Chinese shipyards' uncertainty over post-Covid19 schedules
The Naval Architect: April 2020
Aside from Hubei province, most of China’s shipyards resumed production on 10 February. At that time, China’s Covid-19 situation remained uncertain and despite each shipyard resuming work, the initial rate of workers returning was generally less than 50%.
Take, for example, Shanghai’s three large-scale shipbuilding companies: Jiangnan Shipbuilding Group, Hudong Zhonghua Shipbuilding and Shanghai Waigaoqiao Shipbuilding. The total number of employees for all three shipyards combined exceeds 6,000 workers, and each company still experienced a workforce shortage in which a large number of employees remained abroad, and upon their return were obliged to self-isolate for 14 days before returning to work.
Fortunately, China’s shipyards have not reported an emergence of Covid-19 in returning employees. Shipbuilding companies in Hubei province, including those in Wuhan, are gradually loosening their working restrictions and the majority are entering into a ‘production acceleration period’.
A production and operations supervisor at Jiangnan Shipbuilding commented that, in order to recover lost time, the company organised production and distribution departments to carry out detailed sorting in February.
“This epidemic has had a huge impact. We should first ensure that business will not collapse in the first half of the year, and then seize the overall progress through policy incentives, management organisation and other ways in the second half of the year,” the representative added.
It has been reported that in the first half of the year, Jiangnan Shipbuilding has plans to deliver an 84,000m3 VLCC and a 28,000m3 LNG-FRU. At present, both vessels are in their critical phase.
When faced with the vessel delivery, Waigaoqiao Shipbuilding has a seemingly bold approach. On 11 February, China’s second day following official work resumption, the company trialled two 210,000tonne bulk carriers.
Despite the company undertaking detailed personnel screenings and emergency plans, it faced great social pressure when it announced its trial plans. However, on 12 March, the two vessels were delivered to their respective owners in South Korea and Greece on the same day.
Taking their lead from Waigaoqiao, Chinese shipyards are attempting to show global shipowners that the impact of the pandemic on China’s shipyards’ production is controllable.
But the country’s shipyards have less control when confronted with supporting enterprises and service providers.
A representative of the China Shipbuilding Industry Economic and Market Research Centre’s has said that over the next two to three months, the industry’s supporting companies in Hubei will be directly affected by the pandemic, and it will take five to six months to digest the impact of the virus after returning to work.
In the wake of Hubei companies resuming production, closing the gap left by Covid-19 is only a matter of time. However, outside of Hubei province, there is a severe shortage of supporting companies for shipping.
In early March, an employee responsible for supporting facilities at Jiangnan Shipbuilding expressed their concerns for the continuous supply of outfitting parts, which mainly come from businesses in the Jiangsu and Zhejiang province.
However, at that time, these companies experienced problems due to difficulties reinstating foreign employees, a lagging supply of equipment and a low return rate of personnel. All of which affected the production flow of the company’s general assembly plant.
It is reported that Jiangnan Shipbuilding is coordinating the production plans of its suppliers and encouraging companies with a high rate of returning workforce to share the production tasks of some partner companies, to support key products which have limited resources.
However, the greatest uncertainty faced by Chinese shipyards is the return of foreign suppliers. Ships built in China will still be equipped with imported products, most of which are key equipment onboard the vessel. Shipyards have reported that they are faced with situations where business with foreign shipowners, foreign service providers and even ships awaiting crew, are unable to take place.
Although the shipyards have used remote video to take steps such as installation, guidance, debugging and approval, some works involving confidential business, or that require specialised work, still need onsite presence from foreign service providers.