The Straits Times / The Business Times News on Cosco

Cosco Corp hires staff for new rig-building focus

Technicians for China yard come from Japan, Korea and Singapore

(SINGAPORE) In preparation for its new offshore rig-building focus, Cosco Corporation Singapore has been hiring experienced technical staff from shipyards in Japan, Korea and Singapore for its China-based shipyard subsidiary.

Mr Ji: Close cooperation with SembCorp will help Cosco move faster into rig building and ship newbuilding.

'In the last couple of months we have hired eight senior marine engineering technicians - two from Japan, two from Korea and four from Singapore,' Cosco Corp vice-chairman and president Ji Hai Sheng told reporters on Monday.

The eight - all with offshore marine engineering experience - have all been seconded to the Cosco Shipyard Group where they are working together with the Chinese team, he said.

A senior technician from SembCorp Marine (SembMarine) has already been stationed at Cosco's Dalian Shipyard for a number of years, but Mr Ji declined to say which Singapore yards the other four had been wooed from.

SembMarine holds a 30 per cent stake in the Cosco Shipyard Group while Cosco Corp holds a 51 per cent stake.

Hiring the external expertise was necessary for the shipyard group to make the key transition from repairing and converting vessels to undertaking more sophisticated, and lucrative, newbuilding projects for the offshore oil and gas sector.

Just last month the Singapore-mainboard listed shipping group announced its first newbuilding orders for six supramax bulk carriers and one semi-submersible oil rig worth a total of US$450 million.

Noting the close cooperation with SembMarine Mr Ji said personnel from the Cosco Shipyard group underwent training at SembMarine's PPL Shipyard.

'Close cooperation with SembCorp and PPL will help us to move faster into these new areas,' he added.

Mr Ji earlier told BT that he expects the new focus on offshore rig building and ship newbuilding to contribute about 60 per cent of total revenue from its China-based shipyard subsidiary within three years.

Speaking after announcing the full-year 2006 financial results which saw a 28 per cent jump in net profit to $205.4 million, Mr Ji said the group would not diversify into other high-end vessel building like container ships or liquified natural gas (LNG) or liquified petroleum gas (LPG) carriers as it wanted to focus on the offshore sector.

'At the present time we have no intention to go into a fuller range of newbuildings.

'We will see how it goes because for Cosco Corp we have given direction to our shipyards to put first priority on oil related businesses and then ship repair and conversions,' he said.

The shipyard group is also trying to wean itself off bulk carrier repairs which have at least a 10 per cent lower profit margin compared with other repairs.

Cosco Corp's net repair margins for 2006 were about 19 per cent compared with shipyards in Singapore which typically see at least a 25 per cent profit margin in the repair business.

The group reduced the percentage of bulk carrier repairs from 57 per cent of the total in 2005 to 40 per cent last year and Mr Ji hopes to reduce this even further.