Could the Middle East be a Shipbuilding Hub?

The likelihood of the Middle East becoming the next South Korea in terms of shipbuilding is not feasible according to industry experts.

Currently the Middle East has shipbuilding yards which focus mainly on military and commercial vessels such as the Abu Dhabi Ship Building the UAE’s largest shipbuilding company which had revenues of Dh448m in 2007 and Dh 26m in net profit in the same year.

But compared to Korea these figures are a drop in the ocean with Korea Shipbuilders’ Association registering $43.2 worth of exports in 2008, which they say will rise 26 per cent to $54.4m in 2009, making the country the world’s number one shipbuilder.

Mohammed Souri, Chairman of the National Iranian Tanker Company, said the population of Middle Eastern countries coupled with the climate were huge disadvantages.

“In my opinion the area does not have the basic needs to be capable of shipbuilding like Europe in the old days,” he added.

“Weather conditions would mean very low efficiency for the labour and at 40 to 50 degrees having to do jobs like welding would be too much.

“Another thing is that the nations who are successful in shipbuilding are producing the equipment needed such as steel and components.

“Here you would have to import everything from outside and pay customs which would all add to the cost.”

Souri added there would not be enough experienced engineers and experts and those brought over would have to be paid triple and banks would only provide short finance such as one to five years not 15 years or more which is needed in shipbuilding.

“Labour and living expenses are not cheap in this region whereas in China it is much easier in this respect,” Souri added.

“This is not a good region for building ships but repairs is another issue which we can do.

“It could be feasible in many years time as a diversification of industries but certainly not in the near future.”

Richard Meade, news editor of Lloyds List, a prominent daily maritime newspaper, said he agreed with the panellists but believed that the Middle East could be a major force for ship repairs.

“The fact is nobody is building ships at the moment and the fact that smaller start up in China will not survive the recession even post 2010 this will not happen,” he added.

“The Middle East on the other hand is going to be a force in repairs with Dubai Dry Docks [which is currently refurbishing the QE2] leading the way.

“In the next five to 10 year these could be leading the way as many small ship yards in the east were turned in to shipbuilding facilities and will not survive.”

Robert Houston, President of National Shipping Company of Saudi Arabia, said that history dictated that the workers needed to be local and not imported.

“If you look at the history of shipbuilding it has moved from Europe to Japan to Korea and now to China and all these places had the workforces to make it happen,” he added.

“It’s labour intensive, the cheaper the labour the more successful you are and I don’t really see the GCC being the place where cheap labour is going to be or cheap materials.

“But when Dubai Dry Docks was planned nobody thought it would work but it has so you never know.”