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2012

OVERVIEW Of SHIP BUILDING INDUSTRY

Submitted By :Ajit Kumar Hamneesh Rahul Menon Sandeep Mukhia 10/2/2012 (PGDM EXEC)

ACKNOWLEDGEMENT

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We place on record and warmly acknowledge the continuous encouragement, invaluable supervision, timely suggestions and inspired guidance offered by our guide Dr. J S Lamba , K J Somaiya Institute of Management Studies and Research ,Mumbai, in bringing this report to a successful completion. We are grateful to Dr. J S Lamba for permitting us to make use of the facilities available in the department to carry out the project successfully. Apart, he has been helping closely at a personal level and we acknowledge his contribution. Last but not the least we express our sincere thanks to all of our friends who have patiently extended all sorts of help for accomplishing this undertaking. Finally we extend our gratefulness to one and all who are directly or indirectly involved in the successful completion of this project work .

KJ Somaiya institute of Management Studies

Ajit Kumar Hamneesh Rahul Menon Sandeep Mukhia

DECLARATION

We hereby declare that the project work entitled Overview of Ship Building Industry submitted to the K J Somaiya Institute of Management Studies and Research ,Mumbai, is a record of an original work done by us under the guidance of Dr. J S Lamba This project work is submitted in the partial fulfillment of the requirements for the Operations Management. The results embodied in this course have not been submitted to any other University or Institute for the award of any course. Date- 02-Oct-2012 Place-SIMSR, Mumbai

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KJ Somaiya institute of Management Studies

Ajit Kumar Hamneesh Rahul Menon Sandeep Mukhia

CERTIFICATE
This is to certify that the Project entitled, Overview of Ship Building Industry submitted by Ajit Kumar, Hamneesh , Rahul Menon , Sandeep Mukhia in partial fulfillments for the requirements for course of Operations management at K J Somaiya Institute of Management Studies and Research, Mumbai An authentic work carried out by Ajit Kumar, Hamneesh ,Rahul Menon, Sandeep mukhia under my supervision and guidance. To the best of my knowledge, the matter embodied in the Project has not been submitted to any other University / Institute for any course. Date:

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Dr. J S Lamba
KJ Somaiya institute of Management Studies

K J Somaiya Institute of Management Studies and Research, Mumbai

TABLE OF CONTENT
S.NO 1 2 3 4 5 6 7 8 9 10 CONTENT INDUSTRY OVERVIEW MANUFACTURING PROCESSES SHIP BUILDING MANUFACTURING TECHNIQUE ASSEMBLY PROCESS LOGISTICS & SUPPLY CHAIN PROCESSES MAJOR DRIVERS OF INDIA SHIP BUILDINGINDUSTRY INDIA COMPETATIVE ADVANTAGES OVER COMPETITORS CHALLENGES FACED BY INDIAN SHIPBUILDING INDUSTRY CONCLUSION REFERENCE PAGE NO 6 9 14 16 22 27 28 29 31 32

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1.INDUSTRY OVERVIEW
Shipbuilding is the construction of ships and floating vessels. It normally takes place in a specialized facility known as a shipyard. Shipbuilders are also called shipwrights. Shipbuilding and ship repairs, both commercial and defense, are also referred to as "naval engineering".

GLOBAL SCENARIO:
In the 20th century, shipbuilding grew as an important and strategic industry in a number of countries around the world. This importance stems from: The large number of skilled workers required directly by the shipyard, along with supporting industries such as steel mills, railroads and engine manufacturers; and A nation's need to manufacture and repair its own navy and vessels that support its primary industries

Shipbuilding is therefore an attractive industry for developing nations. Japan used shipbuilding in the 1950s and 1960s to rebuild its industrial structure; South Korea started to make shipbuilding a strategic industry in the 1970s, and China is now in the process of repeating these models with large state-supported investments in this industry. South Korea is the world's largest shipbuilding nation with a global market share of 37.45% in 2011. South Korea is the global leader in the production of advanced high-tech vessels such as cruise liners, super tankers, LNG carriers, drill ships, and large-sized container ships. Japan lost its once industry leading position to South Korea in 2003 and its market share has since fallen sharply. The European nations' combined output has fallen to a tenth of South Korea's, and the outputs of the United States and the rest of the world have become negligible. China is an emerging shipbuilder that briefly overtook South Korea during the 2008-2010 global financial crisis as they won new orders for medium and small-sized container ships based on their cheap prices, although its current production is limited mainly to basic vessels. World Shipbuilding market share by countries (2011): Rank 1 2 3 4 Country South Korea China Japan Philippines Gross Tonnage(GT) 137,596,000 123,961,000 63,641,000 423,000 % 37.45% 33.7 % 17.3 % 1.6 %

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World Top 5 players: Rank 1 Company Hyundai Heavy Industry Daewoo Shipbuilding Samsung Heavy Industry Hyundai Samho Mitsubishi Heavy Industry Place Ulsan, South Korea Okpo, South Korea Geoje, South Korea Samho, South Korea Nagasaki, Japan GT 93,893,700 GT 68,284,087 GT 58,082,349 GT 28,414,515 GT 19,506,548 GT Ships 1428

2 3

834 785

4 5

372 315

INDIAN SCENARIO:
India is a major maritime country, predominantly peninsular in nature having a coastline of 7515 Km and 1197 islands, and located strategically on major maritime routes. Indian ship building Industry has around 32 ship yards. India accounts for just about one per cent of the global shipbuilding industry. Lower costs of labor, availability of skilled workforce together with robust demand in the domestic market and a growing steel industry are certain factors that build up a strong case for shipbuilding sector in India. Ship building industry in India consists of both Ship Building and Ship Repairing. New Ship Building yards are mainly active in building commercial and defense vessels. Commercial vessels are mainly build for European owners and defence vessels are built for Indian Navy. Four defence shipyards viz. MDL, GRSE, GSL and ASL are presently engaged in warship building and repairs and refits. A ship with displacement tonnage of 3,500 tonnes in the South Korea is built in 30 months with 2, 50,000 man hours as against 72 months and 1.8 million man hours in India.

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Ship repair is an evergreen industry as all ships require periodic maintenance. India is strategically located in the Indian Ocean and hence, many ships from the nearby trade routes call on Indian ports. This means that there is a lot of potential for ship repair industry in India. However, currently ship repair for these is primarily undertaken in Dubai Dry docks, Singapore, Bahrain and Colombo dockyards. Thus, India with its great strategic location, and availability of low labour costs and availability, can position itself among the world leaders of shipbuilding with necessary industrial and political will and support.

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2. MANUFACTURING PROCESSES
The History of Making of Ship in INDIA:
Shipbuilding is the construction of ships and floating vessels. It normally takes place in a specialized facility known as a shipyard. Shipbuilders, are also called shipwrights, Shipbuilding and ship repairs, both commercial and defense , are referred to as "naval engineering"

The oldest known dock in the world was built around 2500 BC during the Harappan civilization at Lothal near the present day Mangrol harbor on the Gujarat coast in India. Other ports were probably at Balakot and Dwarka. However, it is probable that many small-scale ports, and not massive ports, were used for the Harappan maritime trade. Ships from the harbor at these ancient port cities established trade with Mesopotamia. Shipbuilding and boat making may have been prosperous industries in ancient India. The Indians also exported teak for shipbuilding to ancient Persia.

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The Shipbuilding Process- Step Wise:

1. PROPOSAL Based on the basic specifications (simplified specifications) provided , lay out a broad design to get a rough overall picture of the ship. 2. DISCUSSION ON THE SPECIFICATION AND AGREEMENT Once proposal is accepted by the customer, discuss the specifications in detail shipbuilding process, general layout, specifications, etc. are determined, an agreement is made.
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3. BASIC DESIGN

There are various factors that influence ship performance, other than speed. Other factors can include load capacity of cargo, ship stability, fuel cost and so on. The key function of basic design is to design the ship so that all those factors comply with the specifications.

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4. DETAILED DESIGN

Based on the information obtained from the basic design, the detailed design clarifying the design of components and parts of the ship to be built. The key point of this step is to work out drawings that are feasible and accurate enough to facilitate the actual shipbuilding operation on-site without compromising the ability or performance of the ship.

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5. PRODUCTION DESIGN

The production design organizes the design information in the detailed plans into respective component information. The production design enables the field staff to meticulously control a large amount of components on site.

6. MATERIAL ORDERING Place purchase orders for required materials based on the design information. Since a tremendous volume of materials need to be ordered to build a ship, it is vital to manage and supervise the delivery dates of those materials so that the procurement is timely and accurate.

7. PRODUCTION PLAN The production plan has a critical impact on manufacturing efficiency because of the enormous amount of components, and the large number of workers involved on the job site. It is vital, therefore, to plan thoroughly so as to control and supervise the flow of materials, work volume, job assignments and subsequent progress of the shipbuilding process. 8. CUTTING & PROCESSING Steel plates are cut and processed according to the blueprint. The process of heating and bending a steel plate into curved shapes is of great importance in shipbuilding, and require sophisticated skill and technique

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9. ASSEMBLY
The cut and processed components are assembled block by block. In order to maximize manufacturing efficiency, the assembling of blocks is carried out in a phased manner: small-scale assembly comes first, midscale assembly second, and large-scale assembly last.

10. INSTALLATION OF RIGGING ARTICLE Assembled blocks are further jointed together to make huge blocks, and at this point, rigging articles such as pipes, electric wires are installed.

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In order to enhance manufacturing efficiency at the dockyard, most rigging articles are installed while the block is still on the ground

11. MOUNTING HUGE BLOCKS Following the above step, the huge blocks are mounted on the vessel. In order to maintain the predefined dimension, even after tens of such blocks have been jointed together; accurate positioning of each block is critically important.

12. LAUNCHING When all the blocks are mounted and jointed, launching is the next stage.While the launching at a dock simply means filling the dock with water to float the ship, the launching from a building berth is a very impressive and exciting sight to see since the ship slides its way majestically into the sea. This is one of the most thrilling moments for all involved with the shipbuilding process.

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13. OPERATION AT THE QUAY

The finishing operation is carried out with the launched hull at the quay. Starting with finishing work of accommodation and control sections, every equipment and instrument is checked and reexamined in practice. We are now in the final stretch of shipbuilding

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14. TRIAL CRUISE The trial cruise includes tests of speed, engine performance and operation of all equipment and instruments. The test results are kept as the performance record of the vessel .

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15 . DELIVERY A new ship is born. After the delivery ceremony, the captain, chief engineer and crew embark for the ships maiden voyage.

IN NUTSHELL

After contract signing and design process, cutting of steel plates into small parts in accordance with the design and construct blocks with them. Block is a basic component to construct a ship. Blocks are assembled in workshops which are called bays. Outfitting process is to outfit items like pipes inside the block. After that, painting of the block is performed. After outfitting and painting process, the blocks are assembled in the dock to form the hull of the ship, which is called the erection process. The ship is then launched and finishing process is done at the harbor.

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3. SHIPBUILDING MANUFACTURING TECHNIQUES


Modern shipbuilding makes considerable use of prefabricated sections Prefabrication is the practice of assembling components of a structure in a factory or other manufacturing site, and transporting complete assemblies or sub-assemblies to the construction site where the structure is to be located. The term is used to distinguish this process from the more conventional construction practice of transporting the basic materials to the construction site where all assembly is carried out . The theory behind the method is that time and cost is saved if similar construction tasks can be grouped, and assembly line techniques can be employed in prefabrication at a location where skilled labor is available, while congestion at the assembly site, which wastes time, can be reduced. The method finds application particularly where the structure is composed of repeating units or forms, or where multiple copies of the same basic structure are being constructed. Prefabrication avoids the need to transport so many skilled workers to the construction site, and other restricting conditions such as a lack of power, lack of water, exposure to harsh weather or a hazardous environment are avoided. Against these advantages must be weighed the cost of transporting prefabricated sections and lifting them into position as they will usually be larger, more fragile and more difficult to handle than the materials and components of which they are made

Advantages of Prefabrication:
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Self-supporting ready-made components are used, so the need for formwork, shuttering and scaffolding is greatly reduced. Construction time is reduced and buildings are completed sooner, allowing an earlier return of the capital invested. On-site construction and congestion is minimized. Quality control can be easier in a factory assembly line setting than a construction site setting. Prefabrication can be located where skilled labor is more readily available and costs of labor, power, materials, space and overheads are lower. Time spent in bad weather or hazardous environments at the construction site is minimized. Less waste may occur Advanced materials such as sandwich-structured composite can be easily used, improving thermal and sound insulation and air tightness

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Disadvantages of Prefabrication:
Careful handling of prefabricated components such as concrete panels or steel and glass panels is required. Attention has to be paid to the strength and corrosion-resistance of the joining of prefabricated sections to avoid failure of the joint. Similarly, leaks can form at joints in prefabricated components. Transportation costs may be higher for voluminous prefabricated sections than for the materials of which they are made, which can often be packed more efficiently. Large prefabricated sections require heavy-duty cranes and precision measurement and handling to place in position. Larger groups of buildings from the same type of prefabricated elements tend to look drab and monotonous. Local jobs may be lost, if the work done to fabricate the components being located in a place far away from the place of construction. This means that there are less locals working on any construction project at any time, because fabrication is outsourced. A superstructure is an upward extension of an existing structure above a baseline. This term is applied to various kinds of physical structures such as buildings, bridges, or ships.

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4 .ASSEMBLY PROCESS

The different parts assembled are as shown under:

1. Block:
In the block assembly process, we make blocks in the bays by assembling the small parts made in the cutting process. There are two types of bays in the particular shipyard we considered. One is called fixed-bay and the other is called moving-bay. Moving-bay is more efficient in its operations but it can only assemble small and flat blocks. On the other hand, fixed-bay is mainly used to assemble curved blocks and large blocks.
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2. Hull:
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The hull is the main body of the ship below the main outside deck. The hull consists of an outside covering (or skin) and an inside framework to which the skin is secured. The skin and framework are usually made of steel and secured by welding. The main centerline structural part of the hull is the keel, which runs from the stem at the bow to the sternpost at the stern. The keel is the backbone of the ship the ribs of the ship and gives shape and strength to the hull Deck beams and bulkheads support the decks and gives added strength to resist the pressure of the water on the sides of the hull.

3.Construction of a Hull
The skin, or shell plating, provides water-tightness. The plates, the principal strength members of a ship, have various thickness. A ship's hull endures harsh conditions at sea in bad weather. For a ship to float, its weight must be less than that of the water displaced by the ship's hull There are many types of hulls, from logs lashed together to form a raft to the advanced hulls of America's Cup sailboats. A vessel may have a single hull (called a monohull design), two in the case of catamarans, or three in the case of trimarans. Vessels with more than three hulls are rare, but some experiments have been conducted with designs such as pentamarans. Multiple hulls are generally parallel to each other and connected by rigid arms. Hulls have several elements. The bow is the foremost part of the hull. Many ships feature a bulbous bow. The keel is at the very bottom of the hull, extending the entire length of the ship. The rear part of the hull is known as the stern, and many hulls have a flat back known as a transom. Common hull appendages include propellers for propulsion, rudders for steering, and stabilizers to quell a ship's rolling motion. Other hull features can be related to the vessel's work, such as fishing gear and sonar domes. Hulls are subject to various hydrostatic and hydrodynamic constraints. The key hydrostatic constraint is that it must be able to support the entire weight of the boat, and maintain stability even with often unevenly distributed weight. Hydrodynamic constraints include the ability to withstand shock waves, weather collisions and groundings. Older ships and pleasure craft often have or had wooden hulls. Steel is used for most commercial vessels. Aluminium is frequently used for fast vessels, and composite materials

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are often found in sailboats and pleasure craft. Some ships have been made with concrete hulls.

4.Bulkheads:

The interior of the ship is divided by the bulkheads and decks into watertight compartments. A vessel could be made virtually unsinkable if it were divided into enough small compartments. However, too many compartments would interfere with the arrangement of mechanical equipment and the operation of the ship. Engine rooms must be large enough to accommodate bulky machinery. Cargo spaces must be large enough to hold large equipment and containers.
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5. External Parts Of The Hull:

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The external parts of the Hull are as depicted in the above figure.

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6. Propulsion Systems:
Propulsion systems for ships fall into three categories: human propulsion, sailing, and mechanical propulsion. Human propulsion includes rowing, which was used even on large galleys. Propulsion by sail generally consists of a sail hoisted on an erect mast, supported by stays and spars and controlled by ropes. Sail systems were the dominant form of propulsion until the 19th century. They are now generally used for recreation and competition, although experimental sail systems, such as the turbo sails, rotor sails, and wing sails have been used on larger modern vessels for fuel savings.

7. Steering Systems:

For ships with independent propulsion systems for each side, such as manual oars or some paddles,[62] steering systems may not be necessary. In most designs, such as boats propelled by engines or sails, a steering system becomes necessary. The most common is a rudder, a submerged plane located at the rear of the hull. Rudders are rotated to generate a lateral force which turns the boat. Rudders can be rotated by a tiller, manual wheels, or electro-hydraulic systems. Autopilot systems combine mechanical rudders with navigation systems. Ducted propellers are sometimes used for steering.

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8.Equipment
Shipboard equipment varies from ship to ship depending on such factors as the ship's era, design, area of operation, and purpose. Some types of equipment that are widely found include: Masts can be the home of antennas, navigation lights, radar transponders, fog signals, and similar devices often required by law. Ground tackle includes equipment such as mooring winches, windlasses, and anchors. Anchors are used to moor ships in shallow water. They are connected to the ship by a rope or chain. On larger vessels, the chain runs through a hawsepipe. Cargo equipment such as cranes and cargo booms are used to load and unload cargo and ship's stores. Safety equipment such as lifeboats, liferafts, and survival suits are carried aboard many vessels for emergency use.
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9.Hydrostatics
Boats and ships are kept on (or slightly above) the water in three ways: For most vessels, known as displacement vessels, the vessel's weight is offset by that of the water displaced by the hull. For planing ships and boats, such as the hydrofoil, the lift developed by the movement of the foil through the water increases with the vessel's speed, until the vessel is foilborne. For non-displacement craft such as hovercraft and air-cushion vehicles, the vessel is suspended over the water by a cushion of high-pressure air it projects downwards against the surface of the water.

A vessel is in equilibrium when the upwards and downwards forces are of equal
magnitude. As a vessel is lowered into the water its weight remains constant but the corresponding weight of water displaced by its hull increases. When the two forces are equal, the boat floats. If weight is evenly distributed throughout the vessel, it floats without trim or heel

10. Hydrodynamics
The advance of a vessel through water is resisted by the water. This resistance can be broken down into several components, the main ones being the friction of the water on the hull and wave making resistance. To reduce resistance and therefore increase the speed for a given power, it is necessary to reduce the wetted surface and use submerged hull shapes that produce low amplitude waves . To do so, high-speed vessels are often more slender, with fewer or smaller appendages. The friction of the water is also reduced by regular maintenance of the hull to remove the sea creatures and algae that accumulate there. Antifouling paint is commonly used to assist in this. Advanced designs such as the bulbous bow assist in decreasing wave resistance.
A simple way of considering wave-making resistance is to look at the hull in relation to its wake. At speeds lower than the wave propagation speed, the wave rapidly dissipates to the sides. As the hull approaches the wave propagation speed, however, the wake at the bow begins to build up faster than it can dissipate, and so it grows in amplitude. Since the water is not able to "get out of the way of the hull fast enough", the hull, in essence, has to climb over or push through the bow wave. This results in an exponential increase in resistance with increasing speed.

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This hull speed is found by the formula:

or, in metric units:

where L is the length of the waterline in feet or meters.

Lifecycle of Ship:

A ship will pass through several stages during its career. The first is usually an initial contract to build the ship, the details of which can vary widely based on relationships between the shipowners, operators, designers and the shipyard. Then, the design phase carried out by a naval architect. Then the ship is constructed in a shipyard. After construction, the vessel is launched and goes into service. Ships end their careers in a number of ways, ranging from shipwrecks to service as a museum ship to the scrap yard .
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5. LOGISTICS & SUPPLY CHAIN PROCESSES


Currently, one of the main challenges for most of the shipbuilding companies is to manage the activities performed by a network of suppliers worldwide. Shipbuilding involves activities carried out by companies in different countries that are challenging to manage. One consequence of globalization is that competition is going to occur between supply chains composed of companies of different nationalities. As firms globalize, they realize that no matter how large they are, they lack the total resources and requisites for success. Viewing the complete supply chain for producing value, they recognize the necessity of partnering with other organizations. The lack of integration and coordination between partners of the same supply chain affects the quality and the delivery date. The function of Supply chain management (SCM) is to manage the flow of material, information, and service. The supply chain that better learns how to manage the flow of material, information, and service through different companies tends to be more competitive.
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We are now entering the era of network competition, where the prizes will go to those organizations who can better structure, coordinate and manage the relationships with their partners in a network committed to delivering superior value in the final marketplace. Shipbuilding has many specific challenges that are not common to other industries, like; The need to involve multiple companies to design and build a vessel The generation and manipulation of enormous amounts of information The complexity of information flow because of the operation itself and the numerous working disciplines involved Every vessel is different; even vessels from the same series differ somewhat from each other Approximately 6080 per cent of the value of a ship is outsourced, and the complex structure of a ship demands a considerable coordination between all those involved in the design, engineering, and production Hence, the competence in a supply chain lies in the ability to coordinate activities across businesses and to interact with different partners as if it were a single business unit. The increasing complexity of products, as well as the number of technologies and competences in the production process, has created enormous challenges. In the past,

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shipbuilding companies were responsible for performing most of the activities to produce a vessel; even some equipment was produced internally. This meant that many companies were vertically integrated. Nowadays, sourcing can cover almost every phase performed in the shipyard. The so-called full shipyard became an assembly shipyard .Thus, companies decided to outsource some activities to other shipyards, and focus on the activities where they could remain competitive.

Procurement- The important link of SCM for Ship Building Companies:

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The above flow chart shows the importance of procurement across different functions of the ship building process

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The competitive advantage derives from all the discrete activities of an enterprise, including design, production, marketing and delivery. All these activities contribute to the overall cost of a company. A business can win the competition either through low cost or better quality.

The costs of the shipbuilding are composed of design cost, procurement cost, manufacturing cost & labor costs. Costs are determined at the design stage. Design activities are of little expense, but have a great impact on the whole shipbuilding costs. When the design is completed, batch production will follow after a large procurement.
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The procurement cost is the largest part of the total cost, and with the increase of technical content and value added, the proportion of the procurement cost will rise accordingly. Thus, for a shipbuilding enterprise, the procurement activity is a value activity with highest costs. Simultaneously, it has a strong impact on the costs of other activities. The procurement activity runs through all the links of the supply chain, and therefore presents a significant opportunity to cost reduction.

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The supply chain is too complex and random, which leads to heavy organization and coordination work in the procurement department of the shipyard and creates additional costs. The change in some ways of the procurement activities will likely increase or decrease the cost of the whole procurement process. For instance, the procurement of good-quality and pretreated steel plates will probably increase the cost of the procurement but simplify the production process, raise the utilization efficiency, reduce the construction cost and optimize the total costs of the value chain. If the procurement department strengthens the management and control of suppliers, it will reduce the cost of internal quality inspection in the shipyard.

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At present, shipyards pay more attention to increasing production efficiency and reducing production costs instead of the procurement activities. Procurement is viewed as a secondary function. Certain SCM principles followed at Hyundai Heavy Industries, Uslan, South Korea 1. Focus on meeting and guiding the requirements of the clients. By developing and popularizing the standardized ship types and discovering the potential requirements of the ship owners, it can promote the combination of complimentary units and the information share. The whole supply chain can then quickly respond to the changing demands of the ship owners and make timely adjustments accordingly. 2. Focus on the core business, vigorously improve specialization and subcontract non-key business. 3. Establish an integrated information system for effective and prompt exchange in terms of information flow, capital flow and material flow, and provide the technical assistance on an informational platform to reduce stocking during production, transportation and storage, to shorten the production cycle. 4. Integrate the internal resources within the Group, mainly to concentrate not on the trading but on the process of procurement. Use the theory of modern logistics management as guidance to transform stock-oriented procurement into order-oriented procurement. Aiming to improve the efficiency of the procurement, reduce storage and save costs, make analysis from the view of the logistics, attempt to eliminate the unreasonable, the waste and the low efficiency in the production and the procurement activities, making each link reasonable and efficient.

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Above figure shows relationship of procurement/design/business groups with the suppliers. As shown above, management of supply chains is a systematic process, including business flow, material flow, capital flow and information flow. It's like a public pipeline in which there are four cables. The optimization of material flow and capital flow depends on the design of the business process; the information flow is the nerve system for the whole supply chains and the basis for the successful operation of supply chains. Thus, the management of the supply chain aims at the optimization of the process to improve efficiency and reduce costs and it covers all the divisions and processes of the shipbuilding enterprise.
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6. MAJOR DRIVERS OF INDIAN SHIPBUILDING INDUSTRY


Shipbuilding acts as a catalyst for overall industrial growth due to spin offs to other industries , including steel, engineering equipment, port infrastructure, trade and shipping. Indias economic growth will continue to create a demand for new ships. Although India occupies a small percentage of the global shipbuilding market, the Indian shipbuilding industry is well positioned for growth. According to a study by the Indian Shipbuilders Association, the industry can grow at a rate of more than 30%, and this rate of growth could be achieved through supportive measures by the Government, including incentives for shipyards. Following are the major growth drivers for demand of Indian ship building industry : 1. World Economy : High levels of economic activity boost the trade of raw materials and even finished goods need to be moved from one country to another when two countries are in agreement of trade. 2. Oil : High demand for oil creates the need for bulding tankers for transporting it. 3. Steel Production : As steel constitutes approximately 42% of the worlds dry bulk trade, it directly influences the demand for buying dry bulk ships. 4. Replacement of aging fleet : With an average span of around 30 years, a sizeable portion of the current fleet which came into market in around 1980 has reached the replacement age around 2011., spurring the new demand. 5. Conversion of single hull tankers : Concerns around the risk of environmental damage arising from single hull tankers have led to the regulation that necessitates replacement of single hull very large tankers by double hull tankers. The major supply drivers of the industry are : 1. Capacity : Ship building is a time consuming process. Hence, the industry is largely unable to increase supply, following a sudden increase in demand. 2. Ship building cost: Low prices may lead to increased orders, fuelling supply in market. 3. Economic Life : A long fleet implies low growth of the fleet, resulting in low supply levels. 4. Regulations : Regulations from international maritime organization also determines supply.

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7. INDIAS COMPETITIVE ADVANTAGES OVERCOMPETITORS


India also enjoys several of the advantages which have propelled emerging countries such as China and Vietnam into the forefront of global ship building. Some of the key advantages that can be leveraged by shipbuilders in India are: 1. Low Labour Cost : Low labour cost is a key driving factor in ship building nations, as it accounts for more than 10% of the total cost. Indian labour costs are slightly lower as compared to those of the leading ship building industry.

2. Strong domestic demand : Indian shipping trade is booking on the back of the economic at the growth rate of around 8%. Domestic base lines have expanded their fleets and have placed orders with global yards. There is also strong thrust in sectors such as power and steel and companies are looking to acquire ships to control transport from international mines. The governments new initiatives in coastal shipping and IWT, is likely to boost further demand for new ships. 3. Long Coastline : India has along coast line of over 7500 km long with several deep water ports serving as good locations for setting up ship yards. Other drivers for shipping industry in India include the limited surplus capacity available with the globalship building yards and a booming capital market which could provide easy financing for capital and operational expenses of these yards.

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8. CHALLENGES FACED BY INDIAN SHIPBUILDING INDUSTRY


Onerous Tax Regime
According to a Research Paper by Ministry of Finance, Government of India, the shipping industry is facing significant tax burden, though the tonnage tax has been introduced. The paper lists out taxes such as minimum alternate tax, dividend distribution tax, withholding tax liability on interest paid to foreign lenders, withholding tax liability on charter hire charges paid to foreign ship owners, seafarers taxation cost to employers, wealth tax, sales tax, VAT on ships and spares, lease tax on charter hire charges, customs duty on import of certain categories of ships, stores, spares and bunkers, and services tax.

Multiplicity of Regulations
Shipping industry, catering to the demand across continents, is regulated by both domestic and international regulations. Internationally, the International Maritime Organisation has a set of rules to ensure safe, secure and efficient shipping, besides the labour standards required for seafarers worldwide. There are also international regulations on operations of ships, such as International Convention for the Safety of Life at Sea, International Convention for the Prevention of Pollution from Ships, convention on the International Regulations for Preventing Collisions at Sea, International Convention on Loadlines, International Ship and Port Facility Security Code, and International Safety Management Code. There are also international regulations for seafarers, such as International Convention on Standards of Training, Certification and Watch-keeping for Seafarers, and ILO Merchant ,Shipping Convention.

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Working Capital
Typically a shipyard requires a working capital of around 25-35 percent of the cost of the ship during the entire construction period. The interest rates on working capital in India average 10.5%. In contrast to other countries like Korea it is 5-6%.

Other Costs
Indian shipping industry is at an early stage but has to compete against established yards in Korea and China to grab a share of the market. Its lower scale leads to several disadvantages in design and manpower costs. Leading shipbuilding countries support the industry by creating enabling policies for development of technical and manpower capabilities.

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For instance, China provides scientific research subsidy to maritime universities, and provides R&D and living allowance to post graduate students, to ensure availability of talent pool for shipyards.

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9. CONCLUSION
The shipbuilding industry dates back many years back, and holds a great prospect in future also. As globalization and trade between countries increases in 21st century, there would be a substantial growth in the shipbuilding industry. Shipbuilding industry is capital intensive, labor intensive and has a great impact on the overall economic development of a nation. Hence countries like South Korea and China are in a race to establish their expertise and supremacy in this field. India though at present far away, has great potential to use its resources to the maximum and make its presence shown in the world of shipbuilding industry.

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10. REFERENCE
http://www.skdy.co.jp/english/e-product/index.html http://www.dtic.mil/cgi-bin/GetTRDoc?AD=ADA458698 http://www.higaki.co.jp/en/technology/building.php http://www.transport-pf.or.jp/english/umi/07_dekirumade.html
http://www.ilo.org/wcmsp5/groups/public/---ed_protect/---protrav/safework/documents/normativeinstrument/wcms_107897.pdf ILO_Safety and health in shipbuilding and ship repairing http://www.shipbuilders.org/Portals/Shipbuilders/documents/pdf/Safety%20Alert%20on%20Ve ntitlation_FINAL.pdf

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