Southern African Shipyards upbeat about 2016 after a tough 2015

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Southern African Shipyards CEO Prasheen Maharaj believes there is a lot to be positive about regarding South Africa’s maritime industry, which experienced a tough time in 2015.

“Things have been tough for a while now, but there is light at the end of the tunnel, the industry just has to adapt and put itself in a position to capitalise once the good days roll on,” Maharaj said.

Southern African Shipyards (SAS) said that prospects have not been good for the industry, including SAS, which is slowly coming out of a “really tough” last 24 months.
“Overall for the industry it has been a relatively poor year, especially for the ship repairers and our ship repair division faired none the better. In fact, for ship repair it has been one of the most appalling years in the history of the industry,” Maharaj said.
“When Tier One ship repairers take a knock, the entire value chain becomes severely depressed, leading to the closure of smaller suppliers, layoffs and retrenchments, business rescue and liquidations. We have seen too much of these incidents this year,” he said.

The main issues for the industry, said, included a lack of work; uncompetitive supply chain; excessive costs for infrastructure and facilities by landlord Transnet National Port Authority; labour that is becoming too militant and reluctant to work towards a common goals of mutual success; as well as government paralysis and bureaucracy when it comes to decision making which leads to project delays.

Maharaj contends that added to these factors is an industry that refuses to change and adapt to fewer jobs coming in from outside of the country, as well as a government that is failing to create an enabling environment.

Despite the negatives, Maharaj still describes 2015 as a “relatively positive” year for his company, which saw things like the R350 million refitting of the SAS Amatola for the South African Navy. The Amatola, which will be ready to deploy operationally early next year, underwent an extensive refurbishment which involved both mechanical and cosmetic work being done by SAS between March 2014 and July 2015.

Last month SAS completed and launched, on schedule, Mvezo, the first of nine tugboats to be built for Transnet National Port Authority as part of a R1.4 billion contract. This was the single biggest contract for harbour craft awarded to a South African company, and finishing the first one was a major milestone, Maharaj said. Mvezo will be handed over to the Port of Nelson Mandela Bay in February 2016. The remaining tugs will be delivered in three month intervals until 2018.

SAS said the contract was a lifesaver for SAS and the industry, creating 4 000 direct and indirect jobs and injecting R 800 million in socio-economic benefits through 2018.

Maharaj said he was excited to complete the signing of an important Memorandum of Understanding with the Chinese State Shipbuilding Corporation (CSSC), the largest shipbuilding and repair group in the word. The partnership involves the construction of an Oil and Gas services hub in Saldana as well as a ship repair industrial hub in Richards Bay. Upon completion the repair hub should position SAS to get more much-needed repair and maintenance work out of the estimated 30 000 ships that pass South Africa’s shores every year, SAS said.

Maharaj said he is excited about the prospects for 2016. In addition to the agreement with CSSC, and value that can extracted from Operation Phakisa – government’s programme to unlock economic potential of South Africa’s ports and ocean – SAS is also looking for opportunities in the United States and will open a representative office in Houston, Texas as part of its strategy to increase its presence in the off-shore oil and gas market.