percent is for other export destinations. The home shipbuilding market accounts for 25-percent of the 2003 order tally.

The company's Augsburg-developed family of large trunk engines, consisting of the 58/64, 48/60, 40/54 and 32/40 series, has been brought to the market over the period from 1985 to 1995, and the B version of the 48/60, with its 14-percent unit power uprating, was launched in 2002. The enduringly popular 58/64 and successful 48/60B are most strongly represented in the engines booked by shipyards and shipping companies from MAN B&W Augsburg last year for propulsion duties.

MAN B&W observed that the order boom in 2003 for merchant vessel newbuilds, primarily benefiting Asian workloads, reflected strongly increasing freight rates and low marine engine prices. The group's expansion of its network of international branches during the past few years better positioned it to act on the growth in market demand. MAN B&W has experienced strong business growth emanating from China's fast developing shipbuilding industry, in particular. The group reported that it now has a share of over 60-percent in the medium-speed, four-stroke propulsion engine market.

Last year's order inflow is the largest achieved by the parent company for Augsburg in 100 years. The first vessels were provided with diesel engine propulsion in 1903. Before 2003, the record year for marine engine orders at the works was 1938, when the tally amounted to 635,000-kW.

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