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"One advantage that the Singapore shipyards have over their competitors is their strength in customisation work."
- Ms Nancy Wei, Analyst, UOB Kay Hian
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Singapore is a leading force in the global marine industry, the result of focused strategies and calculated long-term planning. Today, Singapore boasts world-class shipyards and a strong ecosystem of supporting marine equipment and services companies. Singapore's port is the world's busiest in terms of shipping tonnage and Singapore Registry of Ships is the largest register in Asia.
A winning streak
- In 2004, Singapore's marine industry boasted an output of S$5.3 billion (US$3.2 billion) and provided jobs for about 34,000 employees
Singapore's marine industry was modernised in the late 1960s and output grew rapidly - from S$40 million (US$22 million) in the early years to 2004's figure of S$5.3 billion (US$3.2 billion), providing jobs for about 34,000 employees. The maritime trade contributes about five per cent to the Republic's gross domestic product.
Resilience has been a key growth factor for the industry. As shipbuilding and repair grew in tandem with the world trade volume, the industry went through dramatic periods of growth as well as downturns. Through it all, the maritime industry stepped up to the challenges and continued to reinvent itself and grow.
It was this willingness to adapt to market conditions that triggered profound changes in Singapore's marine industry. According to Mr Heng Chiang Gnee, President, Association of Singapore Marine Industries (ASMI) and Deputy President, SembCorp Marine Ltd (Singapore, www.sembcorpmarine.com.sg): "Besides adopting new technologies to improve their engineering and production processes, our companies have developed proprietary designs and strong project management know-how in executing contracts in excess of S$1 billion (US$0.6 billion)." This, in turn, has pooled hundreds of multinational and local companies into the industry, providing a comprehensive range of marine products and services.
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Strong global track record
- In the last 15 months, Singapore companies Keppel Offshore and Marine and SembCorp Marine have clinched deals worth S$8.5 billion (US$4.7 billion)
World-class capabilities and impressive track records aptly describe the players in the Singapore marine sector. SembCorp Marine and Keppel Offshore and Marine (Singapore, www.keppelom.com) are the undisputed global leaders in fast-track vessel conversions for the offshore marine industry and leaders in rig building, with Keppel Offshore and Marine being the world's biggest builder of jack-up rigs.
With each conglomerate holding a portfolio of yards, the Republic has the ability to fulfil the entire range of ship repair, conversion, shipbuilding and rig-building services in one convenient location. Since 2003, Keppel Offshore and Marine and SembCorp Marine have bagged about 80 per cent of all new rig orders. This year, both companies have scooped all 11 orders placed so far for complex jack-up rigs and in the past 15 months, they have signed deals worth S$8.5 billion (US$4.7 billion).
The success of the offshore sector is propelled by numerous factors. First, high oil and gas prices have resulted in big oil players upping their budgets for exploration and production. Second, the global fleet of offshore rigs and vessels is approaching replacement, with most of them older than 20 years. Third, greater exploration has led to the search for new oil fields, with players venturing into deeper waters. This requires increased specialised drilling equipment and advanced deep-sea rigs. All this translates to more spending on rigs and FPSOs, with analysts projecting a minimum 20 per cent increase this year.
With industry analysts projecting S$58 billion (US$32 billion) in capital expenditure spending on 90 FPSO conversions and upgrades in the next five years, SembCorp Marine and Keppel Offshore and Marine can expect a robust harvest.
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Singapore is also a hub for marine engine companies
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Promoting diversity
- Mid-sized players such as Pan United Marine, BT Engineering and Damen Shipyards Group complement key industry players, leading to a more vibrant and diverse industry
It is no surprise that Singapore's maritime sector is a leader in the global marine industry. In the local market, key players are complemented by a range of midsized players like Pan United Marine (Singapore, www.panunited.com.sg), offshore module fabricators such as BT Engineering (Singapore, www.bte.com.sg) and aluminium yards such as Damen Shipyards Group (Netherlands, www.damen.nl), which is one of the world's top three makers of fast ferries.
In addition, organisations and businesses that provide complementary and supplementary products and services have also sprung up, offering products from marine equipment for navigation, communications, propulsion and auxiliary equipment, to services like classification and emergency response teams.
World leaders like Wartsila (Finland, www.wartsila.com) and MAN B&W Diesel (Germany, www.manbw.com) have regional centres in Singapore, where they carry out a wide spectrum of marine commercial vessel engine maintenance, repair and overhaul activities.
MTU (Germany, www.mtu-friedrichshafen.com), the world leader in high-speed engines, serves the naval and pleasure craft markets from Singapore. Its regional headquarters, MTU Asia, has a 30-year presence in Singapore. Today, besides engaging in engine maintenance, engineering and testing, MTU Asia also manages the regional distribution and after-sales services in 18 countries.
Recently an increasing number of marine companies have been carrying out developmental activities in Singapore. THISS Technologies (Singapore, www.thiss.net) has developed an innovative low-cost satellite tracking system for merchant vessels, while TNA Solutions (Singapore) has developed a maritime e-learning system for shipping companies and equipment makers.
Underpinning the Republic's global leadership status in the marine industry are several top-notch classification societies which have been operating here for several decades. The American Bureau of Shipping (US, www.eagle.com) has a 120-man outfit in Singapore today, serving as the headquarters for its regional operations in the Pacific. Another firm believer in Singapore's marine industry is DNV (Norway, www.dnv.com). From its regional centre of competence in Singapore, DNV provides a full range of technical and consultancy services for the marine industry. Lloyd's Register Group (UK, www.lr.org) and Bureau Veritas (France, www.bureauveritas.com) both have 60-man teams operating in Singapore. These outfits also serve as the companies' regional arms for marine consultancy services.
The marine and offshore industry in Singapore is also complemented by the presence of a strong base of oil and gas equipment and service companies. Many of them are already using Singapore as their main Asian manufacturing and services hub. They include industry leaders such as Reed Hycalog (UK, www.reedhycalog.com), Schlumberger (www.slb.com) and FMC Technologies (US, www.fmctechnologies.com).
Efforts are being stepped up to further support and nurture the growth potential of Singapore's marine industry with targeted programmes and initiatives. The key to future success is in retaining the country's shipyard dominance, developing new growth engines in equipment and services, particularly in areas such as R&D capabilities and the manufacture of electronics and propulsion systems.
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Sound policies, solid infrastructure and a pro-business government have fuelled the marine industry's growth over the years
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Building R&D and training capabilities
- Singapore is implementing research and education initiatives to develop the fast-growing maritime industry
Growing interest from oil and gas equipment companies to carry out R&D activities in Singapore resulted in the launch of the Centre for Offshore Research and Engineering (CORE) last year. CORE aims to promote R&D programmes for the offshore engineering industry and to establish a platform for networking amongst offshore and marine industries, universities and research institutes.
Also, Maritime and Port Authority of Singapore and Singapore Economic Development Board have jointly established the Test-bedding, Research and Innovation Development for New Maritime Technologies programme, to support the maritime industry in their R&D efforts.
Recognising the strong growth prospects in the marine industry, several initiatives were launched to ensure the availability of qualified talent. In Singapore Polytechnic for example, the ASMI Marine Engineering Scholarship was introduced for students intending to pursue a Diploma in Marine Engineering. Additionally, specialisation in Marine and Offshore technology was introduced to final year Mechanical and Production Engineering students of Nanyang Technological University.
Singapore is well-placed to be a heavyweight in the key sectors of ship repair and conversion, offshore structures and specialised ship building. Riding on the growth of world trade and demand for oil and gas exploration activities, the Singapore marine industry is set to scale greater heights.
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