Abu Dhabi Ship Building is expanding its business of servicing and repairing commercial vessels amid a slowdown in orders from regional military clients.
The region’s biggest publicly traded shipbuilder is targeting more commercial clients as governments reduce spending after the steepest drop in oil prices since the financial crash of 2009.
“The company used to depend heavily on military contracts, which is perfect and fine but it takes long to negotiate and build and you don’t want to have the risk of ‘when are we going to get orders’, especially amid the financial crisis,” said Khaled Al Mazrouei, the chief executive of Abu Dhabi Ship Building.
“So we decided to concentrate on the services and the margins on the services are better.”
While most of the commercial ships, which are being serviced under the new strategy, are from the oil and gas industry in the region, the company has beefed up its marketing team and is trying to attract a broader array of commercial vessels.
At the same time, the company has also been bolstering its military repair and servicing capabilities. Arabian Gulf militaries like to order ships from Abu Dhabi Ship Building because of their familiarity with regional specifications as well as the proximity of maintenance teams, the company’s chief executive said.
The UAE Navy and the Coast Guard have been among the biggest customers while in the Gulf, Kuwaiti customers have been especially keen to engage the services of the company.
Mr Al Mazrouei said that regional customers not only get a better price compared to competitors outside the region but also ships that are designed with regional conditions in mind.
“When they buy, GCC customers look at the quality of the ships and the design and also the water in the Gulf is different from water elsewhere, therefore we know the specifications,” he said. “We are from the area and so we know their needs.”
Abu Dhabi Ship Building was established in 1996. It sprung out of a defence offset agreement whereby the UAE purchased military hardware from western countries in exchange for investment in local industries as well as the transfer of know-how to them.
Since it started, Abu Dhabi Ship Building has built 167 ships, delivering them to clients around the region as well as to customers in the Indian subcontinent. Of the total, 60 ships have gone to the UAE Navy and the Coast Guard.
Mr Al Mazrouei spoke to The National after the official inauguration yesterday of the company’s first floating dry dock at Mina Zayed, which started operating in summer last year.
The floating dry dock adds to the company’s service capabilities, allowing Abu Dhabi Ship Building to service ships that are too large to be handled at its facility in Mussaffah.
The new facility allows the company to dock vessels up to 180 metres in length, almost the length of two football pitches, and 30 metres wide. The floating dock has received 20 customers since going into service.
mkassem@thenational.ae
