OBG talks to Chris Potter, CEO, Arab Shipbuilding & Repair Yard (ASRY)

Interview: Chris Potter

What are the significant trends in the industry that will impact the future of the region’s repair yards?

CHRIS POTTER: Due to the fact that ship operators’ repair schedules and scopes are still being kept to a minimum, 2013 will continue to be challenging for any yard that relies solely on ship repair. The biggest challenge in the ship repair industry in the Gulf is to expand market share despite a persistent depression in the industry, while simultaneously responding to more competition from new yards that have opened in the past two years. Diversification in the foreseeable future will be imperative if repair yards are going to stay competitive. New opportunities for regional players include offshore power generation and engineering design services for offshore activities. In order to compete we have developed an energy division, which consists of a barge with power units providing 125 MW of power.

How has diminishing international trade volumes affected the broader shipping industry in the Gulf?

POTTER: This region is one of the world’s major trading centres, and despite the turmoil in international shipping, activity in the Gulf has continued at 2012 levels. International ship owners are in a much more precarious position vis-à-vis regional owners due to their need to compete in the spot market, whereas regional players are subsidised by their respective governments. This is precisely why regional activity accounts for a majority of the Gulf shipping industry’s portfolio. To illustrate this, the number of inquiries for dry-docking and repairs at ASRY over the past year remained steady and the Gulf remains one of the most competitive areas for carrying out repairs. However, overcapacity in East Asia, and China in particular, has led to more owners bringing their ships to this region.

How does the technical capacity of Bahrain’s local engineers compare to that of other regional hubs?

POTTER: Bahrain’s industrial labour force has one of the highest ratios of nationalisation in the region – you will find more nationals in technical and engineering jobs than you would find in other regional workforces. In my experience, this local participation is very beneficial as it creates a sense of local pride in the firm, which can be an excellent motivator. Another effect of this participation is that the actual technical expertise of local engineers is increasing all the time. In other countries in the region there can often be a widening gap in skills between the local and expatriate labour force, but in Bahrain this gap is actually getting smaller.

What measures should the Bahrain Maritime Code focus on to support the industry?

POTTER: As I represent a repair yard, The Port Act is of most interest to me, with the presence of the act itself being its most important feature. By formalising these regulations, many of which are already in place but not explicitly codified, and having a legalised, certified framework it gives potential customers a huge amount of confidence. Knowing that treatment will be fair when dealing in Bahrain will undoubtedly ease global customers’ decision to seek repairs here.

In what way has the offshore segment of your industry grown, and how significant is it for the future?

POTTER: The offshore segment has always been very active, even though it was only in the past five years that ASRY tapped into it with its ASRY Offshore Services division. Due to Saudi Aramco’s proximity, the offshore sector has promising opportunities, which will only keep growing. There are also several other players in the region with offshore vessels, both rigs and support vessels, which translates into a wealth of repair work in that sector. And since the repair market is becoming more competitive each year, non-repair work, such as power generation through offshore turbines, will broaden the services provided in the offshore segment. Moving forward, offshore is going to remain a very important part of the marine repair industry, especially as ship repair continues to be challenging.