Building and breaking ships

It may prove wise for the government to heed the call of Japanese shipowners to establish a shipbreaking industry in the country. After all, the Japanese themselves are already assuring the government of a steady stream of clientele in the midterm given that the global financial crisis is reportedly pushing many of their shipping firms to retire and scrap their vessels.

Japanese shipowners also believe a shipbreaking industry will be a good bridge program while waiting for the global economy to pick up. Invariably, such an industry will help create many jobs locally, as well other business opportunities and employment, in the downstream.

Says Ericson Marquez, cochairman of the Philippine-Japan Manning Consultative Council, which is composed of mostly shipowners from Japan and manning agencies from the Philippines, “…due to very limited areas with a shipbreaking industry, Japan is urging the Philippines to look into the possibility of having such an industry here they assured good business with them.”

Japan reportedly has about 5,000 vessels, with 2,000 ships used domestically and another 3,000 internationally. For ocean-going vessels, Japanese owners reportedly want to scrap about 300. And they normally turn to India and Bangladesh for shipbreaking. But one can only imagine the turnaround time for every ship that comes to drydock or breaking, and here lies the opportunity for the Philippines.

The expertise and the manpower are readily available, anyway. And the apital investment is most likely to come from the Japanese themselves. All the project needs is a suitable site, and perhaps a well-thought plan on how to go about things and how to maximize the conomic benefits from the  proposed industry.

Shipbreaking will also complement the country’s own efforts in shipbuilding, given possible technology transfer and the availability of salvageable parts and components. Already, a Filipino-owned shipbuilding company in Sarangani province is putting up the biggest shipyard in  Mindanao, with its eyes on the shipping needs of the Brunei-Indonesia-Malaysia-Philippines East Asean Growth Area.

Information from the Mindanao Economic Development Council indicated that a member of the RD Group of Companies, Sarangani-based Gensan Shipyard and Machine Works Inc., would start the groundwork for a new P250-million shipbuilding facility with huge twin slipways with a combined capacity of 10,000 gross registered tonnage. Currently, the Gensan Shipyard has two floating dry docks with a combined lifting capacity of 4,000 tons only.

Notes Rodrigo Rivera Sr., chairman and chief executive officer of the D Group of Companies, “The Philippines and most of the Asean countries need ships and vessels to transport their products…. By xpanding our business reach within the region, Gensan Shipyard and all member-companies in the RD Group are paving the way for other investors, both local and foreign, to invest in the province of Sarangani and partner for economic  development.”

In this line, Rivera challenged other investors to go to the countryside and create job opportunities. His shipyard intends to build medium-sized vessels for export to Asean countries, and he may yet do good business. Unless the Japanese beat him to the punch and opt to sell instead of break their excess vessels.

Already, the Department of Environment and Natural Resources (DENR) is reportedly looking for at least three possible shipbreaking sites in the country. The thing is, the DENR is reportedly apprehensive to approve the project given possible risks to the country’s environment, particularly the spillage of oil and other toxic materials, including asbestos and heavy metals, during the course of shipbreaking activities.

One cannot blame the DENR for being cautious. But such caution should also be tempered with practical considerations. The priority now is for the economy to create jobs. Shipbuilding is one way, but shipbreaking is also an opportunity that can be considered, as long as suitable regulatory and environmental policies are quickly put in place. – Sway / Marvin A. Tort, Business Mirror