Mega-merger in Singapore?News // August 11, 2000
Faced with increasing competition from countries such as China, where labour and materials costs are low, Singapore's ship repair industry has been in an on-going process of consolidation for some time.
Speculation that Keppel Hitachi Zosen and SembCorp, the two largest ship repair groups, could merge, creating a 'mega repair yard' in the process, first started when Sembawang Shipyard and Jurong Shipyard merged. Jurong Shipyard was re-named SembCorp Marine as part of a wide-ranging restructuring effort announced in November of 1999.
Under the restructuring effort, the operations of the Jurong yard, Sembawang Shipyard, and PT Karimum Sembawang Shipyard in Indonesia are being integrated and centralised.
Then, in January of last year, Keppel Shipyard and Hitachi Zosen Singapore merged to form Keppel Hitachi Zosen.
The downward pressure on prices from Chinese ship repairers has been unrelenting, however, and a merger between the two consolidated groups - now the largest ship repair organisations in Singapore - would seem to be on the cards.
Merging Keppel Hitachi Zosen and SembCorp Marine would create a huge ship repair organisation - with a dock capacity exceeding 3 million dwt, with in excess of 12,000 employees - and one with the facilities, expertise, workforce and economies of scale tocompete successfully with the Chinese.
Speaking at the end of July, when Keppel Hitachi Zosen's half-year results were announced, Keppel Hitachi Zosen Chairman Designate Choo Chiau Beng confirmed that the two companies had conducted what he called 'informal' discussions.
Choo Chiau Beng said he hoped that the merger would take place "sooner rather than later.