Local shipbuilding and repairing firms are struggling to find more yard space in the country as they seek to expand their business operations.
Local shipbuilding and repairing firms are struggling to find more yard space in the country as they seek to expand their business operations, said a senior executive of a shipbuilding and repair company in Dubai. While demand for new builds and repair services has steadily grown in the region over the past few years, the growth has not been matched with an increase in yard capacity to accommodate new orders.
"We have several requests from local and international companies seeking to place orders for new builds, but we have to turn them away," Mohammed Obaid Mubarak, Managing Director for Dubai Shipbuilding and Engineering told.
"We urgently want to expand our operations but we can not do so and this is the main challenge facing every company in this business here."
Ongoing offshore projects in the region have sparked off an unprecedented demand for service vessels and vessel owners are increasingly looking at Dubai for new builds.
Currently, Dubai Shipbuilding and Engineering has a total of just over 25,000 square metres of yard space in Jaddaf area and another 20,000 sq m in Sharjah's Hamriyah Free Zone.
The company builds mainly offshore service vessels such as tugs, accommodation work barges, pollution control vessels, landing crafts as well as catamarans.
The company's ship repairing business is a major contributor to its total turnover and this covers repair for various types of ships including bulkers and tankers.
In an effort to provide room for extra orders, the company currently rents from 100 sq m of yard space in Jaddaf the government, for which it pays Dh36 per sq m per day.
Although the company has also reserved space at the Dubai Maritime City (DMC) Mubarak said that the space provided by DMCDMCLoading... is not enough to cater for the growing demand.
"Since 1980, Jaddaf has not increased, so every one operating here is looking for any available space to expand their business. While the facility at DMC is good for the industry, it underestimates the demand for ship building and repair services in this region," said Mubarak.
Also shipbuilders in Jaddaf cannot build ships that are above 15 metres in height because all ships built must be able to freely sail below the adjacent Al Garhoud Bridge.
Mubarak asked the UAE Government to intervene and allocate more yard space to shipbuilders, adding the industry is strong and its contribution to the economy is high. "If the government can allocate four kilometres to each company, this would help to relieve our yards of the current pressure and this would help to facilitate the expansion of the industry," said Mubarak.
The company's order book is currently full until 2009, with four vessels on order. The company is also in the final stages of receiving new orders for three other vessels, whose construction will commence in 2009.
On the brighter side, Mubarak said the local shipbuilding and repair business has not been hit by the current financial crisis since most of the companies involved are medium sized and that most orders come from within the Middle East, which has been less impacted.
The company's turnover for 2008 is expected to reach $100 million (Dh367m), while profits are likely to be in the range of $15m to $16m.
"The company has been growing by more than 25 per cent year-on-year and I do not see this changing even in the coming year," said Mubarak.
He said the orders at the firm's yard were safe since most of them are from the government as well as established private companies.