Tough times boost Bangladesh shipbuilding

When Bangladeshi labourer Abdul Karim was laid off from his shipbuilding job in Singapore because of the global recession, he did not expect to find the same sort of work at home. But the 35-year-old, like similarly skilled shipbuilding labourers who have worked abroad, returned six months ago to find the industry booming and his expertise much in demand.
"My salary is about 40 percent lower than it was in Singapore, but overall I'm better off in Bangladesh and I get to stay close to my family," said Karim, who now earns around 300 dollars each month.
Bangladesh is better known for shipbreaking -- dismantling of old vessels -- but now, just a few kilometres (miles) north of the shipbreaking yards, men like Karim are creating new ocean-going ships.
And experts say it is a safer, less environmentally damaging industry that can create hundreds of thousands of jobs.
"Bangladesh's garment industry became big because it was cheaper here to make clothes than anywhere else in the world," said Sakhawat Hossain, chief executive of Western Marine, one of the main shipbuilders.
"The same thing is now happening with shipbuilding. European buyers are flocking here. If more building yards emerge, we can take orders worth a billion dollars a year by 2015."
Hossain said Bangladesh had become a natural destination for shipbuilding because costs in other countries had become too high.
His firm once built cargo boats and ferries for inland and coastal waters but it graduated into ocean-going shipbuilding three years ago and has enough orders until 2012 from Denmark, Germany and Norway.
He estimates that one in four of his 1,600 employees has recently returned from shipbuilding yards abroad, most after losing jobs through cuts due to contract defaults and delayed orders amid the recession.
He wants to hire another 2,500 welders, fitters and foremen in the next few months.
"The layoffs in other countries are a gain for us," Hossain said. "It's win-win, we benefit from their knowledge abroad and they get a decent salary at home."
Western Marine, along with the other main Bangladeshi firm Ananda Shipbuilders, have in the past two years signed deals to build 50 ships worth 600 million dollars.
All are on the small side of the business, but that is where Bangladesh has an advantage, according to Hossain.
"Top global shipbuilders are not interested in making smaller vessels that weigh less than 20,000 dead weight tonnage because of high labour cost and shrinking profit."
If this trend continues, Bangladesh, with its experience of building vessels to traverse the delta nation, could emerge as a shipbuilding hub.
"Shipbuilding is in our blood. Our workers have been building boats for centuries and now tens of thousands of them work in shipyards across Asia," said Khabirul Haque Chowdhury, a naval architecture professor at Bangladesh University of Engineering and Training.
He said that unlike the controversial shipbreaking industry, shipbuilding is environmentally safe, and could help the poor nation of 144 million people become a middle income country.
"Building ships is like building a city. When it grows, dozens of other industrial sectors such as painting, furniture, steel and electrical equipment also grow," he said.
The programme coordinator of the Danish Embassy's business-to-business programme, Morten Lynge, said European companies that placed the first orders in 2007 took a huge gamble, but it appeared to have paid off and the industry was showing big potential for the future.
"We have estimated that some 55 percent of the world's small ships are aged over 20 years, meaning they need to be replaced within the next few years. I think Bangladesh will be the largest beneficiary," said Lynge, who is hosting 23 Danish vessel makers in Bangladesh next month to explore joint ventures.
Although Bangladesh has so far been largely immune to the effects of the global economic crisis, the shipbuilding business has felt a small slowdown with a German firm cancelling orders for four ships worth 42 million dollars.
"We can win back the orders once the global economy turns around," said Ananda Shipbuilders owner Abdullahel Bari.
"Western companies will definitely come here. Bangladesh will be a major shipbuilder," he said, but he warned the government needed to invest in gas and electricity for the potential to be realised.
Subhash Moydey, an engineer who has recently returned to Bangladesh after 30 years working at yards across the globe, is optimistic.
"When I started in Singapore it was a small business. Until the economic crisis it was booming," the 55-year-old said.
"I predict the same story for my country. We have the workers to power the boom. I can already see it beginning to happen."