Facility will focus on handysizes and handymaxes, with creation of up to 3,000 jobs
OSHIMA Shipbuilding will build a shipyard in Vietnam, joining a small but growing number of Japanese builders that have shifted production overseas as pressure from rising costs and the appreciation of the yen squeezes margins.
A spokesman at Oshima’s corporate headquarters in Tokyo declined to elaborate on the project, saying that official information would be revealed tomorrow.
The Vietnam yard is expected to focus on handysizes and handymaxes, Oshima’s traditional areas of strength, and provide employment for up to 3,000 workers.
“That size of vessel is best suited to Vietnam as it matches the country’s shipbuilding capabilities and port size,” said one shipbuilding analyst.
Oshima’s shipyard at Nagasaki, Japan, has an orderbook for 110 vessels amounting to 7.4m dwt. It produces mainly bulk carriers of size up to 122,000 dwt, according to Clarksons. The company is also the world’s largest builder of open hatch bulk carriers.
The 304 ha shipyard in Vietnam will be located in the Cam Ranh bay area of Khanh Hoa province in the south central part of the country. The area is already home to five shipyards, including Hyundai-Vinashin and STX Vietnam.
The precise scale of the investment remains unclear, with some sources saying the Japanese will invest as much as $500m, but others cite the much lower figure of Dong3.8trn ($182.6m).
The shipbuilding analyst described the shipyard as “medium” sized, suggesting $500m was “about right”.
Construction of Oshima’s plant is scheduled to begin in 2015 once Oshima secures the relevant licence and will finish in 2017.
Last July, Lloyd’s List reported that a licence that had been promised to STX Offshore and Shipbuilding was withdrawn by authorities of Khanh Hoa province due to the South Korean shipbuilder’s “sluggish implementation” of a plan to invest $500m in a project in the Van Phong Economic Zone that included a shipyard.
While there have been examples of Japanese shipbuilders moving production offshore, in general they have been slower to do so than their South Korean rivals.
In 1994, Tsuneishi was the first major Japanese shipbuilder to establish a yard in the Philippines. It also has facilities in China. Kawasaki Heavy Industries has a joint venture in China in Nantong COSCO KHI Ship Engineering, or NACKS.
With Japanese shipbuilders suffering from prolonged appreciation of the yen and rising labour and input costs, many are finding it increasingly difficult to put off moving some or all of their operations overseas.
According to the shipbuilding analyst, labour issues were probably a key consideration for Oshima. “The workmanship in Vietnam can be pretty good, even compared to China,” he said. “But there is more to building ships than craftsmanship, such as commercial considerations and supply chain issues. This is where the Japanese can add value.”
In contrast to China, where labour rates fluctuated frequently as supply of skilled workers tightened, in Vietnam there was higher workforce stability and lower workforce turnover. “The Japanese like a stable operating environment,” he added.
“The whole Vinashin disaster indicates that purely-Vietnamese run shipyards have not been as successful as the joint ventures run with foreign partners such as Hyundai-Vinashin,” he said.
State-owned Vietnam Shipbuilding, or Vinashin, is saddled with more than $4bn in debt, has defaulted on bond payments to both domestic and international investors and is currently in the midst of a giant restructuring.
It was not immediately clear whether Oshima will work with a joint venture partner on its Vietnam project.
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