US yards should look offshore, says ABS PresidentNews // March 6, 2000
Speaking at a recent conference on shipbuilding in the US, Kramek said that a review of world shipbuilding statistics and forecasts revealed major causes for concern for America's shipbuilding industry, but that significant opportunities existed in the offshore sector.
During the last two decades, world trade by sea has continually increased, from 3.3 billion tons in 1980 to 4.3 billion tons in 1995, reaching a projected 5.5 billion tons in 2010, Kramek said in his paper.
World shipbuilding output had generally kept pace with increases and decreases in demand that had resulted from significant events such as wars, major changes in oil prices and recessions, said Kramek.
"Current levels for the past few years and forecasts through 2010 are at 1,500 to 2000 ships for a total of 20 to 27 million gt" Kramek asserted.
However, said the ABS President, America's shipbuilding activity had declined from a high of approximately 205 vessels, equivalent to 0.56m gt and 4.1 per cent of the world total, to an average of 30 vessels, which is 0.06m gt and 0.2 per cent of the world fleet.
Analysing world shipbuilding statistics it was evident that market share had changed dramatically in the last decade, said the ABS man. Europe's share had declined from 33 per cent to 18 per cent, said Kramek, while South Korea has increased from just 1per cent to 29 per cent.
The decline is shipbuilding in the US has led to restructuring and rationalisation within the industry. Consolidations and take-overs have taken place, and the American Shipbuilding Association's big six are now 'the big three' for all practical purposes, whilst the Friede & Goldman/Halter Marine merger highlights consolidations between members of the Shipbuilders Council of America.
US shipbuilders are 'hanging in there', said Kramek, trying to be efficient and flexible, but, military orders apart, newbuilding contracts for commercial ships are few and far between, even in spite of the regular renewal of Jones Act tonnage.
Title XI funding would continue to be essential to support renewal of the Jones Act fleet, and for Floating Production, Storage & Offloading (FPSO) projects, said Kramek.
Production facilities at American yards urgently need to be modernised and workforce productivity needs to increase, said Kramek, noting that the results of increased productivity are readily apparent in Japan, where market share has been preserved, eventhough per hour wage rates of $57 far exceed that of Europe ($25 per hour) and Korea ($15 per hour).
Economies of scale of the type realised by series construction will be required to match the productivity of foreign yards, said Kramek, but series construction has not existed for many years in the United States.
Turning to the offshore sector, Kramek said that the sensitivity of the shipbuilding industry to oil price fluctuations is once again apparent and that revenues from oil and gas had decreased significantly, causing downsizing, mergers and consolidations.
However, analysts forecast that in approximately 5-10 years, 60 per cent of US domestic oil supplies and 27 per cent of gas supplies will come from deepwater areas of the Gulf of Mexico.
FPSOs and shuttle tankers would be required to transport these natural resources to refineries, said Kramek. FPSOs are in use in most deepwater facilities worldwide - although their use in the Gulf of Mexico depends on the results of an ongoing environmental impact study.
Nonetheless, industry projections suggest that more than 50 floating production systems are being planned or are being studied for use in the area.
With shipbuilding prices at historically low levels, and with China increasing its shipbuilding capacity, collaboration and consolidation were essential, said Kramek, so now was the time for the industry in the US to collaborate on designs and start planning for series production to meet anticipated requirements for FPSOs for the Gulf of Mexico.
"The potential for over 50 double hulled FPSOs with additional double hulled shuttle tankers is perhaps the greatest new building opportunity for America in the new Millennium", said Kramek.
"The value of production, mooring and transfer facilities of FPSOs far exceeds the value of the hull platforms and represents significant additional work for equipment manufacturers and support facilities", he claimed.