Shipyards & Ship Repair
Shipbuilding and ship repair companies face continuous, fierce global competitive pressure, and often seek business and technical advice from specialists to continuously improve operations and business processes.
Maritime Management Consulting and its principals have focused on this segment, with over half of the firm’s time spent on international ship owner, builder, and repairer problems and opportunities.
Maritime Management Consulting assists direct participants and third parties in Shipbuilding and Ship Repair including:
Strategy formulation and implementation
Long-term market assessment
Ship procurement based on design competition
Business plan preparation for new enterprises
Newbuilding costs estimates
Market research and design of marketing programs
Contract performance evaluation and litigation support
Project planning and cost/schedule control
Client Work and Other Experience
- Shipyard Claim Evaluation: For an agency of the US Government, MMC conducted a series of detailed operational and financial analyses to help defend against a multi-million dollar claim filed by a shipbuilder. Work involved extensive and complex analyses of the contract's design, purchasing and construction history. Based upon MMC's strategic and tactical recommendations, the claim was denied
- Shipyard Claim Evaluation: For an agency of the US Government, MMC was asked to review the factual entitlement for a shipbuilder's request for price increases on a new contract. After assessing global and local markets for equipment and labor, as well as the impacts of force majeure events, MMC was able to support only a portion of the price increase requested by the shipbuilder. MMC's report was used to develop a negotiating position and strategy for talks with the shipbuilder; resolution led to a construction contract with the yard.
- Evaluation of Insurance Claims: For a consortium of insurance industry players, MMC evaluated the Business Interruption portions of a hurricane-related claim filed by a large defense contractor for three of its shipyards. Work is ongoing and has involved extensive performance analysis of dozens of USN and USCG new construction programs; facilities damage and recovery programs; workforce trends and impacts; and financial performance pre-/post-event. MMC's work was used to guide the successful settlement discussions.
- Evaluation of Insurance Claims: For an insurance company, MMC evaluated the Business Interruption claim of a shipbuilder associated with a crane damaged by a windstorm. MMC analyzed the likely performance impacts associated with the event and related them to two commercial programs underway at the time. MMC's work contributed to a successful negotiated settlement between the shipyard and the insurance company.
- Shipyard Evaluation: MMC conducted an in-depth review of a potential shipyard acquisition target for an investment banking firm. Included were analyses of financial and operational performance, markets and yard positioning, organization and management, risk profile, and level of technology utilization for all of the yards within the target firm.
- Shipbuilding Strategy: For a southeastern US Port Authority, MMC reviewed the state of shipbuilding within the relevant geography and prepared recommendations about market potential, operating and financial performance and possible ways for shipbuilding and ship repair to become more integrated and viable components of the Port's overall Strategic Plan. MMC's findings are incorporated in the Port's recently-adopted Strategic Plan.
- Shipbuilder Assessments: For an agency of the U.S. Government, MMC performed a series of analyses of various shipyards, either to satisfy the agency as to the viability of the ongoing business or to evaluate potential new suppliers. These analyses typically included all facets of the business situation: finances, organization, manpower levels/skills, facility capabilities, market positioning and company strategy. These assessments provided the client with an outlook for the performance of their supplier base and the certainty of future vessel deliveries.
- European Market Assessment: An Italian builder of small and mid-sized vessels was interested in re-capitalizing its business. At the request of the Board of Directors, MMC performed a detailed analysis of relevant vessel markets, and then used those analyses to make short, intermediate and long-term projections of revenue for the concern. The client utilized the report as part of a presentation to financial institutions and interested parties, which ultimately resulted in both new ownership and an expanded book of business.
- Engineering Improvements: For a major classification society, MMC was responsible for a series of initiatives designed to improve customer service delivery, reduce cost, and create an integrated approach to their customers. Utilizing a range of tools/techniques, from cost analysis to process redesign to strategic planning, MMC led a series of client teams through the change definition and assessment process, culminating in a series of actionable implementation plans which are yielding measurable benefits for the client.
- Improvements to USN Manufacturing Operation: A United States Naval manufacturing facility critical to the mission capability for new and existing vessels was having problems with product quality, timely delivery and cost. MMC was part of a consulting team that examined the processes in detail, recommended substantive changes to existing processes, and analyzed the risks associated with various courses of action. Today, the facility's quality, cost and schedule performance have all substantially improved.
- Ship Repair Litigation: For a law firm, MMC assisted with the development of a trial strategy involving a substantial claim arising from repairs to a cruise ship. The line of reasoning that MMC developed, analyzed and documented allowed the case to be settled out of court minutes before going to trial, with a clear victory for MMC's client.
- Asian Shipyard Review: MMC was retained by the largest accounting firm in Indonesia to provide shipbuilding and ship repair expertise as part of a team conducting a government-sponsored review of Indonesia's largest shipyard. Work included a complete cost breakdown structure for both ship repair and new construction, analysis of existing shipyard financial and performance data, analysis of competitive positioning, market sizing for various vessel types, and general advice and counsel to the team of accountants during the audit. The work led to a number of recommendations for change, some of which are being successfully implemented today.
- Shipyard Development: MMC conducted a market analysis and economic projection for a proposed Latin American shipyard being considered as part of an overall development project for a major oil company. The work involved detailed analysis of new construction and repair markets for several vessel types, translation of these forecasts into financial pro-formas for the NewCo, and an assessment of the economic impacts to be generated in the region. The project is now under development.
- Impact of Shipbuilder Bankruptcy & Reorganization: An agency of the U.S. Government had contracted for construction of several special-purpose vessels with a shipbuilder that subsequently filed for reorganization.MMC performed a series of analyses to evaluate the impact to the program of alternative reorganization scenarios. All aspects of the business situation were examined, including finances, organization, manpower levels/skills, facility capabilities, market positioning and shipyard strategy. The assessment permitted our client to focus on a few key issues during the reorganization process, thereby ensuring the likelihood of successful program completion.
- Tanker Design and Construction: For a major U.S. shipyard, MMC managed the implementation of a process improvement for the detail design and construction of a U.S.-flag tanker. A compliance and validation tool was implemented to ensure that all design work products were properly available for production activities and fully compliant with the ship specifications.
- Business Plan: For an international shipyard group, MMC developed a business plan for a new ship repair venture to be located in the Bahamas. The business plan included market forecasts, facilities requirements and financial pro formas. This plan was used directly in negotiations with investors and with the government.
- Strategic Planning Conference: MMC assisted a ship repair yard in developing a five-year strategic plan by preparation of background papers and analyses, and facilitation of a strategic planning conference for senior management staff.
- Facility Divestment: MMC assisted a shipyard and its corporate parent in the sale of the facility. The process included establishing the requirements for prospective buyers, developing sales materials and analysis, assisting investment bankers, and participating in negotiations. The process led to the sale of the shipyard, the timely and effective transfer of contract obligations, and a subsequent turnaround under the new yard owner.
- Facility Divestment: For a major defense contractor, MMC analyzed alternative industrial uses for a large commercial shipyard. Scenarios for industrial development were presented, as well as a suggested strategy for divestment of the facility. This study was the basis for evaluation of offers for the facility, balancing community concerns for job retention against the commercial value of the property under various scenarios.
- Downsizing: For a shipyard group’s board of directors, MMC analyzed the market outlook on the U.S. for both ship repair and shipbuilding and assessed the viability of its shipyards. The resultant forecasts and analyses showed that all but one of the client’s three shipyards should be closed. The company was able to emerge from bankruptcy and operate as a successful shipbuilding and repair firm. MMC segmented the market, forecasted the various segments of the market, and prepared financial pro-formas for the current and restructured business.
- Engineering Spin-off: For a U.S. shipyard, MMC evaluated the feasibility of spinning off its engineering capabilities to existing engineering companies or through a new venture. The options were evaluated from the perspectives of the shipyard, the employees and prospective customers.
- Privatization: During the privatization of a Central American shipyard, MMC assessed the shipyard’s competitive position for a potential investor. The study included analyses of the yard’s facilities, workforce, available labor skills, wages, productivity, overhead and potential markets.
- Shipyard Reengineering: For a major North American shipyard, MMC led a series of client teams in reengineering and reinventing all major business processes at the yard. In embarking on such an extensive effort, the shipyard had two goals: (1) ease/speed the transition from military to commercial ship construction; and 2) ensure that the yard’s processes would allow it to be competitive in the global marketplace.
- Operational Audit: During a two-year period, MMC served the board of directors and parent of a major shipyard, providing an ongoing operational audit of performance on construction, overhaul and conversion contracts. This included analysis of schedule, cost, subcontractor performance, workforce and facility utilization, and steel fabrication and assembly. The analysis identified problems and solutions that successfully reduced construction costs.
- Marine Industry Market Forecasts: MMC has evaluated and forecasted all component of the U.S. shipbuilding and repair industry, including: ocean, coastal and inland towing and barge operations; tankers; containerships; offshore vessels and oil rigs; and naval ships.
- Competition Analysis: MMC analyzed the competitive situation in the ship repair industry, focusing on the anticipated competitive bidding for an upcoming Navy contract. The analysis included reviews of facilities, management, workforce, strategy and political position of likely competitors among U. S. shipyards.
- Industry Capacity Analysis: On behalf of an association of ship repair interests, MMC directed an analysis of the potential U.S. Navy ship repair market on the West Coast, in light of the impending closure of the Long Beach Naval Shipyard. The analysis projected the required dock-days and man-hours that could be expected from Navy repair work. The results showed that an over-capacity situation on the West Coast could absorb the work from Long Beach.
- Caribbean Ship Repair: Working with a major European ship repairer, MMC developed a business plan for a new ship repair facility in the Caribbean. Market research included analysis of over 33,000 ship movements through the catchment area for the proposed shipyard. Potential customers were identified by market segment, including cruise ships, tankers, containerships, general cargo carriers, and offshore vessels. A questionnaire was developed and administered to assess potential customer response, needs and wants. Competitor strengths, weaknesses, opportunities and threats were presented. A forecast of revenues by segment was provided.
- European Ship Repair: For a major European ship repair yard, MMC conducted surveys of ship owners and operators throughout the world to assess the competitive position of the yard in the marketplace. The survey and report addressed quality or work, timeliness of project completion, pricing, and customer relations.
- Branding: For a major European cruise ship builder, MMC conducted a market study to determine brand recognition of the company’s product line. The results showed that the company had a recognizable brand which could be exploited in the marketplace.
- Public Filing – Shipyard Lease: A US shipyard sought to reduce its annual lease for land and facilities owned by a public Port District. Working with the client’s attorneys, MMC prepared a forecast of the future market and likely economic results for the shipyard. These analyses supported the client’s filing before the Port District.
- LNG Tanker Construction: MMC estimated the cost of design and construction for a series of large LNG carriers and barges applying new containment technology. These estimates applied conceptual designs prepared for the owner. Build strategies, master schedules and risk analyses were developed to support the cost estimates, applying best practices in Asian shipyards. Unique challenges for this project were analyzed in depth. Design and manufacturing suggestions were provided to improve producibility. Price sensitivity was provided for labor rates, productivity and exchange rates, and comparisons were made to historic LNG carrier prices and other ship types of similar size.
- Business Development: For a US shipyard, MMC conducted an assessment of their business development process. After identifying the root causes for late delivery of proposals and estimates, recommendations were made for both process and technology changes.
- Shipyard Reengineering: MMC led process reengineering initiatives for a major U.S. inland waterways equipment supplier. Working with several client teams, changes were identified which led to significant reductions in operating budget, improved construction cycle times and reduced direct man hours in specific operational departments.
- Hi-Ballast Tanker: MMC assessed reported problems with conventional double hull tankers and developed a concept to improve ballast tank design. The design significantly reduces maintenance and repair costs and improves safety and efficiency of tanker operations. Work included analysis of technical and economic trade-offs, as well as life cycle cost implications.
- Shipyard Assessment: For a Middle Eastern government, MMC conducted an assessment of their national shipyard, examining both strategic and tactical steps to move operations to a profitable basis and create positive value. Recommendations included new product developments, changes in operations and modifications to the overall business model; when implemented, they resulted in a return to profitability within 2 years.