COMMERCIAL SHIPBUILDING—DIVERSIFICATION AND GROWTH OPPORTUNITIES FOR NAVY SUPPLIERS
Changing military requirements have highlighted the need for traditional Navy suppliers to diversify by developing a growing sales presence in the commercial marine sector. While naval shipbuilding in this country will continue to provide major new business opportunities, there clearly is a need for market diversification to offset the downsizing of naval ship construction over the next few years.
Market Overview The composition of work available to the U.S. marine sector will dramatically change over the near future. Industry in the U.S. will focus less on naval ship construction— an activity which drove much of the marine business in the 1980s.
In its place will be an increasing flow of orders for product tankers, offshore equipment, cruise ship refurbishments, small passenger vessels, megayachts, river barge construction, etc. Importantly, the future workbase will gradually shift from military specification to commercial standard construction. This will provide a wealth of diversification opportunities for manufacturers traditionally selling to the naval ship market. A number of these opportunities are described below.
Cruise Ships There are currently 95 cruise ships servicing the North American cruise trade. Market projections call for a tripling of cruise passenger travel during the coming decade.
One industry analyst recently predicted that 150,000 to 200,000 new cruise ship berths will be required during the 1990s to satisfy increasing demand. Construction of these new ships—costing up to $320 million each—will provide a number of interesting shipbuilding contracts.
Currently, contracts are flowing to shipbuilders in Finland, Italy, France, Germany and Japan. There is no reason why U.S. builders could not participate in this market. Additionally, U.S. builders are wellpositioned for maintenance and conversion work. In IMA's recent analysis of this sector, it identified 16 cruise ships which appear to be refurbishment prospects over the next five years. This refurbishment work alone represents a potential market of $800 million to $1.2 billion.
Coastal Tankers There are currently about 310 coastal tankers operating in the U. S.
domestic trades. They include product tankers, crude carriers, gas carriers and chemical carriers. Abreakdown of the current operating inventory is provided in the exhibit.
About half of the coastal tankers are over 20 years of age and many are reaching the end of their physical life. More importantly, the double hull requirement in the Oil Pollution Act of 1990 will force the retirement of many of these ships. IMA's analysis indicates that 55 percent of the domestic product tanker tonnage now in operation will be forced out of service by 1998. This involves the mandated obsolescence of about 30 ships. Mostly as a result of this forced obsolescence, IMA estimates that 10 to 15 coastal product tankers will likely be ordered over the next several years—at a cost of $600 million to $ 1.1 billion. There will also be some orders for chemical carriers, seagoing tank barges, chemical and specialty tankers.
Sealift Ships The Navy plans to build or buy/ modify at least 30 sealift ships during the 1990s. Current plans call for 20 of these ships being Panamax size RO/RO vessels designed for prepositioning or fast sealift use.
These large vessels will be capable of 24 knots—and will be used solely for military purposes. Another 10 vessels are planned which have both commercial as well as military viability.
A number of options are under consideration—including a convertible containership design prepared by the Maritime Administration.
This MarAd design enables the vessel to be used as a commercial containership in normal circumstances— and be convertible to a RO/RO ship for military missions.
Funding totaling $1,875 billion has already been earmarked for sealift ship construction. Another $1.2 billion is requested in the FY 1993 DOD budget. Nine shipyards are currently working on Navy design contracts. Detailed design and construction contracts are expected to be awarded early next year to several shipyards to begin construction work.
Small Passenger Vessels There are currently 5,300 ferries and small passenger vessels operating in U.S. waters. They provide commuter ferry service, vehicle transport, river and coastal cruises, sightseeing, dinner cruises, river gambling, offshore crew transport, charter fishing, etc. Over the past decade, an average of 190 new ferries and small passenger vessels have been delivered annually by U. S.
shipyards. IMA expects orders to continue at an annual rate of about 220 vessels—providing a yearly business base of about $300 million.
Marine Export Market There are many international shipowners headquartered in the United States. They include major oil companies, independent tanker owners, containership operators, reefer ship operators, chemical ship owners, etc. There are almost 100 shipowners with international operations— where equipment selection is specified or approved by a U.S.
based engineering staff. These firms would appear to be logical sources of business for domestic shipbuilders and equipment manufacturers.
Opportunity To Commercialize Products Many U.S. firms have developed technology, systems and equipment for naval ships with potential commercial application. There is a tremendous amount of talent and know-how among companies which have been involved in designing systems for military use. Harnessing this capability for commercial uses is a task facing management. Given the large and growing commercial shipbuilding market, the marine sector would appear to be a very promising area to target for penetration and positioning.
New IMA Report Available A new report by IMA, "Five-Year Outlook for the U.S. Marine Industry," provides a macro picture of the future U.S. marine market. Future underlying business conditions and likely construction prospects are assessed in each of 24 marine market segments. The study is designed for business planners and marketing executives involved in shipbuilding, equipment manufacture and other marine-related businesses.
The report, number 7119, is available at a cost of $575. To order, contact: IMA Associates, 600 New Hampshire Avenue, NW, Suite 140, Washington, D.C. 20037; telephone: (202) 333-8501; or fax: (202) 333- 8504.
Other stories from April 1992 issue
- Council Suggests DOD Actions To Benefit US Yards page: 6
- AWO Testifies At USCG User Fee Hearing page: 6
- SPD Technologies Elects Colangelo President page: 8
- Renk Tacke Wins Planetary Gear Unit Order From Mitsubishi page: 8
- Sea-Fab Building Two Oil Skimmers For California Co-Op page: 9
- Syncrolift Shiplift Used To Launch HMS Vanguard page: 10
- Frotronics Adds Safecom CM And CP To List Of Products Marketed For Philips page: 11
- Trinity Industries Delivers Two Hydrographic Survey Ships To U.S. Navy page: 11
- MSRC Hosts Reception In N e w York City page: 12
- Comsat Corporation Names C. Thomas Faulders III Vice President And CFO page: 15
- Three Circuit Breaker Seminars Offered By SPD Technologies page: 16
- 1993 International Oil Spill Conference Issues Call For Papers page: 19
- Deerberg Offers Literature On Waste Management And Interior Design page: 20
- OTC PREVIEW Offshore Industry's Largest Show Slated For May 4-7 In Houston page: 23
- USCG Orders Differential GPS Equipment From Magnavox page: 30
- NKK, Hitachi Zosen Cooperate To Build Technigaz LNG Carriers page: 30
- U.S. Cruise Ships Poised To Sail To Havana Should Castro Be Ousted page: 31
- Subic Naval Base Losing Its Drydocks page: 31
- C.F. Laborde Elected Senior VP, Co-General Counsel Of Tidewater page: 31
- MMS Receives Five Ship Contract From Oglebay Norton page: 31
- DEVELOPING A NATIONAL ENERGY POLICY page: 32
- First Spill Response Vessel Launched For MSRC By Bender Shipbuilding page: 34
- MARINE SPILL RESPONSE CORPORATION page: 35
- Erie Basin Bargeport Opens page: 36
- U.S. Naval Academy Acquires Eight ECO Bridge Simulators page: 36
- IHI's Contra rotating Propeller To Be Installed On VLCC Scheduled For Commissioning In 1993 page: 38
- Nichols Delivers 76-Person Ferry For Use By Saipan's Grand Hotel page: 39
- Arkhon Offers Brochure Detailing Marine Consultant Services page: 40
- ABS Holds Seminar On Tanker Designs Of The Future page: 41
- ABS Signs Agreement To Advance Phoenix World City Project page: 42
- Growing Cruise Market: 10 Million Passengers By The Year 2000 page: 45
- New Vicmar Fuel System Could Save Operators Millions Of Dollars page: 45
- PSRY Now Major Center For Cruise Ship Destination, Repair And Conversion page: 45
- SPD Battery Monitoring System Praised By Canadian DOD page: 46
- Intervention/ROV '92 Set For June 10-12 In San Diego, Calif. page: 46
- Det norske Veritas Authorized For U.S. Tonnage Admeasurement page: 47
- WesTech, Cosworth Sign Licensing Agreement For Closed Cycle Systems page: 47
- Chevron Christens New Tanker In Brazil page: 48
- Rolla Offers 20-Page "Guide To Fast Propellers/ And 4-Page, Color Brochure page: 48
- Comsat Expands SeaMail With Instant Electronic News In Seven Languages page: 51
- Krupp MaK Engines Ordered For Three Hurtigruten-Line Ferries page: 51
- Dry Dock Association Formed As Ship Repair Revives In N ew York page: 52
- Two Former East German Shipyards To Be Sold By Privatizing Agency page: 52
- Zidell Marine Launches Second Of Two Chip Barges page: 54
- Nelson Supplies Bilge Equipment For New MSRC Vessels page: 54
- Bisso Adds New Tug To Its Fleet Of Vessels page: 56
- Lanng & Stelman Develop N e w Remote Monitoring System page: 56
- Midland Offers Liquid Level Overfill Alarm System For Tank Barges page: 57
- Harrison County Voters In Mississippi Approve Dockside Gambling page: 57
- World's Largest Fish Pump For Chile page: 60
- DOT Releases Port Needs Study page: 60
- ASNE DAY 92 page: 61
- COMMERCIAL SHIPBUILDING—DIVERSIFICATION AND GROWTH OPPORTUNITIES FOR NAVY SUPPLIERS page: 71
- AWO Urges Change In USCG User Fees Proposal page: 72
- Alaska Considers Exemption To Direct Action Requirement page: 72
- Motorola Introduces Line Of Portable Marine Radios page: 74
- MSI Awarded $9 Million Navy Simulator Contract page: 75
- Joint Venture Formed By McDermott, Shelfproekstroi page: 75
- Oil Industry Warns US Of Looming Price Shock page: 76
- Tanker Operators Asking Charterers To Cover Oil Spill Costs page: 76
- Jotun Coatings For All Statoil Platforms page: 76
- U n i t o r To Conduct U n i q u e R e f r i g e r a t i o n T r a i n i n g On G a s Tanker page: 77
- G r e a t Lake C a r r i e r s C o u l d G a i n From W o r l d T r a d e A g r e e m e n t s page: 77
- N e w Miller Brochure On XMT Inverters page: 78
- N e w Gulf Coast Marine Communications Service page: 78
- Pan-United Secures Major Tanker Contract page: 79
- Chemical Carriers Association Elects N e w Officers page: 79
- USCG Rules On Oil Spill Recovery Vessel Foreign Ownership page: 79
- Harris Introduces New Multiband, Multimission VHF/UHF Radio For Export Markets page: 80
- Shipping Business Booms Despite Soviet Breakup page: 81
- ABS Urges Side Stringers For Double Hulls page: 82
- Bender Shipbuilding To Convert Galena Eagle page: 82
- How The Oil Industry Did Financially In 1991 page: 83
- ECO-100 Pollution-Control Vessel Makes National Debut page: 84
- IMAS ' 9 2 To Be Held In Cyprus November 11-13, 1992 page: 86
- SWATH Cruise Ship Passes Sea Trials page: 87
- USCG/IMO To Hold Oil Spill R&D Seminar In Washington, June 1 -4 page: 87
- U.S.-Built NSF Research Icebreaker Begins Operation page: 88
- Marlow Ropes Offers Full Color, 36-Page Literature Package page: 89
- Brown Brothers Develops New Stabilizer System page: 89
- Avondale Boat Division Delivers New Tug To E.N. Bisso page: 90
- Free Color Brochure From ABB Marine Details Diesel Control page: 92
- Aqua-Chem Offers Brochure On Freshwater Equipment page: 92
- T-Torque's Drive System Available To Boat Builders, High-Speed Enthusiasts page: 92
- Free Brochure Offered On AutroMaster 3 0 0 0 Monitoring System page: 93
- Singmarine Launches Ore Carrier page: 94
- Schottel Rudderpropellers Offer Power, Maneuverability page: 96
- IDB Aero-Nautical Acquires Ocean Satellite Television page: 97
- VLCC ' N ew Venture7 Delivered By Ariake Works Of Hitachi Zosen page: 97
- World Shipbuilding Order Book Largest Since 1977 page: 98
- ISOPE 92 Scheduled For June 14-19, 1992 In San Francisco page: 98
- Textron Lycoming TF40 Marine Turbines Power New Megayacht Seawalker page: 99
- Trinity To Build Two Double-Hull Barges For Bouchard Transportation page: 99
- Gibbons Bill Pounded By South Atlantic And Caribbean Port Association page: 100
- USCG Prepares Overseas Maritime Training Team page: 100
- US Carriers Ask Government To Enforce Cargo Competition Rule page: 101
- Carnival Examines Future Ship Designs page: 101
- 'Spirit Of Norfolk' Delivered By Service Marine Industries page: 102
- Tampa Shipyards Christens First Of Two Navy Oilers page: 102
- Lamb Appointed To Oil Spill Oversight Council page: 103
- Marine Industries Northwest Installs Bowthruster In Freighter page: 103
- L&C Associates Provides D / H And Sealing System For Two Ships page: 103
- New Range Of Hold And Deck Coatings From International page: 104
- Aldenderfer Joins Trans-Tec Services As Managing Director page: 104
- Corroless Offers Owners Project Management, "Flying Squad'' Services page: 105
- Stolt Tankers And Terminals To Purchase Stolt-Nielsen Seaway page: 105
- Gladding-Hearn Delivers New Pilot Boat To Charleston, S.C. page: 112
- Toronto/St. Catharines Study Possible High-Speed Ferry page: 113
- Heavy Duty U.S. Pipe Bender Delivered To Italian Shipyard page: 113