Deadbeat Chinese Shipyards Stick Banks with Default Bill
Chinese banks are stuck in a lose-lose legal battle between domestic shipyards and foreign buyers over billions of dollars in refund guarantees that are supposed to be paid out if shipbuilders fail to deliver on time. One in three ships ordered from Chinese builders was behind schedule in 2013, according to data from Clarksons Research, a UK-based shipping intelligence firm. Although that was an improvement from 36 percent a year earlier, it was well behind rival South Korea, where shipyards routinely delivered ahead of schedule the same year. That means Chinese banks may be on the hook to pay large sums to buyers if the yards can't come through per contract, with little hope of recouping the cash from the yards.
Etter Makes Shipbuilding Top Priority
According to a Reuters report, President George W. Bush's nominee to head Navy acquisition vowed to make shipbuilding a top priority and said she would try to avert funding disruptions that tend to push costs higher. Delores Etter, an engineering professor at the Naval Academy who served in the Pentagon during the Clinton administration, told the Senate Armed Services Committee that technologies need to be fully developed and tested before being added to new arms programs. Etter also vowed to investigate ways to better finance shipbuilding, which is done on an annual basis now, rather than over the four to eight years it takes to build a ship.