The level of natural gas in Trinidad and Tobago has fallen to detrimental levels in recent times, which was independently certified by an international firm, based in Houston, Texas, USA which evaluates oil and gas properties and petroleum reserves quantities.
For future economic sustainability and social stability, the Government of Trinidad and Tobago has deemed it paramount that the gas-based economy be diversified, allowing for alternative avenues of foreign investment, facilitating increased trade and continued industrial growth.
In Trinidad and Tobago the domestic commercial maritime sector developed as a requirement of a strong marine presence in the energy sector, to support offshore exploration activity and the transportation of goods and services between their land and sea bases. Also growth has been buoyed by the rapid expansion in cargo and trans-shipment trade, as the country developed into a major hub to facilitate trade between the smaller islands and countries in mainland South America e.g. Guyana, Brazil.
growth in the sector has increased by over five percent in recent years. Growth in the sector has been expanded by a rapid expansion in non-petroleum trade, which increased by over 30 per cent over the last five years. Trinidad and Tobago has three major cargo ports, two of which are among the most highly developed in the Caribbean - Point Lisas and Port of Spain.
More importantly, given the extremely buoyant performance of the energy sector over the next 10 to 15 years, anticipated growth rate of 7 to 8 per cent in non-energy trade and an emerging tourism and leisure marine industry, there will be high demand for good quality, reasonably priced maritime services.
Objective
To investigate the factors associated with the development of a world-class shipbuilding and repair sector in Trinidad and Tobago, in order to diversify the economy from the energy sector and, to maximize its revenue base.
Scope
Only information more recent than 1995 was considered for this project.
Technical information such as the specifics of the design of a ship was not incorporated in this project.
Limitation
Method of Data Collection & Implementation
Justification
In 2004, the Government of Trinidad and Tobago committed to the establishment of a Merchant Marine Industry. In 2005, the Government identified the proposed Merchant Marine Industry as a targeted sector in the development and diversification of the Trinidad and Tobago economy.
The Government's recognition of the potential for maritime markets in the region, as well as the significant advantages to diversification and strengthening of alternative sectors was a driving force for the TDDCL venture in this area.
Trinidad and Tobago's Vision 2020 initiative, a progressive Government plan to make the country a fully developed nation by the year 2020, works well with the strategy behind the dry dock project. The proposed Sullivan Island Project is strategically located to exploit the opportunity for services in the Gulf of Paria, as the Gulf is the destination for 100% of the country's bulk, cargo and other vessel arrivals. The majority of Oil Tankers traversing through T&T's waters also arrive at the Gulf of Paria. In addition, about 550 empty vessels arrive at the Gulf annually (due to petrochemical exports), including large bulk and LNG tankers.
Trinidad and Tobago also has a number of internationally recognized seaports of entry. The major ports in Trinidad include Port of Spain, Point Lisas (which won the Caribbean Port Award in 2003 for the third consecutive year), Chaguaramas and Point Galeota.
Trinidad and Tobago's rapidly expanding export trade results in approximately 2,200 container and cargo vessel arrivals, per annum.
Port of Spain has a sheltered harbor, capable of handling bulk container shipping and cruise ships. Point Lisas is a fully developed industrial port which specializes in handling petrochemicals, iron and steel and containerized and general cargo.
There is a great deal of large vessel traffic in the southeastern part of the country, which houses a major bauxite plant as well. Point Galeota, located on the southern tip of Trinidad, is the main port from which Trinidad and Tobago companies undertake major oil operations.
The primary port in Tobago is Scarborough, a sheltered deep-water harbor and the main link for transportation of products from Trinidad. It is also a port of call for major cruise lines.
Other main towns with deep-water harbors are Roxborough and Charlotteville. Trinidad and Tobago has a highly skilled workforce trained through the development of the energy sector in the height of the natural gas expansion boom, and this can be readily absorbed into the Sullivan Island project. Personnel will be sent to augment the human resource industry capacity in the New Amsterdam operations.
Literature Review
Shipbuilding is the construction of large vessels which travel overseas, lakes, or rivers. Sometimes a ship must be custom-built to suit the particular requirements of a client, company or specific trade route. Alternately, many times a significant number of similar ships are constructed, thus employing procedures which take advantage of repetitive processes.
The building of a ship can be divided into seven phases: design, construction planning, work prior to keel laying, ship erection, launching, final outfitting, and sea trials.
A dry dock is a structure that is used in the maintenance, construction, and repair of ships and boats. It is designed so that it can be filled with water, this allows a vessel to sail in, it is then drained, which leaves the entire body of the vessel exposed so that it can be worked on. Most ship yards have at least one dry dock, and some dry docks are extremely large, to accommodate massive ships in need of repair work. A skilled team of ship builders and repair people work on the vessel while it is dry docked, and then flood the dry dock so that it can return to the open water and active use.
What is a deepwater harbor?
TDDCL is expected to bring considerable economic gains to both host countries. The proposed New Amsterdam project is expected to double Guyana's current GDP of US$1.16 billion, while the Sullivan Island project is expected to increase Trinidad and Tobago's current GDP of US$ 2.39 billion by some 8%.
The New Amsterdam and Sullivan Island projects are expected to achieve a Net Present Value (NPV) of US$ 2.6 billion. It is projected that the projects will achieve an International Rate of Returns (IRR) of 28.7% (which exceeds the discount rate applied). The Payback Period on investments is 7.1 years.
Potential business partners have already been identified in the Cruise, Containerised Cargo and Bulk Shipping, Dry Docking and Ship Building industries as well as in the overseas Heavy Construction Sector and the overseas Heavy Manufacturing Sector.
Royal Caribbean Cruise Lines have expressed an interest in the Port of Spain Dry Docks with the potential for locating an operating base in Trinidad and Tobago.
DISCUSSION
T&T has a wide range of competitive advantages
strategic geographic location,
a highly educated,
diverse work force;
low energy and fuel rates,
a highly developed industrial sector;
a commitment to free market principles
strong democratic principles away from the hurricane belt and
long history in weld fabrication
strategically located between key trade routes connecting North and South America.
Existing link with relevant Authorities and regulatory bodies
Jobs: The industry with the establishment of new shipyards would employ more than 4,000 highly skilled workers and would create some of the highest paying jobs in the manufacturing industry.
Naval Architects / Technicians
Mechanical Engineers
Joiners
Painters
Pipe fitters
Electricians
Welders
Fabricators
Human resource managers
Ship engineers
AutoCAD Technicians
design, build and repair ships < 5,000 DWT using fiberglass, steel, aluminum and concrete materials, together with modern fabrication processes.
Steps to interest investors:
provide prospective investor with a comprehensive overview of the specific industry,
mechanisms for driving growth and investment,
incentives for investors
strategic opportunities for business development benefited from a favorable geographical location,
Development of three sub-sectors in the maritime industry - ship ownership, ship building and maritime construction. As such investment opportunities have been identified in such areas as
small vessel ownership and management,
rig and offshore platform construction,
logistical support services and ship repair services.
onshore operations would include ship inspection and certification;
crewing agencies and services;
shipping agents;
ship chandlers;
port management.
Types of ships:
Deep sea multi-purpose fishing vessels
Coast guard ships
Mega Yachts
Terminal Tugboats
Transport and Construction Barges
Ferries / Inter-island vessels
Shipyard spin-off industries:
Hydraulics: sales and servicing
Engine and generator: sales and services
Propeller Balancing : using computerized technology
Hot Dip Galvanizing: Zinc and Aluminum
Surface preparation: wet and sand blasting
Foundry: ferrous and non-ferrous
Hull and super structure treatment: Paint manufacture
Support services required for success:
Gas freeing and weld inspection
Retro fitting and Conversion
Insulation
Certified human conversion/inspection
Shipboard electrical sales, service
Metal inspection of ship hulls
Standard: The quality of building of the ship in any shipyard is assured by the use of classification societies such as Lloyd's Register (UK), Germanischer Lloyd (Germany), Det Norske Veritas (Norway) and so on.The classification society will approve the details of the design and inspect and report on the building process, ensuring that it meets minimum standards.
Some major industry development incentives include:
The Fiscal Incentives Act, which provides for a waiver of income tax on dividends or other distributions other than interest, out of profits derived from manufacture of approved products; and relief from Value Added Tax on imports for highly capital-intensive enterprises.
Under the Customs and Excise Act, investors can benefit from duty free importation of plant, machinery, equipment, components and raw materials for use in industrial enterprises.
The Foreign Investment Act allows a foreign investor to purchase land up to one acre for residential purposes and five acres for commercial use. In addition, foreign investors are allowed to purchase up to 30 per sent cumulative shareholding in a public company.
Trinidad and Tobago Investment
Advantages
The country has experienced 15 consecutive years of economic growth, with a GDP growth rate of 12 per cent in 2006.
Strong Economic Base and Diverse Economy
Trinidad and Tobago's economy is energy based and also diversified enough into business and services to support any range of financial interests and industrial requirements.
Highly Developed Air and Sea Transport
Trinidad and Tobago has two of the largest and most well-developed ports in the Caribbean, at Port of Spain and Point Lisas, handling dry and general cargo, industrial bulk and containers. The two airports, Piarco and Crown Point International, service some of the largest airlines in the world, e.g. American Airlines, British Airways, Virgin Atlantic, Continental Airlines, Delta Airlines, etc.
Enhanced Market Access
Trinidad and Tobago, as members of CARICOM, has embarked on a drive to secure gain greater market access for manufacturers and service providers located here through bilateral trade agreements with its Latin neighbors. So far we have arrangements in place with Colombia, Cuba, Costa Rica, Venezuela and the Dominican Republic.
Government Commitment to Development of the Industry
With the establishment of the Maritime Development committee, the Government has indicated its intention to make the Maritime sector a sustainable long term, revenue generating option.
Educated Workforce
Trinidad and Tobago has one of the highest literacy rates in the English speaking Caribbean, and the Government provides a range of educational benefits, in particular for tertiary level and technical education.
Commitment to Free Market Policies
Trinidad and Tobago has a long standing democratic tradition, epitomized by its Westminster model Parliament and continued Government support for business and investment and adherence to democratic principles.
Lower Cost of Living
Due to currency value and economies of scale, the cost of living in Trinidad and Tobago compares favorably with other Eastern Caribbean territories.
Diverse Range of Social Activities
Trinidad and Tobago has more to offer than most other Caribbean islands in terms of social activities, nightlife, restaurants, cultural events, festivals, etc., all of which enhance the overall quality of life for the country's citizens.
Ethnically and Culturally Diverse
Due to its history, Trinidad and Tobago has become famous for its ethnic mix and tolerance of diversity, which ensure that all people are welcomed to live and work here. In fact, as part of the drive to integrate our economy into Latin America, Government has embarked on a program to implement Spanish as the First Foreign Language.
Highest Concentration of Foreign Missions in the Caribbean
Along with the United States, the UK and Canada, the presence here of representatives from several major European and Commonwealth countries is testament to the long-standing, positive relationships which the international community has enjoyed with Trinidad and Tobago. In particular, visitors will have immediate contact to their home territories whenever
necessary.
Etienne Mendez, chairman of the Trinidad Dry Dock Company, has been specially invited by the Commonwealth Business Council to undertake a presentation on the proposed "Sullivan Island" shipyard to be built offshore Sea-Lots, Port-of-Spain. The presentation is to be held onboard the Serenade of the Seas, (built 2003). The Radiance-class cruise liners are considered by many people to be one of the most beautiful ships in the Royal Caribbean's fleet.
Published: 19 Nov 2009
The T&T shipbuilding and repair cluster, an initiative of the Ministry of Trade and Industry (MTI), was formed in 2007 to plan and carefully develop this "new" area of maritime activity. The Government contracted international maritime and transport consultants Barry Rogliano Salles (BRS) and Global Insight, through the MTI, in September 2007 to undertake a comprehensive study of this sector. Initially, the idea was tabled to build liquefied natural gas (LNG) carrier ships in Trinidad, as T&T then and now continues to be one of the main suppliers of LNG to the North American market. It was predicted that thousands of shipments would be required to lift these precious cargoes from Point Fortin for final delivery to various regasification terminals, scattered along the eastern seaboard of the United States.
At the early stages of this consultation exercise, local stakeholders had different views about this concept, as they saw as a prerequisite T&T nationals first needing to build their competencies and to form strategic alliances related to the building of these technologically sophisticated ships. One of the main recommendations to the consultants was initially to specialise in the construction and repair of smaller vessels, vessels less than 5,000 DWT (deadweight tons, being the amount of cargo a ship could safely carry). Examples of these small vessels would be water taxis, fast ferries, inter-island cargo ships, anchor handling supply vessels, tugs and barges. Within the last 18 months, the T&T shipbuilding and repair cluster, which, at present, comprises some 25 local and foreign stakeholders has received various enquires from around the globe and these have been collectively estimated at $2.5 billion to date.
Global maritime players
These enquiries vary from shipbuilding, ship repairs and conversions and the establishment of new maritime service providers in Port-of-Spain. The cluster has also managed to attract a number of major global maritime players including, ASCO (British oil and gas logistic specialist), Det Norske Veritas (Norwegian ship certification), GAC (Dubai-based logistics, shipping and marine services), Lloyd's Register (London-based ship certification) and Wartsila (well-known Finnish ship design, ship propulsion and automation manufacturer). Among the local cluster stakeholders are: Alstons Shipping Ltd (ANSA McAL Group); Damus Group; Tracmac Ltd (division of Neal and Massy Group); local dealer for Caterpillar marine engines; Cantrex Ltd; member of the Bhagwansingh group of companies, which produces aluminium extrusion supplies for the construction, shipbuilding and repair industries, and several others.
Financing
In the 2010 budget recently passed in Parliament, approximately $100 million has been allocated towards the design and build of two new harbour tugs by the National Energy Corporation of T&T Ltd (NEC). The Government, together with the maritime cluster, through the Shipbuilding and Repair Development Company of T&T Ltd, will be building, maintaining and repairing these types of vessels, as a result of this unique public private partnership (PPP). T&T, with its large fleet of water taxis, inter-isle ferries, harbour tugs and offshore patrol vessels on order, would automatically become the largest customer initially. The result would be a net savings of millions of dollars in valuable foreign exchange and the employment of thousands of citizens directly and indirectly, as this industry is very labour intensive.
In August 2009, another successful Maritime Mentorship Programme was undertaken for a second year. This programme was held during the vacation period and organised by the Business Development Company Ltd (BDC). The aim is to encourage young men and women, 15-17 years, to seriously consider the maritime industry, including shipbuilding and repair as a rewarding career. Approximately 50 mentees participated in this year's shipbuilding and repair presentation, which was oversubscribed. The programme included local and foreign speakers on the maritime industry and visits to ports and shipyards. Already, plans are to expand this programme in 2010 and to offer an internship to take these young graduates into an intensive period of learning and practical training at T&T's main shipyard(s).
Opportunity in crisis
With the ongoing world economic crisis, an article published in a local newspaper correctly stated this has negatively affected the shipbuilding sector. This is simply because of the existing demand and supply imbalance, which is the case primarily for the large ships more than 5,000 DWE. Looking back, the original recommendation made to the foreign consultants by the shipbuilding and repair cluster in 2007 is correct. Luckily, for all concerned this recommendation was accepted. Nevertheless, as in the old saying, "with crisis, there is opportunity." As a result of the current downturn, there is an enormous glut in the worldwide oversupply of these large ships including LNG carriers, bulk ore carriers and very large crude carriers (VLCCs) chasing a small number of cargoes. This has created a new market for the shipbuilding and repair custer and T&T, as thousands of these ships that were ordered in 2007 and recently launched by foreign shipyards located mainly in South Korea, Japan and the People's Republic of China have to be "laid-up," some without ever having transported a single shipment of cargo.
Sheltered harbours
Trinidad is also blessed with having one of the largest natural sheltered harbours in the world, the Gulf of Paria, which is located outside the hurricane belt. The numerous yachts that arrive at Chaguaramas Bay testify to this. Several large ships with varying flags fluttering in the mild breeze are clearly seen in the Gulf of Paria. Already, some of the cluster stakeholders have started the business commonly referred to in the maritime world as "ship lay-up." The crisis has created a new opportunity for T&T and is fast becoming a valuable eamer of foreign exchange. Possibly, the shipbuilding and repair cluster may also have to officially include this maritime word in their vocabulary, as increased demand for smaller vessels would be immediately needed to properly service the needs of these larger ships, while they patiently await instructions from their respective owners/ship managers thousands of miles away.
Prospects
The shipping industry is a multibillion dollar global industry, one which is the first to feel the effects of a recession and also the first to recover. Recently, Joep Gorgels, head of European Transportation at Fortis Bank Nederland, stated: "We have to find US$500 billion needed for ship financing between 2011 and 2012."
If T&T's local shipbuilding industry would successfully get half of one per cent of this huge amount, it would be unsound for any writer, economist or potential investor to describe the future of local shipbuilding as being "bleak." What better diversification of T&T can a country want at this present time? T&T has substantial foreign exchange earning capacity: the industry is also labour intensive. In the dynamic maritime industry, there is an old saying: "If you stop moving, you're dead."
Recommendation
Creating replacement demand by developing environmentally friendly and safer ships.
Upon reaching the end of their operating lives, ships are dismantled and the materials and
equipment are almost entirely recycled or re-used. Ship recycling activities are only economically viable
in the area with demand for recycled materials and inexpensive labor. Therefore, in recent years the
activities have shifted to countries such as Bangladesh and India.
Conclusion
References
http://www.investtnt.com/1content/articlefiles/9-Merchant%20Marine%20Indus-%20TIC2008.pdf
http://guardian.co.tt/business/business-guardian/2009/11/19/building-tt-s-shipping-industry
http://www.tradeind.gov.tt/Business_Dev/Merchant%20Marine/S&R%20Jan%202008%20Cluster%20Presentation-c.pdf
http://ezinearticles.com/?Development-of-the-Shipbuilding-and-Ship-Repair-Industry-in-Trinidad-and-Tobago&id=5267339(29/11/10)
Answers Cooperation. (2010). Shipbuilding. Retrieved November 30, 2010, http://www.answers.com/topic/shipbuilding#World_shipbuilding_industry_in_the_21st_century
S.E. Smith. (2010, September). What is a dry dock, Retrieved November 30, 2010, http://www.wisegeek.com/what-is-a-drydock.htm
