While the global maritime industry generally presents huge opportunities to develop supplier development programs, the South African maritime sector is currently contracting and in need of urgent interventions to stabilize and grow emerging businesses. Enterprise Supplier Development (ESD) programs in South Africa remain a legislative requirement for companies accepting government contracts, but the blue economy still faces significant challenges, particularly in the construction pillars and ship repair. Simply put, in its current state, there is simply not enough work in the local maritime sector to develop and support emerging shipbuilders and repairers.
For ESD to succeed in shipbuilding, there must be continuity in new shipbuilding and ship repair contracts. Shipbuilding and repair encompasses a wide range of specialist skills, including metal fabrication, marine electricians, mechanical fitters, carpenters, painters, and riggers, among others. During the build/repair cycle of ships, not all of these disciplines are needed at the same time. Unless workers can move on to the next new build after the work is completed, shipbuilders and their suppliers are forced to lay off workers, which is disastrous for ESD companies.
Shipbuilding requires costly investments in infrastructure and skills, so the barrier to entry as a player in the blue economy is considerable. ESD programs, if maintained in continuity, can allow new entrants to join the South African maritime fraternity, but new orders are essential, whether for local or international customers.
Export, especially to the African market, has a lot of potential. The Ocean Economy Master Plan, an industry recovery plan nearing completion, is taking the South African government to market capacity to develop the local maritime sector. Success in this area will greatly benefit ESD.
Unfortunately, South Africa remains a very minor cog in the global shipbuilding machine, building ships on a significantly smaller scale than countries like Korea, China and Japan. Although the local shipbuilding industry has produced many ships over the years, single-order shipbuilding is inefficient and expensive.
Currently, government contracts are essential to support our shipbuilding industry, as private demand is generally very low. It is much cheaper for foreign ship operators to buy a ship built in Vietnam or Korea, for example. Another challenge is that private clients are not obligated to support ESD.
The ship repair industry is no better off in South Africa. While approximately 130,000 ships pass through our shores each year, we only attract a very small percentage of them to our ports, as South Africa remains an unattractive destination for ship repair, primarily in due to limited berthing and repair infrastructure, high port costs and inefficient port operations. .
Status of local facilities
Ships assigned to certain trade routes, such as between China and the United States, will try to schedule their maintenance at each end of the route. While some vessels that only travel between South Africa and other destinations could potentially be berthed here, the challenge lies in the availability and poor condition of repair facilities in the country. South Africa’s dry dock facilities are very old and maintenance issues and management inefficiencies result in less availability of the marine industry for commercial work.
In the current state of our marine industry, it is very difficult to develop appropriate and meaningful ESD programs. Since there is little work to support new entrants into this sector, developing small businesses through ESD initiatives simply sets them up for failure, which is clearly the last thing we want to do.
For the maritime industry and ESD to grow, local shipbuilding cost factors must be reduced, allowing the industry to tap into the significant maritime needs in Africa and South America. Indeed, the privatization of ship berthing and lifting facilities and the improvement of port services would reduce costs.
The government should recognize and support shipyards that have successfully implemented ESD programs to maintain sustainable maritime growth.
In addition, better protection of our waters and resources to combat illegal fishing would result in higher quotas for local fishers and industry. The larger quotas would also allow more local fishermen and ESD to thrive. This could affect 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 privatization of many functions currently performed by the state so that it can stabilize and grow. Only then can we implement ESD programs to help small businesses become sustainable maritime businesses.
Eva Moloi is Head of Human Resources and Transformation at Damen Shipyards Cape Town, and Patrick Kamerman is Head of Services and Repairs at Damen Shipyards Cape Town.