World demand for ships is growing fast, especially for energy-related vessels, which account for about 50% of new builds. “In 2007, overall demand is expected to reach 90 million tonnes, up from 37 million tonnes in 2000-2002 and construction demand is expected to stabilise at about 60 million tonnes per year until 2015”, says Daniel Cho, Head of Offshore and LNG at Samsung Heavy Industries.
The world shipbuilding leader is Korea, with a 38% share, but coming up fast is China (30%, up from 5% in 1998) with a number of new shipyards. Japan is in third place and losing market share.
With 9 big shipyards and about 20 smaller ones, Korea turns out 400 ships a year, including a 300-metre monster every week. Shipbuilding is a key industry for Korea; its turnover of nearly $18 billion per year accounts of 3.3% of GDP and 6% of exports by value. Korea’s No. 1 player is Hyundai, which launches about 100 ships a year, followed by Samsung and Daewoo, but Samsung is the world leader in offshore related vessels such as drill-ships, big FPSOs and shuttle tankers.
But all is not rosy, says Daniel Cho: “Korean yards are suffering from saturated capacity (the leading players are booked up until 2010) and rising wage costs. Some have been outsourcing in China to gain capacity and find cheaper manpower”. So far only low-tech work is involved. “Korea’s advantage is technology, engineering skills and productivity, and we are investing heavily in equipment (floating cranes, dry docks, robotics, etc.) and R&D on more productive techniques to maintain our lead”, adds Daniel Cho. “China won’t be a real threat for more than 10 years. The real added value in this market is technology and China still has a long way to go.” Today’s ships — especially the FPSOs, LNG carriers and drill-ships very high tech but so is the way they are built. “Today’s ships are computer designed, plasma cut and automatically welded so accurately that we can build huge ‘mega-block’ modules on the quay and then lift them into a dry dock for rapid assembly”, says Henry Jeong, who heads the FPSO project team at Samsung’s huge Geoje shipyard. “We always build in dry docks and floating docks now. Samsung has the biggest dry dock in the world, more than 640 metres long. Five ships can be built simultaneously in the dock, which launches 30 ships a year”, adds Henry Jeong. The 3.6-million sq. m (1000 acres) Geoje yard (which recently built Total’s Dalia FPSO) boasts 3 dry docks and 3 floating docks and its 21,000 workers (including in-yard contractors) turn 1.2 million tonnes of steel into 50-plus ships each year. The yard builds all types but specialises in high-tech ships like LNG carriers, FPSOs and drill-ships and is planning to build icebreakers and cruise ships. “The hardest to build are LNG and offshore vessels”, explains Henry Jeong. “The big oil companies stress safety and reliability, so there are very stringent procedures and verification processes”. They also take longer to build: “Tankers and containers take 9 months from steel cutting to delivery, drill-ships and LNG carriers need 16 months and FPSOs 24 months”.
One way to cope with growing demand is to boost productivity: “Ten years ago the turnover rate of our biggest dry dock was 5 times a year; today it is 10 times. The best in the industry. We are very proud of that”.