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Middle East shipbuilding hampered by poor management, argues Sanmar boss

Shipbuilding in the Middle East is being hampered by inconsistency and poor training, according to Gary Dockerty, head of Turkish tug builder Sanmar.

Dockerty argued that with GCC countries allocating $36bn for port infrastructure development, and Saudi Arabia undertaking $200bn worth of coastal infrastructure projects, “serious questions need to be asked” about the tendency of Middle East ship operators to contract outside of the region.

Dockerty highlighted Sanmar’s own recent contracts for three tugs in Fujairah port, and seven in Jordan. “With new shipbuilding capacity online, with a plethora of diversification going on in these yards, why is it that customers still go outside the Middle East to build?”

Dockerty asserted that shipbuilders in the Gulf suffer from a lack of expertise, thanks to a shortage of investment in training.

“I refer to the comments made yesterday by Lars Seistrup [Damen Sharjah md] saying that the perception of Middle Eastern Shipbuilding did not match the reality. For me, history suggests that the region’s shipyards have a mixed record when it comes to executing projects, especially large and sophisticated ones,” said Dockerty. “In my opinion the root causes of inefficient development, management and execution include insufficient management systems, a lack of clear governance, poor trading and personnel development policies.

“You see their cost overruns, schedule slippages, inconsistent quality, which have been recurring concerns for senior management both in the yards and from the customer base.”

This inconsistency in Middle East shipbuilding, Dockerty argued, came at a time when various economic drivers in China have left the Far East more open to competition than it has been for decades, with factors including the decreasing strength of the Yuan, and the sudden downward lurch in China’s economy increasing the competitiveness of shipbuilding elsewhere in the world. “We’re a Turkish shipyard, and we’re able to be increasingly competitive,” said Dockerty. “China’s yards are heavily leveraged in US dollars. They now have to pay these debts back in local currency. Now, with the euro is almost one-to-one with the dollar, it makes exports very competitive indeed.”

“There’s heightened competition at a time when customers are more discerning than ever before. They’re looking for something more sophisticated. In China, there’s a lack of R&D, and therefore a lack of innovation.”

This was one subject touched on by Gunnar Huag md of Ulstien Asia, who claimed that his company would build its cheap, simplified and low-spec ship types in China while keeping one-offs and technologically sophisticated vessels in Norway.

“In the end, it comes down to price, quality, and track record,” Dockerty continued. “There’s a shortage of key skills, and that comes down to the issue of training personnel.”

Shipbuilders in the Middle East would have to make changes quickly if they are to capitalise on China’s weakening dominance, he indicated. “Shipyards and shipbuilders in the Middle East probably need to sit down and have a review of what they’re doing. There’s still a lot of orders going abroad for vessels coming into this region; serious questions need to be asked about the situation.”

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