Shipbuilding Industry

A Brief History

Shipbuilding is the construction of ships and other floating vessels. It normally
takes place in a specialized facility known as a shipyard. Shipbuilders, also
called shipwrights, follow a specialized occupation that traces its roots to
before recorded history.

Shipbuilding and ship repairs, both commercial and military, are referred to as
"naval engineering". The construction of boats is a similar activity called boat
building.

The dismantling of ships is called ship breaking.
Ancient India
The maritime history of Indian shipbuilding begins right from the time of civilisation in
Harappa and Mohenjo-Daro. The Rig-Veda one of the four Vedas (Hindu holy writings)
documents about the variously termed parts of a vessel in the oldest existing Indian language: the
Sanskrit. Also, other detailing about the ancient marine industry is documented in the
Arthashastra and various other writings of the ancient Indian folk-lore. In the context of these
documentations, it needs to be noted that the ancient maritime India was also majorly influenced
by the then-prevailing system of societal superiority.
Since the boats of that era were built of wood, there were stringent specifications and
protocols laid down for the materials to be used. There were also numerous other superstitious
beliefs that were documented in a book known as the Yuktikalpataru, regarded to be published
around the 6
th
century AD.
The shipbuilding industry in India was mainly carried on in the coastal territories like
Bombay, Cochin, Tuticorin, Mandvi and Cuddalore. The ships and the shipyards that existed in
Ancient India were used to carry out and further the existing international trade with the then
existing European empires. In addition to the European empires, trading through the oceanic
routes also existed between India and some of the other South Asian territories
Colonisation
With the advent of the European voyagers like Vasco da Gama in the 13
th
century,
shipbuilding in India suffered as these voyagers laid the foundation stone of colonisation in the
country. However due to the political alliance formed between the Indian rulers in the Western
part of the country to counter the shipbuilding and naval efforts of the Westerners, shipbuilding
in India saw a resurgence of sorts towards the 17
th
century.
Prehistory
Archaeological evidence indicates that humans arrived on Borneo at least 120,000 years ago,
probably by sea from the Asian mainland during an ice age period when the sea was lower and
distances between islands shorter (See History of Borneo and Papua New Guinea). The ancestors
of Australian Aborigines and New Guineans also went across the Lombok Strait to Sahul by boat
over 50,000 years ago.
4th Millennium BC
Evidence from Ancient Egypt shows that the early Egyptians knew how to assemble planks
of wood into a ship hull as early as 3000 BC. The Archaeological Institute of America reports
that some of the oldest ships yet unearthed are known as the Abydos boats. These are a group of
14 ships discovered in Abydos that were constructed of wooden planks which were "sewn"
together. Discovered by Egyptologist David O'Connor of New York University, woven straps
were found to have been used to lash the planks together, and reeds or grass stuffed between the
planks helped to seal the seams. Because the ships are all buried together and near a mortuary
belonging to Pharaoh Khasekhemwy, originally they were all thought to have belonged to him,
but one of the 14 ships dates to 3000 BC, and the associated pottery jars buried with the vessels
also suggest earlier dating. The ship dating to 3000 BC was about 25 m, 75 feet long and is now
thought to perhaps have belonged to an earlier pharaoh. According to professor O'Connor, the
5,000-year-old ship may have even belonged to Pharaoh Aha.
3rd Millennium BC
Early Egyptians also knew how to assemble planks of wood with treenails to fasten them
together, using pitch for caulking the seams. The "Khufu ship", a 43.6-meter vessel sealed into a
pit in the Giza pyramid complex at the foot of the Great Pyramid of Giza in the Fourth Dynasty
around 2500 BC, is a full-size surviving example which may have fulfilled the symbolic function
of a solar barque. Early Egyptians also knew how to fasten the planks of this ship together with
mortise and tenon joints.
The oldest known tidal dock in the world was built around 2500 BC during the Harappan
civilisation at Lothal near the present day Mangrol harbour on the Gujarat coast in India. Other
ports were probably at Balakot and Dwarka. However, it is probable that many small-scale ports,
and not massive ports, were used for the Harappan maritime trade. Ships from the harbour at
these ancient port cities established trade with Mesopotamia. Shipbuilding and boat making may
have been prosperous industries in ancient India. Native labourers may have manufactured the
flotilla of boats used by Alexander the Great to navigate across the Hydaspes and even the Indus,
under Nearchos. The Indians also exported teak for shipbuilding to ancient Persia. Other
references to Indian timber used for shipbuilding is noted in the works of Ibn Jubayr.
2nd Millennium BC
The ships of Ancient Egypt's Eighteenth Dynasty were typically about 25 meters (80 ft) in
length, and had a single mast, sometimes consisting of two poles lashed together at the top
making an "A" shape. They mounted a single square sail on a yard, with an additional spar along
the bottom of the sail. These ships could also be oar propelled. The ocean and sea going ships of
Ancient Egypt were constructed with cedar wood, most likely hailing from Lebanon.
1st Millennium BC
The naval history of China stems back to the Spring and Autumn Period (722 BC481 BC)
of the ancient Chinese Zhou Dynasty. The Chinese built large rectangular barges known as
"castle ships", which were essentially floating fortresses complete with multiple decks with
guarded ramparts.
Early 1st Millennium AD
The ancient Chinese also built ramming vessels as in the Greco-Roman tradition of the
trireme, although oar-steered ships in China lost favor very early on since it was in the 1st
century China that the stern-mounted rudder was first developed. This was dually met with the
introduction of the Han Dynasty junk ship design in the same century. Archeological
investigations done at Portus near Rome have revealed inscriptions indicating the existence of a
'guild of shipbuilders' during the time of Hadrian.
Early Modern
With the development of the carrack, the west moved into a new era of ship construction by
building the first regular ocean going vessels. In a relatively short time, these ships grew to an
unprecedented size, complexity and cost.
Shipyards became large industrial complexes and the ships built were financed by consortia
of investors. These considerations led to the documentation of design and construction practices
in what had previously been a secretive trade run by master shipwrights, and ultimately led to the
field of naval architecture, where professional designers and draughts men played an
increasingly important role.

Even so, construction techniques changed only very gradually. The
ships of the Napoleonic Wars were still built more or less to the same basic plan as those of
the Spanish Armada of two centuries earlier but there had been numerous subtle improvements
in ship design and construction throughout this period. For instance, the introduction
of tumblehome; adjustments to the shapes of sails and hulls; the introduction of the wheel; the
introduction of hardened copper fastenings below the waterline; the introduction of copper
sheathing as a deterrent to shipworm and fouling; etc.

Industrial Revolution
The industrial revolution made possible the use of new materials and designs that radically
altered shipbuilding. Other than its widespread use in fastenings, Iron was gradually adopted in
ship construction, initially in discrete areas in a wooden hull needing greater strength, (e.g. as
deck knees, hanging knees, knee riders and the like). Then, in the form of plates riveted together
and made watertight, it was used to form the hull itself. Initially copying wooden construction
traditions with a frame over which the hull was fastened, Isambard Kingdom Brunel's Great
Britain of 1843 was the first radical new design, being built entirely of wrought iron. Despite her
success, and the great savings in cost and space provided by the iron hull, compared to a copper
sheathed counterpart, there remained problems with fouling due to the adherence of weeds and
barnacles. As a result composite construction remained the dominant approach where fast ships
were required, with wooden timbers laid over an iron frame (the Cutty Sark is a famous
example). Later Great Britain's iron hull was sheathed in wood to enable it to carry a copper-
based sheathing. Brunel's Great Eastern represented the next great development in shipbuilding.
Built in association with John Scott Russell, it used longitudinal stringers for strength, inner and
outer hulls, and bulkheads to form multiple watertight compartments. Steel also
supplanted wrought iron when it became readily available in the latter half of the 19th century,
providing great savings when compared with iron in cost and weight. Wood continued to be
favored for the decks.
During World War II, the need for cargo ships was so great that construction time for Liberty
Ships went from initially eight months or longer, down to weeks or even days. They employed
production line and prefabrication techniques such as those used in shipyards today. The total
number of dry-cargo ships built in the United States in a 15-year period just before the war was a
grand total of two. During the war, thousands of Liberty Ships and Victory Ships were built,
many of them in shipyards that didn't exist before the war. And, they were built by a workforce
consisting largely of women and other inexperienced workers who had never seen a ship before
(or even the ocean).

Worldwide shipbuilding industry
After the Second World War, shipbuilding (which encompasses the shipyards, the marine
equipment manufacturers, and many related service and knowledge providers) grew as an
important and strategic industry in a number of countries around the world.
This importance stems from:
The large number of skilled workers required directly by the shipyard, along with
supporting industries such as steel mills, railroads and engine manufacturers; and
A nation's need to manufacture and repair its own navy and vessels that support its
primary industries
Historically, the industry has suffered from the absence of global rules and a tendency
towards (state-supported) over-investment due to the fact that shipyards offer a wide range of
technologies, employ a significant number of workers, and generate income as the shipbuilding
market is global.
Shipbuilding is therefore an attractive industry for developing nations. Japan used
shipbuilding in the 1950s and 1960s to rebuild its industrial structure; South Korea started to
make shipbuilding a strategic industry in the 1970s, and China is now in the process of repeating
these models with large state-supported investments in this industry. Conversely, Croatia is
privatizing its shipbuilding industry.
As a result, the world shipbuilding market suffers from over-capacities, depressed prices
(although the industry experienced a price increase in the period 20032005 due to strong
demand for new ships which was in excess of actual cost increases), low profit margins, trade
distortions and widespread subsidisation. All efforts to address the problems in the OECD have
so far failed, with the 1994 international shipbuilding agreement never entering into force and
the 20032005 round of negotiations being paused in September 2005 after no agreement was
possible. After numerous efforts to restart the negotiations these were formally terminated in
December 2010. The OECD's Council Working Party on Shipbuilding (WP6) will continue its
efforts to identify and progressively reduce factors that distort the shipbuilding market.
Where state subsidies have been removed and domestic industrial policies do not provide
support in high labor cost countries, shipbuilding has gone into decline. The British shipbuilding
industry is a prime example of this with its industries suffering badly from the 1960s. In the early
1970s British yards still had the capacity to build all types and sizes of merchant ships but today
they have been reduced to a small number specializing in defence contracts, luxury yachts and
repair work.

Present day shipbuilding
China is an emerging shipbuilder that overtook South Korea during the 2008-2010 global
financial crisis as they won new orders for medium and small-sized container ships. China is
now firmly the world's largest shipbuilder with 45% of the world's total orders, and its quality
and technology have improved very much.
Today, South Korea is the world's second largest shipbuilding country with a global market
share of 29% in 2012. South Korea leads in the production of large vessels such as cruise
liners, super tankers, LNG carriers, drill ships, and large container ships. In the 3rd quarter of
2011, South Korea won all 18 orders for LNG carriers, 3 out of 5 drill ships and 5 out of 7 large
container ships.

South Korea's shipyards are highly efficient, with the world's largest shipyard
in Ulsan operated by Hyundai Heavy Industries slipping a newly built, $80 million vessel into
the water every four working days. South Korea's "big three" shipbuilders, Hyundai Heavy
Industries, Samsung Heavy Industries, and Daewoo Shipbuilding & Marine Engineering,
dominate global shipbuilding, with STX Shipbuilding, Hyundai Samho Heavy Industries, Hanjin
Heavy Industries, and Sungdong Shipbuilding & Marine Engineering also ranking among the top
ten shipbuilders in the world.

In 2007, STX Shipbuilding further strengthened South Korea's
leading position in the industry by acquiring Aker Yards, the largest shipbuilding group
in Europe. (The former Aker Yards was renamed STX Europe in 2008). In the first half of 2011,
South Korean shipbuilders won new orders to build 25 LNG carriers, out of the total 29 orders
placed worldwide during the period.
Japan had been the dominant ship building country from the 1960s through to the end of
1990s but gradually lost its competitive advantage to the emerging industry in South Korea
which had the advantages of much cheaper wages, strong government backing and a cheaper
currency. South Korean production overtook Japan's in 2003 and Japanese market share has
since fallen sharply.
The Philippines has placed fourth among shipbuilding nations around the world producing
more than six million deadweight tons of ships built in 2012. The country is anchored by South
Korean Hanjin and Japan's Tsuneishi shipbuilders. The country has shipyards in Subic and Cebu.
The market share of European ship builders began to decline in the 1960s as they lost work
to the Japanese in the same way as Japanese builders have lost work to South Koreans more
recently; Europe's production is now a tenth of South Korea's and is primarily military, although
cruise liners and some cargo ships are still built in Italy, Finland, France, Germany and
Denmark. The largest shares of the European shipbuilding market belong to Germany, Italy,
Norway, the Netherlands and Spain, which accounted in 2010 for over 70% of total deliveries by
the yards.

This activity accounted in 2010 for 1.5% of European GDP.

Over the four years from
2007, the total number of employees in the European shipbuilding industry declined from
150,000 to 115,000.The output of the United States also underwent a similar change.

Tabular column Shows a Glance of Details













World shipbuilding market share by countries (2013)
Rank Country Combined GT %

1 China 67,000,000 45%

2 South Korea 53,000,000 29%

3 Japan 28,000,000 18%

4 European Union 4,500,000 1%

5 Rest of the world 11,000,000 7%

Key Government Entities in the Indian Shipbuilding Industry
Company name Activities Office locations Total turnover in India in
USD $
Cochin Shipyard Shipbuilding, ship repair South India, Tamil Nadu 279 million
Hindustan Shipyard Shipbuilding, ship repair South India, Andhra Pradesh 132 million
Mazgaon Docks Shipbuilding West India, Maharashtra 616 million
Goa Shipyards Shipbuilding, ship repair and
engineering
West India, Maharashtra 205 million
Garden Reach Shipyard Shipbuilding, ship repair East India, West Bengal 190 million
Hooghly Docks Shipbuilding, ship repair East India, West Bengal 75 million

Key Private Entities in the Indian Shipbuilding Industry

Company name Activities Office locations Total turnover in India in
USD $
- ABG Shipyard - private Shipbuilding, ship repair West India, Maharashtra 407 million
- Bharati Shipyard Shipbuilding, ship repair West India, Maharashtra 284 million
- Pipavav Shipyard Shipbuilding West India, Maharashtra 157 million
- Chowgule & Company Shipbuilding, ship repair West India, Maharashtra 110 million
- L&T Shipyard Shipbuilding, ship repair South India, Tamil Nadu 60 million
- Tebma Shipyard Shipbuilding, design South India, Tamil Nadu 69 million

3) LEADERS I N SHI P BUI LI DI NG I NDUSTRY
Public sector
Alcock ashdown Gujarat limited
Cochin Shipyard Limited
Hindustan Shipyard Limited- Visakhapatnam
Garden Reach Shipbuilders and Engineers- Kolkata
Goa Shipyard Limited
Mazagon Dock Limited-Mumbai
Naval Dockyard (Bombay)
Naval Dockyard (Visakhapatnam)
Jawaharlal Nehru Port Trust
Shalimar Works (1980) Ltd
Hooghly Dock & Port Engineers Limited
Central India Water Transport Company
keppel ship yard
Private sector
ABG Shipyard Limited
Aiswarya Marine Pvt Ltd
Bharati Shipyard Limited
Calex Marine and Industrial Services Pvt Ltd.
Century Shipyard Pvt. Ltd.
Dempo Engineering Works, Goa
L&T Shipbuilding Limited, Hazira
L&T Shipbuilding Limited, Kattupalli, Chennai
Mandovi Drydocks, www.mandovidrydocks.com, Goa
Master Shipyard Pvt. Ltd.
Modest Infrastructure Ltd
Navgathi Shipbuilding & Heavy Industries
Nigel Shipyard Private Limited
NorthStar Shipbuilding Pvt Limited
Pande Shipyard Pvt Ltd
Pipavav Shipyard (currently Pipavav Defence and Offshore Engineering company Limited)
Sea Blue Shipyard Ltd.
Sembmarine Kakinada Limited
Shoft Shipyard Pvt. Ltd.
SSR marine services pvt.ltd.
Sulkha Shipyard
Tebma Shipyard Limited
Timblo Drydocks Private Limited
Timblo Shipyards Limited
West Coast Shipyard, Loutolim, Goa
Western India Shipyard Limited, Goa
SI VI SHIPPING CORPORATION PVT LTD
MAJ OR PLAYERS- GLOBAL & DOMESTI C AND GDP MENTI ONED

1) Maersk Is a Danish shipping company and is considered by Freight Forward Associates
to be the best shipping company in the world. With FFA saying, that the Danish company
is the worlds top carrier with a market share of 15% and has a presence in all of the
worlds ports. Their ships are regularly seen entering and exiting the top ports in the
world. Maersk operates and has subsidiaries/offices in more than 135 countries
worldwide. Involved in global liner shipping services, Maersk Line operates over 550
vessels and has a capacity of 2.2 million.


From the company:
Maersk Line continued the focus on Reliability, Ease of doing business, Environmental impact
and Competitiveness with the aim to achieve a 5% point higher EBIT margin than its peers. A
number of initiatives to facilitate business with Maersk Line have already been implemented and
more initiatives will be introduced during 2012. Maersk Line continues to be the most reliable
container carrier and during Q4 the highest overall on-time-delivery of 87.5% was measured by
Drewry. Customer satisfaction further increased during 2011 and is now at an all time high.

Founded 1904
Headquarters Copenhagen, Denmark
Key people
Nils Smedegaard Andersen(CEO)
Michael Pram Rasmussen(Chairman)
Products
Container shipping and terminals, ferry and tanker
transport, semi-submersible drilling rigs and FPSOs, oil and
gas exploration and production, shipyards, store retail
Revenue DKK 322.520 billion (2011)[1]
Operating
income DKK 55.016 billion (2011)[1]
Profit DKK 18.083 billion (2011)[1]
Total assets DKK 374.72 billion (end 2010)[1]
Total equity DKK 192.96 billion (end 2010)[1]
Employees 108,110 (average, 2010)[1]
Website www.maersk.com
2) Mediterranean Shipping Company MSC is the worlds largest shipping line in terms of
container vessel capacity. MSC serves 270 ports worldwide on the six continents. 350
local offices, employing a total of 29,000 people, providing a large agency network
representation. The line was named shipping line of the year in 2007 for the sixth time in
eleven years by Lloyds Loading List, which is an achievement not matched by any other
shipping line. The Geneva-based company operates in all major ports of the
world. MSCs most important port is Antwerp in Belgium.

From the company:
MSC is one of the few carriers able to offer worldwide coverage with one MSC bill of lading,
allowing the rapid movement of goods through dedicated transshipment hubs. MSC therefore
provides swift connections and efficient on-carriage services. MSC is the leading provider of
direct port calls, serving the 6 continents and calling at 335 ports through 200 direct
and combined weekly liner services. As of the end of September 2012, MSC was operating 438
container vessels with an intake capacity of 2,160,000 TEUs.

Founded 1970
Headquarters Geneva, Switzerland
Area served Worldwide
Key people Gianluigi Aponte, CEO
Services Freight transportation
Employees 30`000
Subsidiaries MSC Cruises
Website www.mscgva.ch

3) Fedex is one of the most widely known and widely used shipping companies on the
planet. Fedex is a leader in logistics and has a strong reputation for providing on time
service without damage. As FFA put it, they ship hundreds of tons of cargo all around the
world regularly and are a pioneer in this field. Fedex also uses air freight and FedEx
Express operates one of the largest civil aircraft fleet in the world with the largest fleet of
wide bodied civil aircraft; it also carries more freight than any other airline.
From the company:
As we grow, we know we must continue to connect the world responsibly. It starts with the
Purple Promise, which FedEx team members deliver millions of times a day worldwide: I will
make every FedEx experience outstanding. If the Purple Promise is our heart, Quality Driven
Management (QDM) represents our hands its how we do things at FedEx. As noted earlier,
our QDM philosophy and methods are built on the proven premise that higher quality lowers
costs, improves service levels, and enhances the customer experience. Its a three-legged stool
that supports our long-term growth strategies.

Founded
Little Rock, Arkansas (1971)
as Federal Express Corporation
Founder(s) Frederick W. Smith
Headquarters Memphis, Tennessee, U.S.
Area served Worldwide
Key people
Frederick W. Smith
(Chairman, President & CEO)
Products
Post delivery, express mail,freight forwarding, third-party
logistics
Revenue US$ 39.3 billion (2011)[1]
Operating
income US$ 2.37 billion (2011)[1]
Net income US$ 1.42 billion (2011)[1]
Total assets US$ 27.3 billion (2011)[1]
Total equity US$ 15.2 billion (2011)[1]
Employees 300,000 (2012)[1]
Subsidiaries
FedEx Office, FedEx Express,FedEx Ground, FedEx
Freight, FedEx Custom Critical, FedEx Supply Chain,
FedEx Trade Networks, FedEx Services
Website www.FedEx.com

4) Hapag-Lloyd is one of the largest logistics companies on the planet, and they have been
in the business for quite a while now, since they began operating in 1970. Thus, giving
them a deep background of experience in shipping and freight management. They are one
of the leading players of the shipping line industry, and are a go-to group for all cargo
shipping needs.

From the company:
In 2007 Hapag-Lloyd was the first container shipping company in the world to be awarded the
Excellence 5 Stars rating by Germanischer Lloyd, one of the worlds largest ship
certification and classification societies, for the high standards of its quality assurance and
sustainability activities. This certification was renewed in 2011. As a global company, Hapag-
Lloyd performs annual audits in order to maintain its high quality and environmental protection
standards. In 2011, 128 audits were carried out in the Group.

Founded 1970
Headquarters Hamburg, Germany
Area served Worldwide
Parent TUI AG
Website http://www.hapag-lloyd.com

PESTEL ANALYSIS
Political factors are basically to what degree the government intervenes in the economy.
Specifically, political factors include areas such as tax policy, labor law, environmental
law, trade restrictions, tariffs, and political stability. Political factors may also include goods
and services which the government wants to provide or be provided (merit goods) and those
that the government does not want to be provided (demerit goods or merit bads).
Furthermore, governments have great influence on the health, education, andinfrastructure of
a nation.
Economic factors include economic growth, interest rates, exchange rates and the inflation
rate. These factors have major impacts on how businesses operate and make decisions. For
example, interest rates affect a firm's cost of capital and therefore to what extent a business
grows and expands. Exchange rates affect the costs of exporting goods and the supply and
price of imported goods in an economy.
Social factors include the cultural aspects and include health consciousness, population
growth rate, age distribution, career attitudes and emphasis on safety. Trends in social factors
affect the demand for a company's products and how that company operates. For example, an
aging population may imply a smaller and less-willing workforce (thus increasing the cost of
labor). Furthermore, companies may change various management strategies to adapt to these
social trends (such as recruiting older workers).
Technological factors include technological aspects such as R&D activity, automation,
technology incentives and the rate of technological change. They can determine barriers to
entry, minimum efficient production level and influence outsourcing decisions. Furthermore,
technological shifts can affect costs, quality, and lead to innovation.
Legal factors include discrimination law, consumer law, antitrust law, employment law,
and health and safety law. These factors can affect how a company operates, its costs, and
the demand for its products.
Environmental factors include ecological and environmental aspects such as weather,
climate, and climate change, which may especially affect industries such as tourism, farming,
and insurance. Furthermore, growing awareness of the potential impacts of climate change is
affecting how companies operate and the products they offer, both creating new markets and
diminishing or destroying existing ones.

SWOT Analysis of the Indian shipbuilding
industry

Strengths
Government allowing 30% cash subsidies to new
shipbuilding yards in India
Large coastline for ships
Strong labour force
Low cost labour



Weaknesses
Lack in building high capacity shipyards
Lack of trained engineers and skilled labour
Government support and initiative for shipbuilding is
negligible
No financing support to shipbuilding companies from the
government

Opportunities
Requirements of equipment and ancillaries in new Indian
shipbuilding yards
Demand for offshore oil exploration and production in
Indian shores and abroad through collaborations
Increase in demand in India for offshore platforms and
their repair facilities

Threats
Order cancellation in new shipbuilding due to untimely
delivery by shipyards
Lack of government recognition
Shipbuilding industry does not have countrywide
presence
Lack of professionals and R&D facilities


Scope for MBA in and Ship Building Industry

The scope for the master of business administration is logistics and shipping management is
great in country like India were the shipping industry is on an tremendous growth oath an there is
no shortage of the jobs for the trained and talented professionals also the pay is far better than
many other professions and also the living conditions and the job environment is also great ,
the shipping management course generally covers the following aspects :
1. providing the knowledge of the all the management areas in the shipping industry
2. thorough knowledge of the maritime businesses
3. providing the knowledge and skills in various sectors of shipping industry ,the various
sectors are as follows :
linear shipping
ship agency management
freight forwarding
supply chain management
logistics