DMHI is perfectly Buoyant
Located 400 kilometers from Bosporus in Romania, the 2 Mai Mangalia shipyard has been producing shipbuilding and repair services in conjunction with Daewoo Shipbuilding & Marine Engineering for the past ten years.
Prior to entering into a joint ownership agreement with the Korean company, Mangalia had been owned and run by the Romanian government since the 1970s. In 1997, Daewoo announced it had entered into an agreement with Mangalia, with the site becoming the European supplier of the organisation’s quality shipbuilding services. Capital investment of the shipyard totaled $104 million; with $53 million being spent by Daewoo on new equipment and training its Romanian partners, and $51 million in kind by Mangalia on the installation of dry dock facilities and relevant heavy equipment supplies.
Today, Mangalia is a fully functioning, successful wing of Daewoo’s global shipbuilding enterprise. Entering into the agreement has supplied the Romanian shipyard with Daewoo’s extensive network of clients, and the site is currently completing projects for German and Greek customers. When the Koreans invested in the site, they applied their knowledge and know-how of management techniques to make the Romanian yard run more efficiently, in a style that mirrored Daewoo’s shipyard in Okpo, Korea. Mangalia quickly became proficient in developing skills related to new building and repair of vessels, marine engineering, and steel construction.
The competence that has developed at Mangalia can be demonstrated by the success of a project completed for the Greek shipping company LMZ Transoil. In 2004, Mangalia began the building of an ABS-classed, 69,000-deadweight double-hull panamax tanker, which indicates the level and scale of work the shipyard is now completing. Equally, Mangalia would be responsible, in maintaining this vessel, as well as constructing three sister vessels.
Eugen Pricopie is vice president of Daewoo Mangalia Heavy Industries (DMHI), as the joint venture is known. He outlines the history of the Romanian site: “Mangalia shipyard was built in 1976 by the Romanian government. However, on the 22nd January 1997, the yard entered into a joint venture with a Korean site, Daewoo Shipbuilding & Marine Engineering. The Koreans have a 51 per cent hold of the overall assets, with the remaining 49 per cent owned by Romania. We began by cleaning and preparing ships at first, and we have developed into repairing and building ships. Our turnover in the first year was around $30 million, and this year our target up to $500 million. So, the expansion in this ten-year period is very significant, and marks an upturn in business at the site.
“At the beginning, Mangalia produced the outside of vessels, focusing on the hull area in particular,” Eugen continues. ”The site had a large amount of expertise and equipment linked to this department, and had several long-term contracts with clients. Three years ago, the site undertook its first complete ship building project, and it was a very large vessel with which to begin this new area of operation. Previously, the projects that we had taken on were mainly on smaller vessels. If we concentrate on the growth in terms of vessel deadweight, to vessels measuring 180,000-tonnes in deadweight, the difference in scale is indicative of the progress the site has been making, particularly under the influence of Daewoo.”
Eugen explains Mangalia’s relationship with the business, especially in the global market: “Daewoo and their Korean links recommended the clients that have requested work at the Mangalia site. Daewoo operates its own shipyard in Okpo, South Korea, under the name Daewoo Shipbuilding & Marine Engineering. They told some of their customers about the capabilities and services that we have here in Romania, and we are happy to take on the work.
“The customers that we are currently working with are German and Greek shipping companies. These projects are ongoing, and the contract is due for completion in 2010, upon delivery of the vessels.”
To meet the demands and requirements of shipping companies, there has been significant investment in Mangalia’s capabilities, as Eugen elaborates: “The shipyard is currently in a highly developed stage of existence, and we have made a significant amount of recent investments. Concentrating strictly on investments into the site, we added a hull parts assembly shop last year, as well as developing our blasting and painting capabilities by creating specific workshops. The emphasis in 2007 was on increasing the overall capacity of the site, by building large, new construction halls.
“Equally, we will improve our services by purchasing a range of new equipment, and employing additional staff to cope with the demand. The aim is to achieve a turnover of $1 billion by 2010. This is a very significant period of growth for the Mangalia shipyard and its Korean partners. Increasing productivity is a step-by-step process, and requires careful attention from everyone at the yard. Planning an increase in productivity must be extensive to achieve the best results. We aim to increase Mangalia’s productivity every year by at least five to ten per cent.”
Alongside investment in the site, Mangalia has also needed to increase its amount of employees, as Eugen states: “Currently, the shipyard employs 4000 people, but it also subcontracts work to a further 2000 people to complete various tasks around the shipyard. Through the increase of Mangalia’s capacity, and the subsequent rise in production volume, we have had to increase the amount of staff that works at the site. Equally, some of the clients we are dealing with are located across Europe, this increase in staff is needed at a greater rate. From summer this year, we have taken on an extra 2000 subcontracted staff to aid the installation of the hull and the equipments.”
Despite the obvious benefits, there have been challenges in working with Daewoo, as Eugen is keen to point out: “At the moment, the primary difference between the Korean site and ours in Romania is the fact that we are incomparable in terms of efficiency. There are many factors that this could be attributed to, for instance mentality, technology or capacity, but the fact remains that in comparison to the Okpo site, Mangalia is not as efficient. However, despite this difference in how the two shipyards are run, we are equally as competitive as our Korean partners. Even if we do not have the full capacity or a specific machine to complete a particular project, we will attempt to undertake it anyway out of determination.
“The main challenge that Mangalia faces is to be the best shipbuilding yard in Europe; I think we already offer competitive services to the industry, but we must always strive to be the best,” Eugen comments. “In 2012, I want DMHI to be one of the top 10 shipyards in the world. If you consider that 90 per cent of the world’s shipbuilding is now completed in the Far East, this is a substantial target, but it is one I think we are capable of reaching.”
Eugen concludes by outlining some of the reasons behind the shipyard’s recent developments: “I would say the success of Mangalia over recent years could be attributed to the combination of skills created by the joint venture with Daewoo Shipbuilding & Marine Engineering. The venture combines the tradition and heritage of Mangalia yard, with the management capabilities of our Korean partner. The influence that Daewoo has had on our work ethic has been refreshing, and has impacted the way we work. Equally, Daewoo’s network of partners and contacts was also important in securing lengthy vessel construction contracts. Collaboration between the two sites has been smooth and beneficial for everyone involved. Finally, I think the real success can be attributed to the employees we have at Mangalia; everyone is open and accepting of new techniques and technological developments, which has a positive effect on our work. All of the staff works to ensure they have put the most they can into a project, and this provides quality results all round.”
Products: Shipbuilding and repairs