Dubai is strengthening its reputation as a shipbuilding and maritime centre by looking to leverage its location. It is doing that with the support of one of the most thriving shipping lanes in the world and the increasing need for local and regional maritime support to develop a major shipbuilding and maintenance industry.
The most important of Dubai’s maritime services industry is Drydocks World (DDW), which is part of the Dubai World group. DDW was founded in 1983 and it was initially focused on repairs and service work. Then it expanded and, as a result, its remit has broadened to include construction and conversion, as well as offshore platform building.
Nevertheless, in recent years DDW has been carrying a huge debt load. It even threatened to ruin the company as creditors sought repayment. Like many shipyards, business Drydocks Worldvolume of DDW dropped in the wake of the global economic crisis, as worldwide trade went in stagnation, because of declining demand. In addition, orders for new vessels also fell sharply. The downturn came during a period of aggressive expansion for DDW, which saw it acquire strategic assets in Asia, including shipyards in Singapore and Indonesia.
Recently, there are signs of improvement. A good example of that is the fact that by the end of August, DDW won the backing of a Dubai tribunal to restructure some $2.2bn worth of debt. The management of DDW will now focus on core activities since almost 98% of the firm’s creditors agree to reschedule repayments, which will see the principal repaid in full over a five-year term. Mr. Khamis Juma Buamim, the chairman of DDW, told media that a strategy was recently developed that will help the company to repair, refurbish, and construct offshore vessels for the oil, gas and energy sectors. A particular focus will be placed on the oil and gas industry.
The management of the company considers what would happen in the next 15-25 years and the data showed that the oil and gas industry has a growth cycle up to 2030. Such change in strategy is expected to produce 3-4% annual growth for the company.
DDW, however, is not the only shipyard in Dubai. Another such company is Grandweld Shipyards, which produces mid-sized vessels. They are mainly used in the oil industry to ferry personnel between offshore platforms and bases on the mainland.
In late August, Grandweld unveiled a deal with local firm Global Marine. The deal is to design and construct two aluminium crew boats that will have the capacity to carry 83 passengers and crew, as well as 90 tonnes of cargo. Grandweld is based in Dubai Marine City (DMC) and has 20 vessels of various sizes already on its slips, and recently delivered two tugboats to Abu Dhabi.
Moreover, another company will soon join Grandweld at the DMC – Dubai Ship Building and Engineering (DSBE). It signed a 25-year lease earlier this year and its new facility will be developed on a block of land comprising 11,196 sq metres. This will enable the company to work closer with suppliers and clients, thus expanding its operations and benefiting from improved economic conditions.
The maritime services sector of the emirate will rely on careful management in order to carve out a significant and profitable niche in the industry.