Global shipping giant STX invests $150 million in new Brazilian shipyard and plans to double production. Reuben Ford investigates.
STX is Brazil’s leading shipbuilder. Its core business: innovative design and construction of complex and highly customized vessels for the oil and gas industry.
Hitting rough seas in the 2009 crisis, the international shipbuilding industry suffered from drastically sinking sales; the more tranquil markets such as Brazil became subject to over-supplying.
STX plans to add to its Niterói shipyard in Rio de Janeiro by building a new facility in north eastern Pernambuco, which will increase productivity by 50 percent over the next five years. Brazil therefore has an important role in putting the market leader on course for recovery.
Believing in Brazil
“Since the oil industry boom in 2000, the world has looked to Brazil for growth and opportunity in shipping,” explains Miro Arantes, president of STX OSV Niterói S.A.
The Niterói shipyard builds on average three to four complex vessels a year and has annual revenue of around $300 million. “The steady increase in revenue and stable growth of the shipyard led to the decision to invest more in Brazil,” relates Arantes.
He refers to STX’s multimillion investment in a new shipyard in the strategically chosen Pernambuco. The state – located on Brazil’s northeast coast – is ideally situated for receiving raw material for production, which is purchased from abroad. “Sixty percent of our equipment is imported, and the new shipyard brings huge benefits in logistics,” Arantes confirms.
Construction of the facility, located in Suape, began in November 2011 and is due for completion in July 2013.
Pernambuco also has one of the fastest growing state economies in Brazil. As well as great opportunity and access to a large workforce, STX also has the advantage of government tax incentives created to draw new businesses to the state.
Despite the $150 million investment in Suape, STX is also constantly updating its Niterói shipyard. “Niterói is a successful facility – we are investing in increasing Brazilian production, because we believe in the potential of the national market,” Arantes says.
Success in Brazil comes from experience. Arantes is clear: “The national content policies must be respected – Petrobras needs assistance on a local level and, as a major contributor to the economy, needs strong and reliable suppliers.”
With 100 percent of its vessels destined for the offshore oil industry, STX remains competitive – a challenge tested by the international crisis in 2009 which flooded the Brazilian market with ships that had not been sold abroad. Arantes explains: “Reduced buyer investments dealt a blow to the ship building industry and we are working hard to recover – by investing in Brazil and competing for more Petrobras contracts.”
The shipyard in Niterói is no stranger to progress. Opened in 1996 by Brazilian group PJMR, it first concentrated on maintenance and repair services. In 1998 it signed the first shipbuilding contract for three platform supply vessels (PSV).
The Norwegian company Aker Yards bought the shipyard in 2001, by which time it built more than 28 vessels ranging from PSVs to anchor handling tug supply vessels (AHTS), and pipe-laying support vessels (PLSV).
In 2008 the STX Cooperation acquired Aker Yards. The shipyard became STX OSV Niterói. “Over the years we have increased the complexity of our vessels and our knowledge. We’ve always been ready for the next phase,” Arantes says.
In 2010, STX Niterói delivered the first Brazilian-built PLSV: the Skandi Vitória. One year later, the company finished the Skandi Amazonas – the biggest and strongest AHTS ever built in the country, with 300 tons of Bollard Pull. In 2012, STX completed the Skandi Iguaçu, sister ship to the Skandi Amazonas.
The shipyard in Rio de Janeiro occupies an area of 120,000 square meters in the Guanabara Bay of Niterói. It employs 1,800 staff and has a production capacity of 6,500 tons of steel a year. The 250,000-square-meter industrial park in Suape will house all the necessary facilities for ship building. A steel cutting and processing plant – as well as assembly and painting plants and docking capacity for vessels of up to 151 meters in length – will allow an increased production capacity of 20,000 tons of steel every year, providing employment for 1,500 people.
Together the STX’s two Brazilian facilities will focus on maritime support vessels for the growing Brazilian oil and gas market by supplying PSV, AHTS and PLSV as well as offshore & specialized vessels (OSV) and LPG (liquid petroleum gas) carriers. “Each ship has specific requirements, in accordance with the necessities and operations of the client. Each one is unique,” emphasizes Arantes.
A Trained Ear
The basic project for the vessels comes from STX’s headquarters in Norway, but each is developed regionally in the group’s 10 shipyards around the world. In Brazil, this “nationalization” process is critically important. Arantes explains: “The dimensions of our steel and our industrial norms differ from those in Norway and in other countries. Each region listens to the needs of its clients and works on basic projects accordingly.”
Listening to, and knowing its market is central to STX’s methods. The complex requirements of the vessels leave many competitors with a lack in qualified staff. STX invests heavily in training, together with local governments to build the level of expertise required.
“With the Pernambuco shipyard, our focus for the future is on training and meeting the requirements of the oil and gas industry in Brazil,” Arantes says.
Although the ship building industry outside of Brazil is consolidated, it suffers from the wrecks caused by the 2009 crisis.
“To compare the Brazilian market with the foreign market is to compare a developing market with a consolidated one looking for a way to survive,” describes Arantes. “It is essential to understand that the shipbuilding industry will have a strategic role in the future of [Brazil], and that it’s essential to invest in training and development.”