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The next phase of re-invention for Singapore’s shipyards

The next phase of re-invention for Singapore’s shipyards
Singapore's place in the shipyard world is one that is a testament to perseverance and innovation against some distinctly challenging odds. The marine industries were dubbed as a sunset industry for the city-state in the mid-1980's. It was not that hard to see why. The land scarce island, which was starting to rise quickly up the global economic ladder, seemed unsuited to a labour and land intensive industry in the long term.

Yet just a couple of weeks ago, nearly 30 years on from those "sunset" concerns, over a thousand shipping and offshore executives in Singapore trekked their way to a distant corner of the Tuas industrial area for the official launch of Sembmarine Integrated Yard at Tuas, which coincided with Sembmarine's 50th anniversary.

The event was testament to Singapore's marine industries' ability to re-invent themselves and move up the technological ladder. It was also certainly a big deal with the guest-of-honour being no less than Singapore's Prime Minister Lee Hsien Loong. It is also a rather impressive facility with four VLCC drydocks, one capable of docking 18,000 teu boxships, and that is just in phase one.

In his speech at the event PM Lee touched on an interesting point, which was the yard was by no means a new idea. Indeed he noted former Sembmarine chief K K Tan, who it was nice to see got well-deserved public honour at the event, had been pushing for the concept at the highest level in Singapore.

Indeed the idea of the "mega-yard", as it is often dubbed, dates back to the late 1990',s a time of major consolidation in the Singapore shipyard industry. Various mergers resulted in two giant yard groups Sembcorp Marine and Keppel Offshore & Marine. Almost as soon as that had happened the concept of merging the two then emerged, with one party seemingly far more keen on the concept than the other.

Around the merger idea floated the concept of a mega-yard with shared facilities for the two.

The merger never happened, and Singapore to its credit ended up with two offshore and marine giants that compete in way that the market has understood and appreciated.

There were two diverging strategies at that point. Keppel very much merged its marketing and to a lesser extent brands and embarked on an aggressive global expansion policy of being present in all the world's major offshore and marine hubs. By contrast Sembmarine kept its separately marketed and branded yards, despite its push for an integrated yard. Its overseas expansion was also less aggressive, although it is present in Brazil, Indonesia and even the UK.

The official launch saw the fruition of its Singapore mega-yard ambitions, but there will be challenges both external and internal within the country that PM Lee candidly touched on in his speech at the event. Land constraints remain and there has been a reduction in quotas for foreign labour on which the country's shipyards are heavily dependent.

Which is right in its strategy - Sembmarine or Keppel O&M? Only time will tell.