Drydocks World was having a hard time of it when Khamis Buamim came on board as chairman in 2010. Three years later, a focus on offshore construction and the energy sector is helping it to reverse its fortunes
Khamis Juma Buamim readily admits that things were “difficult” when he joined Drydocks World in 2010. The ship maintenance & repair business was down globally in the wake of the financial meltdown and Drydocks World’s parent, Dubai World, was in the midst of its well-publicised debt crisis.
Three years later, things appear to looking up for the company. A settlement on US $2.2 billion of debt, accrued during its expansion into Asia prior to the financial crisis, was reached last year. A strategy to focus on high growth sectors of the offshore construction sector also appears to be making progress.
“I wasn’t in it to turn it around as much as to see if there was salvation for it at all,” says Buamim, describing how he felt in 2010 when he became chairman of Drydocks World. “Nevertheless, business has grown; the new strategy implemented has definitely helped.”
That new strategy involves going beyond the company’s traditional business of ship maintenance & repair. Although it definitely hasn’t given that up, investment now focuses on potential areas of growth, particularly the offshore oil & gas and energy segments. Along the way, Drydocks has come up with some futuristic product concepts that may lead to growth in the future.
“Ship repair and maintenance will always be there, but it’s not going to be as great as we would like it to be,” Buamim explains. “So what we are looking at is that part of our focus will be on the offshore market, and that’s oil & gas and energy.”
A look at the company’s order book gives some idea of the kind of the projects that the new Drydocks World will increasingly be involved in.
One is an offshore platform the size of a football field that will form part of a German offshore wind farm. Another project has seen two ships being converted into module capture units for a consortium of ten oil majors.
The ships will function as tankers in a normal environment, but will be able to convert into special-purpose vessels that can stop leaks and contain spillages in emergencies. The ships will be put to work in the Gulf of Mexico.
Drydocks World is also building the turret for Shell’s Prelude floating liquefied natural gas (FLNG) facility. The structure, around 90 metres in height and 30 metres in diameter and weighing 11,500 tonnes, will be built in six parts and shipped to Korea for final assembly.
Other projects include construction of a 400,000 barrel underwater storage tank, which will be located off the coast of Scotland. One recently completed job was the conversion of LNG carrier Golar Frost into the floating storage re-gasification unit (FSRU) Toscana.
Such projects demonstrate the new direction Drydocks World is taking, but, as Buamin points out, require considerable investment in processes and people.
After dropping to a headcount of around 9000 people in 2010 at the height of the crisis, the company has grown to around 13,000 employees. Employees are sought with advanced welding skills and training is given to advance the existing workforce’s skillsets in this area.
In addition to traditional source markets in the sub-continent, Drydocks is increasingly hiring from the Philippines, Vietnam, and Eastern Europe. Salaries for skilled workers are going up, Buamim confirms, but he says the attraction of working in Dubai helps keep wage inflation in check.
By focusing on higher value segments where expertise matters more than cost, Drydocks is better able to avoid being dragged into a price war with Far Eastern yards. “The big clients are looking for high quality,” says Buamim.
“China is competing heavily because they’re very cheap, plus they have different financing schemes, because they are capable of starting a project at 5% down and 95% on delivery. We cannot do that.”
To support its quality message, Drydocks has invested in relevant accreditations and environmental initiatives.
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It follows a principle called ‘Zero Harm’ and claims to have worked 29,768,751 million man-hours with no work related fatalities and to have suffered no major environmental incidents during 2012 and so far in 2013. It also claims to recycle 80% of all solid waste generated.
The company is certified by Lloyds Register Quality Assurance for meeting ISO and OHSAS requirements. Investment is currently being made in robotic systems that would avoid the need to perform sandblasting procedures.
Buamim says these accreditations and policies are a vital part of its strategy to be seen as a quality supplier. “It’s expensive, but it’s important,” he says. “International, reputed companies will not go into a potentially risky environment. We want to offer something that is highly appreciated by our customer.”
Linked with the quality element, Buamim believes, is the company’s location. Shipment of finished products from the UAE to Europe is more straightforward and insurance is easier to obtain, he says.
As it sharpens its focus on offshore projects, Buamim is clear that Drydocks World will only bid on high value projects. It works with established global names, including the top ten oil & gas majors, and will continue to focus on international projects.
“We will only enter a certain level of project and that’s important,” Buamim says. “We have good partners whom we believe we need to help and sustain. If we enter the smaller vessels market, it will not be fair. We have to stay focused on our global capabilities and knowhow.”
Rig repair and refurbishment are also a big area for the new Drydocks. As oil demand increases and technology allows oil to be extracted from ever more remote places, rigs are coming back online. “If you look at the oil industry, it will continue to grow,” Buamim says.
“More and more rigs are now required to come back on stream and it’s important for us to align ourselves with the needs of the industry.” As of early June, Drydocks had worked on 11 rigs so far this year.
Reinforcing its environmental credentials, Dubai Drydocks has launched something called the
‘Dubai Maritime Green Initiative’. Drydocks describes it as, ‘a strategic movement to encourage all-round environmental excellence in the maritime and allied sectors’.
Under the initiative, a green technology transfer agreement was signed with DNV and Rolls-Royce, and Drydocks has declared plans to develop a ‘Green Tug’ that runs on LNG.
For Buamim, taking a role in the adoption of green technology is a key part of his plan for Drydocks.
He is convinced that LNG is the fuel of the future for the marine industry and that companies like Drydocks should recognise this fact now. While the transition to diesel fuel was a drawn out process, the switch to cleaner, abundant, affortable LNG should happen much more quickly, the chairman believes.
“In my view, LNG will become the source of energy for the marine industry,” says Buamim. “The question is: ‘Do we have to wait 50 years, or should we just do it today?’ It’s clear what he thinks the answer is.
Asked what is unique about Drydocks, Buamim says it is a lot like Dubai itself. “It goes for niche, out of this world concepts,” he says. “It doesn’t not believe in waiting.
We should not wait for the knowhow to come us, we need to go and search for it. The most critical part is that need to deliver certain projects that the world will always associate with us.”
Ultimately, Drydocks World’s chairman believes long term success will come from understanding what the customer wants and delivering it. “We would like to switch from: ‘We offer this’ to ‘What is it you want?’” he concludes.
