ODC now on the region’s dry dock map
Shaikh Khalil Al Salmi, Deputy CEO of Oman Drydock Company (ODC), speaks with United World about the Port of Duqm’s dry dock, which despite having just opened in April 2011, has already completed various major ship repair works. ODC welcomes investment in logistics, material supplies, subcontractors and supporting industries
The dry dock at port of Duqm is considered to be the economic engine that will drive the growth of Duqm into an industrial hub. What is your vision for the future of Oman Drydock Company (ODC)?
Our vision is to be one of the best shipyards in the Middle East. This is the first time that we develop a shipyard within a port in Oman. We want to provide top class services to the large number of vessels going through this part of the world. It is no secret that over 30% of oil and gas and over 60% of LNG comes from the GCC region. We are looking to maximize on our competitive location, just outside the Strait of Hormuz.
Despite the global financial crises, this area is still growing. We have been slightly affected by the downturn, but construction is still going on and the economy in Oman is maintaining growth. The container traffic coming in and out of this region is our market for the time being. These are all pieces of a puzzle and we are trying to put them together in order to have successful operations.
We are facing competition in the region, but we do not shy away from competition. A competitive market is healthy and we will not only compete, but we are also complementing other shipyards in providing services for the growing market in the region.
ODC is a new entrant to the market, although we are equipped with the most advanced technology and have advantages in terms of space, machinery and experience through and O&M (operating management) agreement with, Daewoo Shipbuilding and Marine Services (DSME), as one of the top shipbuilding companies in the world. We are part of a big puzzle and we are very proud to be the first and only operating company in Duqm so far.
A week ago, ODC reached another milestone by receiving the two largest carriers since the beginning of the soft operations in April 2011. Can you comment on the significance of this achievement?
We are still in soft operations mode, but we received these ships last week and it was a huge achievement for us. It was a strategic decision which put us on the dry docks map in the region. It has taken a lot of hard work in order to be able to receive these two vessels and repair them on time. Most of the ship repair yards are not able to do that in the early stages of operation. We are actively marketing ourselves to be ready to receive all sizes of vessels by doing a lot of marketing activities and a promoting our readiness to do major ship repair works.
If you look at our track record over the past year, we have done a variety of different vessel repair jobs. We have completed work on time on LNG carriers, oil tankers, a floating dock and we even converted a cruise liner (Mona Lisa) into a floating hotel (Veronica). We have carried out small and large jobs. A lot of effort and marketing was required to position ourselves. We are proud to say we have received all these vessels and turned them around on time.
The ship repair yard is planning to generate $200 million in revenue by 2020. Where do you expect most of the revenue to come from?
Our main target is the oil and gas vessels in this area. As I mentioned earlier, over 30% of oil and over 60% of LNG is coming out of the GCC region. We are located on the open sea trading line coming into the Gulf and going to India and Africa, all the way to Europe and the Far East. In our vicinity, we have the Port of Salalah, a major transshipment hub, and Sohar Industrial Port. Inside the Gulf, there are ports in Kuwait, Bahrain, Qatar, Jebel Ali, etc.
We have the most technologically advanced equipment available for shipyards, which enables us to engage in a variety of business activities. We are in the final stages of enhancing our industrial work facilities. A combination of all of that gives us the confidence that we can achieve even more than $200 million by 2020.
Following an invitation from DSME, an official delegation from Duqm recently visited South Korea to look for means to enhance bilateral relations and the cooperation in managing the dry dock facilities. What are the main benefits of your partnership with DSME? Where do you see the major potential for increased cooperation?
It is a great asset to have one of the world’s leading shipbuilding companies operating and managing the shipyard for us. One of the major benefits of our partnership with DSME is the transfer of technical expertise, know-how and technology. They have experience in ship repairs, shipbuilding, logistics and construction, so this partnership gives us an edge and opens up other areas for us as well.
The maritime business is a lifestyle. Omanis are known for being sailors and building ships, and we wanted to continue with that heritage. But this business became a multibillion-dollar business with new technologies and know-how, which we did not have. So we decided to work with a top company and that is why we chose DSME.
We have a vision for the dry dock, so the Special Economic Zone Authority at Duqm (SEZAD) decided to go to South Korea to learn from their experience. Thirty years ago, there was a small village in South Korea called Okpo, where the government decided to build a shipyard. We wanted to go and see for ourselves the progress what has been made; we were impressed to see that today Okpo is big town with a vibrant industrial zone that has developed around the shipyard over the past decades. I always say that if I want to start competing, I have to learn from the best.
South Koreans are very business-minded and they have shown interest in investing in almost everything in Duqm, starting from logistics and energy, to services. But now, it is up to SEZAD to decide what matches their vision for the area and what line of business is the most suitable for developing (SEZAD).
The ship repair business is very labor intensive, and by 2020 ODC should employ 4,000 people. What challenges do you face when it comes to finding qualified workforce considering that this is the first time a ship repair yard has been established in Oman?
It is very challenging to find qualified workforce particularly in this region. The first challenge we face is the fact that ship repair is a lifestyle as opposed to a day-to-day business, and we are committed to employ Omanis by taking local engineers and technicians on and training them. The benefit of this training will be realized in the future as we want to go back to our heritage of shipbuilding and to enhance it with modern technology and operating methods.
Nowadays, there is a lot of competition in the region in terms of workforce for shipyards and ship repair. Even bringing people from outside has been a challenge for us, but we managed to recruit people from India, Vietnam and the Philippines, and now we are trying to attract people from Romania. We have created a small global village at Duqm. It is a challenge however and it is going to continue being so. We are ISO 9001:2008 certified and we are proud of it as it gives us the confidence that we have the right approach it terms of the quality of our staff, as our strategy is to focus on quality as opposed to quantity.
We are in the first year of operations, so in engineering and on the technical side we have managed to employ around 30% Omanis, but we are still happy with that figure. If you look at the corporate side in our main office, we are close to 80% Omanisation.
We send most of our foremen and engineers to South Korea and Romania for training and knowledge transfer are very important for us. Training and developing human capital are one of our top priorities. They are all part of a puzzle, which will allow us to compete at the highest level in the future.
Could you tell us more details about your investments in the human resources?
At the end of last year, the company has trained and qualified 59 Omani youths at the end of the year inside the Sultanate. This included technicians, group managers and engineers by allowing them to join the International Maritime College Oman (IMCO) for three months then sending them for scholarships to get training in Daewoo Ship Building & Marine Engineering Co LTD in Korea and its branch in Romania for two months for training on the fundamentals of vessel maintenance and design. Holders of BS in Engineering and foremen have received training in marine engineering and mechanisms and now contribute to the growth of the company. We firmly believe in the capabilities of the Omani youths therefore we have employed more than 300 Omanis at the different departments. We also provide them with training in areas such as vessel engineering, repair, administrative activities, accounting, finance, purchases, business management and marketing.
The company is going on employing and qualifying the Omanis, raising culture and awareness about the significance of the qualified cadre as the company is going through a phase of world competition that requires excellence reputation by becoming perfect in all works in relations with vessel maintenance and rehabilitation. The main aim is to translate the achieve our mission and vision and translate them into reality through working together as one team to ensure providing our customers with high quality service, meeting their tough deadlines and enhancing our brand image.
What are your priorities for the short and medium-term?
We want to build a good name in the market for ODC. The ship business is all about reputation; who you are, and what you have done lately. We are concentrating heavily on that by having our marketing team and the top management promoting the shipyard. In the short-term we are concentrating on equipping the shipyard to compete on the regional market by enhancing our competitive advantage of our position. We are also evolving other competitive advantages in human resources and knowledge in the ship repair business to meet the demand of ship-owners.
Long-term we intend to develop the shipyard to build vessels and to meet the needs of industrial fabrication in the region. We want to enhance and enlarge the facilities to construct offshore and on-shore platforms. Although ship repair is our current activity, we intend to diversify into other activities depending on market demand.
The dry dock itself is creating numerous opportunities for investment. What areas would you point out in this regard?
Success of any industrial ship repair yard depends on the supply chain. Availability of suppliers for the industrial works to support a state-of-the-art shipyard is fundamental. As we are located in a remote area in Al Wusta region, we are dependent on supplies to come from the capital city, Muscat. The opportunities for investments are plenty and at ODC we welcome investment in logistics, material supplies, subcontractors and supporting industries.
The shipyard was not created to be on its own, but to generate other supporting businesses around it. We have different suppliers, but we need more of them to come to Duqm. In no time we have seen investors showing an interest in coming here.
Currently, two graving docks that can accommodate the largest vessels in the world (600,000 dwt) are operative. Can you tell us more about the upcoming floating dock and how ODC is planning to diversify its capabilities in the future?
The floating dock is a requirement for our shipyard. We are in the final stages of getting all the formalities in place so that we can start to design and construct it. We will construct the floating dock on our own, but we will get help from DSME in the designing process. It will be a great opportunity to train our engineers and staff in the designing and constructing of the floating dock.
We have discussed the process with DSME and with their help and support, in 3 years’ time we will have a brand new Panamax size floating dock.
What message would you like to convey to our readers in the US?
We have a good relationship with the U.S. and I would like to invite all the ship owners and investors in the States to come and take advantage of the Free Trade Agreement between the two countries. They are most welcome to Oman Drydock and we look forward to the opportunity to offer them our services.
Project Director: Barbara Jankovic