FEATURE

SHIP REPAIR & CONVERSION ROUNDTABLE

Ship Repair & Conversion

Roundtable of shipyard leaders discuss trends, challenges and opportunities
To start the New Year, Maritime Reporter looked to all points on the globe for insights on the trends and direction in ship conversion and repair, a sector which largely has held up during the 2009 financial crisis. With industrial production starting to crank up again, work at leading shipyards should start to flow anew as vessels of all size and variety find their way back into the workforce. Our participants included:
Juan Manuel Moreno Basurto, General Manager, TNG Donald "Boysie" Bollinger, Chairman, President and CEO, Bollinger Shipyards Steve Durrell, President, Irving Shipbuilding, Inc. Steve Hale, President, Gulf Copper Gilbert Stuart, Repair Yard Manager, Senesco Marine Nelson Yeo, MD, Keppel Shipyard

How did you come to be involved in the ship repair business?

Steve Hale, Gulf Copper I grew up in the ship repair/maintenance business, initially working aboard oil tankers as a teenager. Later, I was employed in several Port Arthur shipyards while attending college. In 1976 I started a career as a marine surveyor until I joined Gulf Copper in 2001 as one of the employeeowners. Steve Durrell, Irving I was born in Farmington, Maine, graduated from Maine Maritime Academy In 1984, and Im a Professional Engineer in the US and Canada. I have been with the Irving Shipbuilding Group for over 24 years. I

started my career with Irving as an engineer at Saint John Shipbuilding in the Canadian Patrol Frigate Program. In 1994, I came to Halifax as a Ship Repair Manager (Project Manager for ship repair), in 2005 I lead Irving Shipbuilding Inc.s Commercial Group, and in August of 2008, I took on the role of President, responsible for all operations at Irving Shipbuilding Inc. and Fleetway Inc. Gil Stuart, Senesco My 37 years in the maritime industry has provided me a rich experience at sea as a licensed engineer, ashore in shipyards and for 20 years operating my own engineering/consulting business. This diversity in rolls (having been on both sides of the fence)

has given me a balanced perspective to the repair environment that is productive to both the yard and, most importantly, the customers wants and needs.

How has the global economic downturn affected your business?

Nelson Yeo, Keppel The global recession led to the softening of demand for repair and conversion jobs in 2009. For us at Keppel Shipyard however, the business didnt drop as much because of projects which had been previously booked. Having experienced and learnt from downturns in the past, Keppel Shipyard is now better placed than in previous downturns. Over the years, the

effective strategies, good governance and the business mix of repair and conversion activities supporting each other have equipped us to better weather the crisis. Therefore, while the level of repair activities has undeniably come down, our work load has remained steady because we have been able to secure a good share of the conversion projects in the market. It has enabled us not only to retain our pool of talent, who we have trained over the years, but also to upgrade our skill sets by investing in people and productivity enhancement. This helps us to maintain a high standard of quality and safety. We have fostered good relationships with our customers over the years and have been working closely with them

Donald "Boysie" Bollinger, Chairman, President and CEO, Bollinger Shipyards Our budgeting for 2010 is pretty optimistic. Although we feel that a majority of our markets will remain slow for the first half of the year, we are expecting a pick up in the second half of 2010.

Bollinger continues to invest in the future, upgrading it's fleet of dry-docks with units, capable of docking the larger support vessels working in and out of the Gulf region. The 4,000 ton, 198' 9" x 75' 6" dock is being built for Bollinger Texas City by sister company Bollinger Marine Fabricators, LLC, Amelia, La. (Photo Courtesy of Bollinger Shipyards) 34 Maritime Reporter & Engineering News

Bollinger Fourchon LLC has recently expanded its services in the Port of Fourchone, introducing the first commercial drydock in the port.
(Photo Courtesy of Bollinger Shipyards)

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to ensure that we deliver projects to their satisfaction. In this manner, we continue to bolster our outstanding track record and maintain a healthy orderbook. During the year, we secured seven major conversion projects. We delivered six conversion vessels and a jumboization project in 2009 and are presently working on another 12 major projects at our yards. Hale, Gulf Copper Our customer base has been much more conservative in the amount they have available to spend on capital projects. With fewer assets currently employed in the maritime arena, there has been less work available for essentially the same number of ship repair companies. Durrell, Irving The unfortunate events of the down-turn have provided us an opportunity to accelerate our growth via the availability of qualified people within the domestic and international labor markets.

of investment that are needed and how to integrate (new technologies and talents) into the existing mix of gear. TNGs investment strategy 2010 is focused on improving offshore modules fabrication infrastructure and to maintain the largest shipbuilding and major repair facility on the east coast of Mxico. Durrell, Irving We made significant investments in infrastructure renewals over the last year and we will continue to inject significant reinvestment over the next few years. But I have to say, the investments we have made in our people are proving to provide the best returns. The center piece of our investment not a brick & mortar investment, it is in establishing sustainable formal management systems. This is not only improving our efficiencies in executing the work we have at hand, but is essential to meet the growth we are facing the next few years. We have an established process improvement group, and other non direct improvements that are significantly improving our productivity. We measure the engagement of our employees through an anonymous survey score. Our last years improvement was the best year-on-year improvement that our consultant had ever seen. Hale, Gulf Copper Gulf Copper just acquired two premier repair/fabrica-

tion facilities on the ship channel in Port Arthur, Texas along with the core group of operating personnel. These will serve us well for the future growth of the company. Additionally, we are significantly enhancing our Galveston fabrication facility through an ARRA grant. Two additional drydocks are being acquired, and we have attracted a number of well qualified people to help us grow the company. One example of that growth is a new facility in San Diego, established this year to provide ship repair services to the military. Yeo, Keppel We will also continue to invest in technology and our workforce in order to improve efficiency and safety in our yards. In October 2009, Keppel Shipyard completed one of the largest semi-automated pipe fabrication workshops in the region, capable of separately handling both ferrous and non-ferrous pipes. In the Philippines, Subic Shipyard and Engineering recently completed the major upgrading of its yard facilities. Its graving dock has been lengthened by 200 metres to 550 metres to accommodate more vessels. In addition, a new and comprehensive training centre was setup to further equip employees with skills in various trades. In Qatar, Nakilat-Keppel Offshore & Marine Ltd (N-KOM), the 43-hectare world-class shipyard jointly developed by Keppel and Qatar Gas

Transport Company Ltd (NAKILAT) will be operationally ready by 3rd quarter 2010. Equipped initially with two large graving docks and other amenities, NKOM will be able to embark on projects similar to those undertaken by our yards in Singapore. Safety: We are continuously driving a strong safety culture through leadership, education, empowerment and stakeholders involvement in our efforts. Keppel Shipyard is on track to completing an Integrated Safety Training Complex which will be used to train its multi-national workforce, including all its subcontractors. When completed, it will be the first such training centre in Singapore. The training complex covers both the technical and non-technical aspects of safety training.

What changes have you implemented in the face of a slowed economy?

How are you investing today?

Juan Manuel Moreno Basurto, GM, TNG With emphasis placed on people, TNG is continually evaluating and introducing new equipment, products, and technology to get ready to meet the needs of the projects to be executed; today the scope of work dictates the kinds

Hale, Gulf Copper During the slowdown we have focused on upgrading a number of our business processes in order to become more efficient and cost effective. This is a process of continuous improvement, but it becomes especially vital in order to remain competitive in this market. Additionally, we have strengthened our sales and marketing efforts, for which we are beginning to see dividends.

Nelson Yeo, MD, Keppel Shipyard In October, Keppel Shipyard completed one of the largest semi-automated pipe fabrication workshops in the region, capable of separately handling both ferrous and non-ferrous pipes.

Golar Freeze is the third Floating Storage and Regasification Unit (FSRU) in for conversion at Keppel Shipyard. Keppel Shipyard previously completed the worlds first two FSRUs, Golar Spirit and Golar Winter. (Photo Courtesy Keppel Corp.)

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Gulf Coppers Central Yard in Port Arthur.

Steve Hale, President, Gulf Copper Gulf Copper acquired two premier repair/fabrication facilities on the ship channel in Port Arthur, Texas along with the core group of operating personnel. These will serve us well for the future growth of the company. Additionally, we are significantly enhancing our Galveston fabrication facility through an ARRA grant.
Gulf Coppers Galveston Yard

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Durrell, Irving On the contrary, we are aggressively moving forward with our expansions plans in facilities as well as people assets.

What is your business projection for 2010 and beyond?

Donald Boysie Bollinger, Bollinger 2009 was a pretty good year, considering the overall slowdown in the economy and in our various industry segments. 2008 was our best year in the companys history, so 2009 was smaller by comparison. Our budgeting for 2010 is pretty optimistic. Although we feel that a majority of our markets will remain slow for the first half of the year, we are expecting a pick up in the second half of 2010. We have seen our commercial customers interest in new construction dwindle to almost nil in the last quarter of 08 and the first three quarters of 09. We have seen a slight pick up in the level of interest in commercial construction in the last quarter of 09, and we hope that continues through 2010. Generally, we are optimistic about 2010 and beyond. Yeo, Keppel The industry appears to have livened-up with signs of recovery in international trade and economic activities. Major oil and gas companies have announced that they are continuing with their field investments, albeit cau-

tiously, to boost reserves and plan for the long term. Demand for the conversion of tankers into floaters remains reasonably steady after an initial period of deferred activities. Looking ahead, FPSOs will continue to be a key floating production solution especially in Brazil, Gulf of Mexico, West Africa and Australasia. Keppel Shipyard has been converting many FPSOs intended for these regions over the years. More recently, we also completed BW Pioneer, the worlds first FPSO to operate in the U.S. side of Gulf of Mexico. In shiprepair, the outlook for the coming year will remain challenging as it continues to be affected by the depressed shipping markets and stiff competition. Hale, Gulf Copper An overused phrase, cautious optimism. Our inquiry levels are up over the last 60 days, we have several good projects underway and more under consideration. If confidence and stability is maintained during the coming year in the energy and maritime markets, we will do well. Durrell, Irving We currently have a substantial back log of business, we will continue to pursue opportunities in ship repair, new construction, offshore oil and gas, and any other markets that reemerge. We feel the markets are continuously in motion and require a solid yet

flexible Sales & Marketing team along with international agents to maintain its pulse and direction. We are fortunate to have an experienced team in place for just that purpose. Basurto, TNG Prior to 2004 about the 70 percent of TNGs business was derived from fabrication; today, however, in response to demand, about the 80 percent of its business has shifted to Repairs, Maintenance and Conversions. This niche is where TNG is growing comfortably, and we intend to keep a steady course heading towards success in providing superior maritime repair and conversion services, as well fabrication through the following services: Fabrication Offshore Modular Fabrication and components like plate girders, rolled pipe, brace cutting, and panel fabrication Fabrication of all types of Light and Heavy steel structures Shipbuilding and floating structures like barges, floating drydocks and offshore support vessels

experienced trade personnel available in the industrys existing labor pool. This situation is a result of the significant contraction of the new build and repair business in the US that started over 30 years ago, and has subsequently left the industry without an ample core of highly experienced tradesmen, especially in the Northeast. Yeo, Keppel Human resource issues will continue to pose challenges to the whole marine industry. Our workforce comes from various countries, ethnic groups and cultures so it is important that we nurture, train and develop them effectively to enable them to do their jobs well. Keppel Shipyard has pulled through bad markets before. We know from experience that having a balanced workload from shiprepair and conversion will help us to continuously improve our level of safety, quality and productivity. Even as we continue to acquire a creditable number of conversion projects, we have the flexibility to effectively use our eight docks in Singapore for repair as well since conversion vessels stay longer afloat than in dock. At the same time, conversion works also serve to strengthen our repair capability as the skills of our workforce are honed from working on oil and gas projects. Fostering good relationships with our long-term customers is also a key factor to a sustainable busi-

Going forward, what do you count as your biggest challenge(s) to running a profitable business?

Stuart, Senesco I find that the greatest obstacle to expansion and profitability in this competitive business is the lack of

Gilbert Stuart, Repair Yard Manager, Senesco Marine I find that the greatest obstacle to expansion and profitability ... is the lack of experienced trade personnel available in the industrys existing labor pool.

Located in Rhode Island on the Narragansett Bay, the Senesco Marine Repair facility utilizes a 338 x 82 ft., 4,500-ton capacity floating drydock. Its newly fendered 1,200 ft. pier set in surrounding water depths of 30 ft. plus, offers 1600 ft. of lay space for wet dock work and short term berthing 38 Maritime Reporter & Engineering News

Juan Manuel Moreno Basurto, General Manager, TNG TNGs investment strategy 2010 is focused on improving offshore modules fabrication infrastructure and to maintain the largest shipbuilding and major repair facility on the east coast of Mxico.

Drydock #2 (157m x 19.5 m; over blocks draft: 4.87m).

Photo courtesy of TNG)

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ness. Keppel Shipyard continues to work closely with them on a win-win solutions. We also seek to pass on to them any costsavings derived from our operational efficiency and productivity efforts. Hale, Gulf Copper We will continue to focus on implementing more efficient business processes, in order to improve our cost structure. As the economy emerges from the downturn, we feel that good potential for repair and fabrication service exists in most marine markets. Deferral of capital investment over the past 12 to 18 months should result in refurbishment of marine assets as utilization rates increase. Durrell, Irving Our biggest challenge is also our biggest opportunity...people by ensuring we have the right people in place. Our biggest challenge is integrating our growth strategy of our staff, workforce, and facilities while maintaining our engagement scores and most importantly, our core values.

About the Shipyards

Bollinger Shipyards Bollinger Shipyards, Inc., owns and operates 12 shipyards strategically located between New Orleans and Houston with direct access to the Gulf of Mexico, Mississippi River and Intracoastal Waterway. Bollinger is a provider of new construction and other services to offshore energy, commercial and government marine markets and is the largest vessel repair/conversion company in the Gulf of Mexico region with a total of 32 dry-docks in Louisiana and Texas. Bollinger services offshore, inland and bluewater commercial operators, both domestic and foreign. Gulf Copper Gulf Copper currently operate in five ports, from Galveston to Guam, with six waterfront docking yards and four land-based shop facilities. Six drydocks, ranging from 1,200 ton to 30,000 ton lift capacity, are in operation. Our workforce averages between 800 to 900 people, providing a full range of marine repair and fabrication services to commercial and government customers. Irving Shipbuilding ISI has been repairing and building ships on the same site for 120 years. The company owns and operates five shipyard sites under Irving Shipbuilding Inc. as well as four Engineering offices under Fleetway Inc. Halifax Shipyard (largest site) is located in one of the worlds largest ice free harbors. In Halifax Irving has three drydocks, the largest a Panamax floater. ISI currently has five major projects underway as well as a steady flow of commercial ship repair projects. An 8 year program to Conduct Midlife refits of the Canadian Navy's Frigates, Destroyers and Oilers Starting the second phase of contract to refit a semi submersible rig for a major Mexican client. Recently delivered the second of a four tug order for a Danish client. Building a UT 755LN for a domestic client for service in the Nova Scotia Offshore Market. Recently awarded a nine (9) vessel contract from the Canadian Coast Guard to build their state of the art Mid Shore Patrol vessels. Keppel Shipyard Keppel Shipyard is a leading ship repairer with the capabilities and expertise to undertake the entire spectrum of high quality repair and conversion work for a diverse range and capacity of vessels. Keppel is a market leader in Floating Production Storage & Offloading (FPSO), Floating Storage & Offloading (FSO) and Floating Storage Re-gasification Unit (FSRU) conversions, having completed more than 85 such projects since 1981. Senesco Marine LLC Located in Rhode Island on the Narragansett Bay, the Senesco Marine Repair facility utilizes a 338 x 82 ft., 4,500-ton capacity floating drydock. Its newly fendered 1,200 ft. pier set in surrounding water depths of 30 ft. plus, offers 1600 ft. of lay space for wet dock work and short term berthing. Senesco employs two 130-ton lattice boom cranes and various smaller hydraulic boom cranes. Its forte is steel and aluminum ship fitting, but being a full service yard, we can accomplish most any task required of a vessel being serviced. TNG TNG has the capacity to repair and build ships up to 45,000 dwt, as well as for the manufacture of offshore oil platforms and capital goods in steel fabrication and mechanical works, supported by a steel facility which today is capable of processing up to 7000 MT (7700 ST) per year. Other features include: 1170 m (3839 ft) of fully serviced piers and quays with water depths up to 12.2 m; and 40 ft. in a bay with water depths up to 13.7 m. Production Lines include: Pipe Mill of a 3500 MT (3800 ST) annual rated capacity; Panel Line of a 2,000 MT (2204 ST) annual rated capacity; Brace cutting facility of a 1,500 MT (1650 ST) annual rated capacity; and Plate cutting by CNC of a 11,000 MT (12,125 ST) annual rated capacity.

Steve Durrell, President, Irving Shipbuilding, Inc. We made significant investments in infrastructure renewals over the last year and we will continue to inject significant reinvestment over the next few years. But I have to say, the investments we have made in our people are proving to provide the best returns.

(Photo Courtesy Irving Shipbuilding)

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