Gerry Duggan questions how realistic it is for the US and UK to revive their shipbuilding traditions.

In the shipping news, we often hear calls to revive shipbuilding in countries like the United States and throughout Europe. We are currently experiencing such a moment, because various current Syringes Headlines prove. The fact is, however, that this calculation does not add up.

For reference, a coated MR product tanker (50,000 dwt) from a Chinese or Korean yard costs between $45 and $55 million depending on specification and is delivered within a year. How can American – or British – yards compete at this level, not to mention that the infrastructures of the US and UK yards would need a drastic overhaul just to do the block fabrication, outfitting and coating processes required to make this viable. And before anyone gets down my throat, I have worked in yards in the US, China and Korea for the past 27 years so I can make a comparison of the state of the yards.

It’s not just the cost of the vessel that matters, but also the daily charter rate the owner can get. The higher the vessel’s cost, the higher the daily charter rate has to be offered to big oil companies and the like in the hope that they will pay. I would like nothing more than to see a revival of the shipbuilding industry in the US and across the pond in the UK, but as someone once said to me: “It is not about how many ships we can produce in a year, but how many years it takes for a ship.”

While it may sound petty, if the US wants to try to keep up with building international merchant ships, a simple thing like adopting the terminology used outside the US would have to happen. I am referring to the metric system, of course. The US is the only one in this field that uses feet and inches, so owners who want to build in the US would have to demand that their ships be built in the metric system that matches the rest of their global fleet. Retraining workers to use a metric system while still sticking to the imperial system used on Jones Act ships would be difficult. Imagine if Newport News, Philly or NASSCO tried to adapt to both imperial and metric systems when building ships, or do you have separate workforces for each type of ship? Then worker salaries come into play too. You can’t pay a guy working on a $50 million ship the same wage as a guy doing the same work on a $120 million ship. Your profit margin is nonexistent.

Over the last 20 years, shipyards have refined their production capabilities to the point where they function like a car production assembly with a worldwide supply chain. Many of the major shipyards in South Korea and China are no more than assembly points where blocks are delivered from satellite yards or subcontractor yards complete with equipment and already coated. The main yard puts the puzzle together. If these yards can produce and deliver 50 to 60 vessels per year, so one per week or more, of MRs, containers, dual-fuel VLCCs, FPSOs and LNG carriers in the same yard, these satellite and subcontractor supply chain yards become an important part of the overall operation. It is becoming clearer that the revival of commercial shipbuilding yards in the US and UK is not just about the yard, but also about the support base needed to maintain some level of commercial viability. It takes a bold step and enormous investment to even set foot on the bottom rung of an extraordinarily long, long ladder.

As I said, I want nothing more than to see a rebirth of the industry in the US and the UK, but to make that happen will require a lot of brain-scratching, a lot of courage and a huge leap of faith.

Finally, ask yourself this question: Put yourself in the shoes of Maersk CEO Vincent Clerc when he was asked by the US Secretary of the Navy earlier this month to build his ships in the US. Why would you pay $120 million for a US or UK MR tanker for international trade and have to wait 18 months for it when you can get the same thing and another one from Asia in 12 months for the same price?