MLC expanding shipbuilding capacity

Monday April 7, 2008
MLC expanding shipbuilding capacity
By SHARIDAN M. ALI

MLC Shipbuilding Sdn Bhd, a new player in the offshore shipbuilding industry, is aggressively increasing its capacity.


Director Redzuan Goh said it was building a new shipyard in Malacca and expanding its existing shipyard in China.

»The shipyard will give priority to Malaysian ship owners who will not have to travel all the way to China to monitor the construction of their vessels« REDZUAN GOH
The nine-month-old company, which was established in Singapore in 1945, has shifted its headquarters to Malaysia to focus on shipbuilding.

But MLC subsidiaries in Singapore are continuing with their offshore support vessels operations as well as tug and barge services.

Redzuan told StarBiz that the wholly owned shipyard would be constructed on a 35-acre piece ofland at a cost of about RM40mil.

“This shipyard is expected to start operations in the first quarter next year.

“It will give priority to Malaysian ship owners who will not have to travel all the way to China to monitor the construction of their vessels,” Redzuan said, adding that it would still take orders from international players.

He said it was also high time for MLC to bring back its well-trained Malaysian employees in China to work in their home country.

On why MLC shifted its headquarters from Singapore to Malaysia, Redzuan said the majority of its shipbuilding contracts were from Malaysia.

“I think it is a good strategy to be closer to your customers, and the prospect of the Malaysian market is promising with high demand for new vessels.

“We are also aware of the development of the oil and gas projects in Malaysia such as Kikeh that will generate a lot of offshore vessel demand,” he said.

MLC's associate company in China, MLC Tongbao Ship Building Co Ltd, has a RM1bil order book that will keep it busy until the middle of next year.

“We are expanding our China shipyard from 25 acres currently to 50 acres at an estimated cost of US$40mil.

“It is scheduled to be completed by year-end. By then, we should have increased the construction capacity to 32 offshore support vessels annually from the current 24,” he said, adding that MLC held a 50% stake in MLC Tongbao Ship Building.

Redzuan said shipbuilding demand was presently on the uptrend. MLC has advanced orders of engines amounting to RM3bil until 2011.

“We are currently specialising in the construction of all types of offshore support vessels from the minimal 4,000hp (horse power) to the highest at 15,800hp.

“MLC has the experience of building maintenance vessels, support vessels, drilling vessels, diving support vessels, anchor handling tug supply vessels, towing tugs, accommodation barges, cement barges and dumb barges,” he said.

Redzuan said MLC used the modern method of plasma steel cutting in a sheltered workshop and the vessel was then assembled on slipways.

“By doing that, we do not have to build the ship from hull or keel upwards,” he said.

On financing for its shipyard expansion, Redzuan revealed that the company only used internal funds.

“I am proud to say that MLC has not taken any bank loans to finance its expansion.

“It comes from the hard-earned income from our offshore support vessel operations in Singapore,” he said.

He said MLC had sold seven of its 14 offshore support vessels recently. The company is moving away from being owner and operator of vessels to that of ship builder.

“Ship owners take about seven years to finally own a ship after loan repayment. In shipbuilding, a company will only take about 18 months to repay the loans,” Redzuan said.

Going forward, he said the company would venture into rig fabrication for the oil and gas industry.