Volume 8 | Issue 5 | Year 2005

It’s everyone’s port of call for fabrication and ship repair services. Talleres Navales del Golfo, S.A. de C.V (TNG) is an independently operated division of J. Ray McDermott, Inc., a leading worldwide marine solutions company, that operates the largest shipbuilding and repair facility on the east coast of Mexico. Ten years into a 30-year agreement with the Port Authority of Mexico, TNG is an ISO-9002 company specializing in three major lines:• offshore fabrication of platforms, components and other heavy and light metal maritime structures;
• ship building and ship repair, including conversion, upgrade, and life extension of seagoing vessels and offshore units;
• semi-submersible and jack-up rig maintenance.

Prior to 2004, about 60 to 70 percent of TNG’s business was derived from fabrication. Today, however, about 80 percent of its business has shifted to repairs and maintenance. “It’s not a conscious decision on our part to emphasize one aspect of the business over another,” explains Miguel Pazos, president, chairman and managing director. “Rather we’re responding to what the market is demanding. We are ready and fully prepared to provide services in all three lines, it’s just a matter of what our customers need us to do for them.”
These customers comprise major petrochemical companies, offshore drilling contractors, ship makers and shipping lines, and typically comprise multi-million dollar projects. Contracted work is either the result of strategic alliances developed between TNG and the customer, or bids as part of long-term master service agreements which encompass multiple project activities TNG performs.

“We’re a global company with highly technical skills and a long tradition of applying rigorous guidelines and procedures not only to marine fabrication, but to effective project management. We have the additional advantage of being located not only in the heart of the largest and busiest port in Mexico, but where we also have access to an abundant, but comparatively inexpensive, labor pool,” Pazos notes. “Those factors combined comprise our major selling point.”

As an important part of the J. Ray McDermott corporate family, TNG also has a unique set of global connections and resources. But, as Pazos explains, this also requires him at times to walk a finely lined plank. “Each division within McDermott is responsible for its own profitability,” he notes. “Of course, we try to accommodate the parent company when they have need of our expertise and facilities. On the other hand, I have to allocate my resources where I think I’m going to be the most profitable for TNG. McDermott fully understands this; in fact it’s their policy that each entity makes its own judgments on what’s in their best interests. That said, however, for the most part we’re usually able to keep everyone satisfied.”

TNG is situated on 85 acres on the key of San Juan de Ulua, with easy access to the Gulf of Mexico and the Caribbean Sea, servicing the country’s most technologically advanced port of Veracruz. Twenty-four acres are devoted to fabrication activities, with a working area of approximately 344,000 square meters that includes offices, shops, warehouses as well as two dry docks for ship repair. The shipyards have the capacity to build and repair ships up to 80,000 deadweight tons, as well as for the manufacture of offshore oil platforms and capital goods in steel fabrication and mechanical works, supported by a steel facility capable of processing up to 37,000 tons of fabricated steel per year. The yard also maintains 1250 meters of fully serviced wharves with water depths up to 12.20 meters in a bay with water depths up to 13.70 meters.

People Priority
TNG peaks at approximately 1,200 direct employees, with another 300 indirect workers. Pazos emphasizes that what gives TNG a commanding competitive edge is its people. “Yes, we have software and general systems and processes in place, but ultimately none of that matters if you don’t have the people committed to do the job. The culture of our company puts people as the number one priority that determines our success.”

Related to this is the necessity to put people in the critical positions where they will be most effective. “We want to challenge our people. That means a combination of using them where their skills are appropriate as well as giving them opportunities for professional and new skills development, which in turn makes them an even more valuable asset to us,” Pazos says. “It’s equally important that once you’ve placed people on assignment that you are very clear on what your expectations are and how you are going to evaluate their performance. That way there are no surprises.”

Of course, even with the emphasis placed on the human factor, you can’t ignore the tools they use. “We’re continually evaluating the mix of our equipment. You just can’t assume that the equipment you have over the course of a two-year project is going to be exactly right for the next job. So we’re continually introducing new products with the old gear to get ready for the next opportunity. The trick is to do it gradually and make sure that whatever gear you have meets the needs of the project. Don’t make the mistake of letting the bells and whistles of the technology dictate your purchase decision; the work dictates what kinds of equipment you need and how it needs to integrate into the existing mix of gear.”

Volatilities and Opportunities
Like every manufacturer, TNG is hit hard by the spiraling costs of raw materials. “The cost of steel is out of control,” he points out. “Two years ago we had a 30- to 90-day contractual window in which we’d guarantee a price, but we just can’t do that today because of the market volatility. We’ve been forced to qualify fees based on the price of materials as to whatever they are when we can acquire them. It is no longer something that we can anticipate or have any influence over.”

While TNG is growing comfortably with the marine service it offers, Pazos believes there is future opportunity to vertically integrate additional port services. “Veracruz is a very busy port, to the point where space is at a premium,” he says. “Because we are located on so much acreage, we could easily have the capability to offer cargo handling services. While our main focus is on our project work, I can easily see us branching into this area and it is something we’re seriously investigating.”

In the meantime, TNG intends to keep a steady course with a heading towards continued success in providing superior maritime repair and construction services.