Indian Shipbuilding in the Global Context: An Empirical Study on the Current State of Industry and Exploring Scope for Improvement

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  • Topic: Ship construction, Shipbuilding, South Korea
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  • Published : May 25, 2013
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Indian Shipbuilding in the Global Context: An empirical study on current state of industry and exploring scope for improvement Joshin John,* Vijaya Dixit,* and Dr. Rajiv K. Srivastava†
* PhD Student, Operations Management, Indian Institute of Management, Lucknow † Professor, Operations Management, Indian Institute of Management, Lucknow Abstract
This paper is about the current state of shipbuilding industry in India, the major problems in domestic shipyards and exploring methods to improve the situation. The paper starts with the importance of shipbuilding as an industry, its close association with manufacturing and development of other ancillary industry and its need especially in the Indian context. We then discuss the various policy issues such as taxes, duties and subsidies and how it impacts Indian shipbuilding. Further, we study the growth and competition within the domestic shipbuilding sector with Porter‟s Five Forces framework and assess the strength and weaknesses of shipyards operating in different market segments. The paper, then delves into the operational aspects such as planning and scheduling, product strategy, design, production, supply chain management, shipyard layout, construction method etc. In each section, we attempt to identify the major problem areas in domestic shipbuilding and discuss the various issues. In case of easily tractable problems we have tried to address them in reference to standard global best practices. If the problem is unique, we have discussed them in light of the particular context. Towards the end of the paper, in the recommendation section, we have conveyed our views on how to improve the current situation by adopting some strategies as well as some tactical and operational decisions.

1. Introduction
Research indicates that there is a positive
and highly significant relationship between
economic growth and manufacturing output
growth (Tyler, 1980). History shows us that
the evolution of nations as manufacturing
powerhouses during various periods of time
has a strong association with its
shipbuilding output. The English during 19th
century and early part of 20th century
(Patrick et al, 1976), the Americans post
world-war II (Zendong Lu, 2005), the
Japanese during 1960-90 (Chida, 1990;
Koenig, 2001), the Koreans post 1990 &
recently the Chinese have emerged as
major shipbuilding nations accounting for
over 40% (sometimes more than 70%) of
annual world ship production in terms of
tonnage. It is interesting to note that the
period of rise of these countries as
economic powerhouses and as major
shipbuilding nations overlaps. The
shipbuilding industry, in addition to securing
vital national security and economic
interests, is critical in the development of
other sectors such as steel, manufacturing,
and other ancillary equipment & product
industries (OECD, 2009). India being one
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among the fast growing BRIC nations is
poised to be a major economic power by
2045 (Third World Quarterly, 2007).
However, India‟s current shipbuilding output
volume indicated in Table 1 is abysmal to
match our current economic growth.
Rank Economy Jul '08 - Jun '09
CGT ('000) %
1 China 5,435.70 34.55%
2 Korea 4,958.70 31.52%
3 Japan 2,707.70 17.21%
4 Philippines 359.50 2.29%
5 Brazil 258.60 1.64%
6 India 251.80 1.60%
7 Vietnam 250.30 1.59%
8 France 208.10 1.32%
9 Croatia 198.00 1.26%
10 R-o-W 1,103.80 7.02%
Total 15,732.20 100.00%
Table 1 - World New Shipbuilding Orders
Source: Lloyd’s Register – Fairplay World
Shipbuilding Statistics '09
To put this in perspective, China‟s
Compensated Gross Tonnage to Gross
Domestic Product Ratio, i.e. CGT/GDP (units
in 1000 Ton / Trillion US$) is 1089 whereas
that of India is 199. [The GDP figures
considered in the above calculation is based
on 2009 data (IMF – World Economic
Outlook Database, 2011)]. India‟s CGT/GDP
ratio is about 1/5 that of China whereas
India‟s Export/GDP ratio is about ½...
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