Transnet leases discourage investment in shipbuilding – Damen


The Transnet National Ports Authority (NPA) policy of only allowing short-term leases is hurting investment in the ship building industry, according to Damen Shipyards.

Kommer Damen, Chairman of the international Damen Shipyards Group, said that shipbuilding, an important strategic activity for South Africa, required access to the waterfront. However, large areas of the waterfront in South Africa are owned by Transnet, which has a policy of only offering short-term leases of five to seven years.

Speaking at the inauguration of the new Damen Shipyards Cape Town (DSCT) building in Table Bay Harbour yesterday, Damen noted that longer leases were required to increase investment. These short leases, Damen remarked, would be turned down in the boardrooms of European shipyards and financing companies.
“What I suggest to Portnet,” Damen said, “is that they should give much longer leases for all their industrial areas in the port because then you’ll attract much bigger investments.”

Damen should know what he is talking about. The original Damen Brothers boat building company was established in the Netherlands by his father and uncle in 1927. Purchased by Kommer Damen in 1969, the small builder was transformed into Damen Shipyards Group, now employing more than 6 000 employees working at 35 yards worldwide, building over 150 vessels annually. With an annual turnover of 1.4 billion euros, the Damen group purchased the Cape Town based Farocean Marine shipyard in 2007, with Montsi Investments taking up a 30% shareholding.

Damen also complained that the short-sighted attitude of the Transnet NPA also impacted the repair of ships. This was because the repair docks at both Cape Town and Durban can only be booked for very short periods.
“We have big repair yards in Europe, big investments for people training, new facilities, and you do that because you own the whole facility,” Damen explained. “But if you can only book for a short period, you don’t put in the investment and you also don’t take a lot of people into service.”

This was because the shipyard would not be able to use its workers while looking for suitable alternative repair docks.

Despite this, there is still good news for the South African shipbuilding industry. Damen has decided that South Africa is the perfect place to base itself to service its customers in southern Africa. Branches, however, are also situated in Angola and Mozambique, two important African customers, together with Tanzania and Nigeria.

Damen will also be starting a training facility in Cape Town to train crews on Damen built ships in service with southern African countries.

Since the take-over of Farocean Marine, Damen Shipyards has invested heavily in the modernisation of the premises, including building expansion and improvements, installation of modern machinery and new, larger capacity overhead cranes, whilst at the same time continuing to build numerous vessels and increasing the staff component.

As part of this expansion, the company inaugurated a modern new building on 3 December. Not only will this new 75 m long shed provide space for boat servicing, logistics and spacious office accommodation, but it will also allow DSCT direct access to a quay and the waterfront for the first time. A seventh shed is also planned, between two of the existing sheds.

The company is one of many international shipyards seeking to take part in the South African Navy’s Project Biro competition for new offshore and inshore patrol vessels.

Damen sees a good future for the Damen Shipyards Group in South Africa. But the shortage of space in Table Bay Harbour is of concern and they are looking at the Port of Saldanha Bay, 111 km northwest of Cape Town, for additional space. This additional investment may be dependent on the lease conditions as this port is also run by Transnet NPA.
“When you have short leases,” Damen concludes, “you don’t put in the investments, you don’t put in the people.”