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Singapore Marine Industry Annual Report 2004


SINGAPORE MARINE INDUSTRY ANNUAL REPORT 2004

OVERVIEW

The marine industry turned in a sterling performance in 2004 to breach S$5 billion dollars in revenue. Its total turnover of $5.3 billion in 2004 was a record milestone achievement for the industry. This revenue was a significant increase of 39.8% over the output of S$3.79 billion generated in 2003. The strong results were a clear manifestation of the industry's robustness in a highly competitive global market. All three sectors of the marine industry, that is, ship repair and conversion, shipbuilding and offshore engineering, grew and contributed to the record-breaking performance. The growth in total output was fuelled to a large extent by the boon in the oil and gas exploration industry that resulted in an increased volume of work across the various sectors of the marine industry.

As in past years, revenue from the ship repair and conversion sector formed the lion's share at 59% of the industry's total turnover. Although there were fewer ship calls for repair in 2004 compared to 2003, this had not affected the overall performance of the ship repair and conversion sector, which recorded an increase in output. Revenue from ship repair and conversion work amounted to S$3,106 million in 2004, an increase of 35.5% from the year before.

The shipbuilding sector also saw an increase in output due to the record levels of new contracts secured in 2003 and early 2004. Shipbuilding revenue rose by 22.9% year-on-year to S$890 million in 2004. It constituted 16.8% of the total industry's revenue for 2004. Revenue from the offshore sector grew by a hefty 68.3% in 2004 over the year before. The output of S$1,304 million from the offshore sector accounted for 24.6% of the industry's total output for the year.

The increase in the number of projects and hence, a higher volume of activities during the year resulted in a corresponding rise in the number of workers employed by the industry. The Ministry of Manpower (MOM)'s statistics showed the total employment for the marine industry in 2004 at 37,716 workers. This was 7.83% more than the 34,977 workers employed by the industry in 2003.

SHIP REPAIR & CONVERSION SECTOR

The largest contributor to the industry's output is the ship repair and conversion sector. This sector accounted for 58.6% of the industry's total turnover in 2004 with revenue of S$3,106 million. This was 35.5% higher than the S$2,293 million generated by the sector in 2003. The sector's contribution to the industry's total output was 1.9 percentage point lower than its previous share of 60.5% in 2003.

Port statistics from the Maritime and Port Authority of Singapore (MPA) showed a reduction in the number of vessels calling in Singapore for ship repair in 2004. The growth in revenue resulted from the higher sales per vessel in 2004. During the year in review, a total of 6,687 vessels called in Singapore for repairs. This was 1,237 vessels fewer or 15.6% lower than the 7,924 vessel calls recorded in 2003. The total gross tonnage of the vessels that called for repair last year was 39 million grt, down by 9% from the gross tonnage of 42.8 million grt for 2003.

In 2004, the industry undertook a total of eight FPSO (Floating Production Storage and Offloading) and FSO (Floating Storage and Offloading) projects. Seven of these were FPSO/FSO conversions and the remaining one was an upgrading project. Six of the seven FPSO/FSO conversions were completed and delivered in 2004. Work on the conversion and upgrading of another eight FPSO projects are in progress in the various shipyards with deliveries expected in 2005. As at end 2004, Singapore shipyards have undertaken a total of 97 FPSO, FSO and other related projects.

SHIPBUILDING SECTOR

The shipbuilding sector posted revenue of S$890 million in 2004. This represented an increase of 22.9% as against the previous year's output of S$724 million. In 2004, shipbuilding activities accounted for 16.8% of the total industry's revenue. This was 2.2% less than the 19% share it contributed to the industry's output in 2003.

A total of 97 vessels totalling a gross tonnage of 149,855 grt were launched in 2004. This was five vessels fewer or 4.9% lower than the 102 vessels launched in 2003. The combined gross tonnage of the vessels launched in 2004 was however, 29.2% higher than the gross tonnage of 116,030 grt in 2003. Most of the vessels launched in 2004 were workboats, barges, tugs and offshore supply/support vessels.

OFFSHORE SECTOR

The offshore sector includes the repair, upgrading and conversion of offshore units such as jack-up rigs, semi-submersibles and other platform structures. This sector brought in record revenue of S$1,304 million in 2004. The output was a hefty 68.3% higher than its previous year's turnover of S$775 million.

The sector's share in the industry's total turnover also went up by 4.2 percentage points from 20.4% in 2003 to reach 24.6% in 2004. Projects in progress during the year in review included the construction of several jack-up rigs and semi-submersibles with expected deliveries in 2005 and 2006.

INDUSTRY OUTLOOK

The outlook for the marine industry is bright. With the industry's order book at an all-time high, the industry looks set to continue its good performance for the next few years.

Singapore has strengthened its global leadership position in the jack-up rig building market with about 80% of the world's market share. The market for FPSO conversions and the building of offshore support vessels, two niche areas for the industry, remain buoyant. Industry members have during the last few years, increased the market share for ship repair in the more specialised and sophisticated market segment, in particular, that of LNG carriers. Singapore is fast becoming the leading LNG ship repair centre with local shipyards winning long-term contracts.

Against the backdrop of an intensifying level of competition, from China and Middle East, the industry must continue to focus on its core competencies and leverage on its strategic and competitive advantages. The industry will have to continue to invest in R&D efforts to further strengthen and broaden their product and service capabilities. To stay ahead, the industry must be knowledge-intensive and technology-driven.


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