By Eva Moloi and Patrick Kamerman
While the global maritime industry typically presents enormous opportunities for developing Supplier Development Programmes, the South African maritime sector is currently shrinking and needs urgent interventions to stabilise and grow emerging businesses.
Enterprise Supplier Development (ESD) Programmes in South Africa remain a legislative requirement for companies that take on government contracts, yet the blue economy still faces significant challenges – especially in the ship building and ship repair pillars.
Simply put, in its current state, there is just not enough work in the local maritime sector to develop and sustain emerging ship builders and repairers.
For ESD to be successful in ship building, there needs to be continuity in new ship building and repair contracts.
Ship building and repair encompass a wide range of specialised skills, including metal fabrication, marine electricians, mechanical fitters, carpenters, painters and riggers, among others.
During the ship building/repair cycle, not all these disciplines are needed at any one time.
Unless workers can move to the next new build when work is completed, ship builders and their supplier stakeholders are forced to lay off workers which is disastrous for ESD companies.
Barriers to entry
Ship building requires costly infrastructure and skills investment, so the barrier to enter as a player in the blue economy is considerable.
ESD programmes, if sustained through continuity, can enable new entrants to join the South African maritime fraternity, but new orders are key, whether for local or international clients.
Export, especially into the African market, has much potential. The Oceans Economy Masterplan, an industry turnaround blueprint that is currently being completed, initiates South African government marketing the capacity to develop the local maritime sector. Success in this area will benefit ESD significantly.
Unfortunately, South Africa remains a very minor cog in the global ship building machine, building ships on a significantly smaller scale than countries such as Korea, China and Japan. While the local ship building industry has over the years produced many vessels, building single order ships is inefficient and costly.
Government contracts
Currently, government contracts are key to sustaining our ship building industry, as private demand is typically very small. It is much cheaper for foreign vessel operators to buy a ship built in Vietnam or Korea, for example. Another challenge is that private clients are not obliged to support ESD.
The ship repair industry is not faring any better in South Africa. While about 130 000 ships pass our coastline every year, we only attract a very small percentage of them into our ports, as South Africa remains an unattractive destination for ship repair mainly due to limited docking and repair infrastructure, high port costs and inefficient port operations.
State of local facilities
Ships assigned to certain trade routes, such as between China and US, will try and time their maintenance to be done at either end of the route.
While some ships that solely travel between South Africa and other destinations could potentially be docked here, the challenge lies with the availability and poor state of the country’s repair facilities.
South Africa’s dry dock facilities are very old and ongoing maintenance challenges and management inefficiencies result in less availability to the marine industry for commercial work.
With the current state of our maritime industry, it is very difficult to develop proper and meaningful ESD programmes. As there is little work to sustain new entrants in this sector, developing small businesses under ESD initiatives is simply setting them up for failure, which is clearly the last thing we want to do.
For the maritime industry and ESD to grow, the cost drivers for shipbuilding locally should be reduced, allowing the industry to tap into the large maritime requirements in both Africa and South America. Indeed, privatisation of docking/ship lift facilities and improvement of port services would reduce cost.
Government should recognise and nurture shipyards who have successfully implemented ESD programmes to maintain sustainable maritime growth.
Additionally, better protection of our waters and resources to tackle illegal fishing would result in greater quotas for local fishermen and the industry. The larger quotas would also allow more local fisherman and ESD to thrive.
This could spill over into the requirements for building fishing vessels as most local fishing vessels are outdated and have inefficient equipment.
The local maritime industry needs interventions – including the privatisation of many of the functions currently performed by the state so that it can be stabilised and grow. Only then can we implement ESD programmes to help small enterprises grow into sustainable maritime businesses.
Eva Moloi is the HR and Transformation manager at Damen Shipyards Cape Town, and Patrick Kamerman is the services and repairs manager at Damen Shipyards Cape Town.
BUSINESS REPORT
