Swan Hunter shipyard finds new home in India

After a month at sea, the towering cranes that stood for nearly a century at the Swan Hunter shipyard on Tyneside will arrive at their new home this week on the shores of the Arabian Sea. The cranes have travelled 4,500 miles to the Dabhol Shipyard, 150 miles south of Mumbai, but when erected they will find themselves in a depressingly familiar situation: a shipbuilding recession.
Bharati Shipyard, India's second-largest private-sector shipbuilder, agreed to buy the equipment in 2007, as the country sought to position itself as a low-cost rival to shipbuilders in South Korea, China and Japan. But during the mammoth operation to disassemble and transport the gear — everything from a vast floating dry dock to the old Swan Hunter cafeteria — from Britain to Bharati's Dabhol yard, the shipping market has collapsed. Plummeting orders for new ships have raised questions over the wisdom of the multimillion-pound deal by the Indian company.
The sale of its hardware marked the end of 149 years of shipbuilding at Swan Hunter, a yard that produced more than 1,600 ships, including the Mauretania in 1906, in her day the most elegant liner afloat, and the aircraft carrier HMS Ark Royal. Failure to secure a critical Ministry of Defence order triggered receivership in 1993.
Almost every big yard worldwide is facing similarly hard times. The seizure of the global credit markets hammered the freight market last year. The Baltic Dry Index (BDI), a gauge of the cost of shipping bulk commodities such as grain and coal and a key indicator of global economic vibrancy, collapsed to a record low in December, having lost 90 per cent of its value during 2008. The slowdown in economic growth, particularly in China, a key importer of raw materials, and a glut of ship capacity weighed on the BDI.
Shipbuilders suffered as orders for new tonnage were cut significantly. The South Korean Government is preparing to inject a total of 21 trillion won (£11 billion) into the domestic and foreign shipping market this year in an attempt to shore up its ailing shipbuilding industry.
The Shanghai-listed China State Shipbuilding Corp reported a 36 per cent fall in first-quarter profits, while yards in Japan have suffered a slew of order cancellations in recent weeks.
Europe has also been affected, with the Wadan Yards in Wismar and Rostock-Warnemünde in Germany planning to cut the working hours of 2,500 employees and JJSietas, the Hamburg shipyard, planning to cut one third of its 880 jobs.
Ramesh J.Warpe, vice-president of Bharati Shipyard, denied that the deal for the Swan Hunter equipment risks appearing ill-timed. “The waiting time for this sort of equipment is extremely long and what we have bought from the UK has been extremely well maintained,” he said.
However, analysts see no quick return to the peak in demand for new ships achieved in the middle of 2008, when surging appetite for iron ore and coal in India and China helped to drive the Baltic index to a record high in May of 11,793.
The global slowdown sent the index as low as 663 in December. It has remained volatile since and shipbuilding yards without proven track records are said to have been hit hardest by the fall in activity.
Analysts still believe that the number of ships expected to be delivered this year — about 300 dry bulk carriers — will still exceed demand, even when sharply increased rates of scrapping older ships is taken into account.
“Even with the expected cancellations of new ship orders, the freight market is set to remain depressed for the next few years,” Barclays Capital said in a recent research note.