Page 70: of Maritime Reporter Magazine (September 1999)

Global Shiprepair Market Faces Further Consolidation, Competition

For those convinced that the latest round of corporate consolidations is the last, think again. According to a new report from Drewry, the announcement by Keppel and Hitachi to further amalgamate the shiprepair indus- try in Singapore is the latest indication of a changing market structure through increased consolidation, diversification and an increased competitiveness from low cost emerging nations.

The intense competition prevalent within the industry is exemplified by the announcement of the two giant

Singapore based conglomerates Keppel Corp. and

Hitachi Zosen to merge their shiprepair and building activities in a $165-million deal, Drewry noted in "Shiprepair And Conversion: The Global Outlook."

The merger gives Hitachi and Keppel interests of around 31 percent and 56 percent, respectively and heightens consolidation in the region as Sembawang and Jurong followed a similar path in 1997 effectively reducing the big four into two without reducing capac- ity.

The global shiprepair market experienced concentrat- ed restructuring during the 1980s as yards responded to changing market conditions and trading patterns in line with ship owners. The 1990s have continued to follow this pattern. In the 1990s, it is estimated that shiprepair capacity based on dry-docks and floating facilities for vessels in excess of 10,000-dwt has changed its struc- ture dramatically. In North Europe, capacity in dead- weight terms has increased by 20 percent since 1990, while that in the Far East has risen by 70 percent (albeit that this includes an effective reclassing of existing facilities in Taiwan). SE Asia has witnessed 30 percent growth in repair facilities doubtless inspired by the aging tanker fleet. On the other hand there has also been a dramatic fall in capacity in North America — the 20 percent decline mainly on the eastern seaboard.

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