Key Take Aways;
1. A number of new naval shipbuilders are entering the naval export market.
2. The shipbuilders are generally coming from emerging economies and are competing with advanced naval shipbuilders worldwide.
3. Naval system houses and equipment manufacturers will need to reach out to these emerging builders to ensure full market coverage for their systems sales.
4. There are still some challenges these emerging builders will face in the marketplace.

In the last 6 years, the world began witnessing an expansion of naval ship exporters from those nations with emerging economies. These new yards offer lower construction costs due to; 1) reduced labor rates, and 2) little to no import tariffs on steel and machinery. Those emerging yards winning export bids are generally providing good quality construction at about 10-15% below the costs of traditional European naval builders. For legacy and new naval systems and equipment houses, reaching out to these non-traditional naval shipbuilders is a vital step in maintaining (as well as expanding) export sales of naval systems and equipment.

Perhaps Damen Shipyards in Galati, Romania is the best example of an early entrant of this new breed of naval ship builders/exporters. In 1994, Damen started cooperating with Galati by subcontracting hulls of cargo vessels to the yard. This cooperation worked out very well and in 1999 the shipyard officially joined Damen Shipyards. An ambitious investment plan followed which mainly focused on the improvement of efficiency as well as working conditions. Damen Shipyards Galati was transformed into a modern, top quality shipyard with the capability of building a broad range of products such as LPDs and OPVs. The vessels are built in Galati and final systems integration, testing, and delivery is done by Damen-Schelde in the Netherlands.

Daewoo Shipbuilding and Marine Engineering (DSME) provides another example of high quality, low labor costs, and indigenous designs that are winning major naval export contracts on a global scale, some of which include:
– Four 37,000 ton replenishment oilers for the UK Royal Fleet Auxiliary – MARS Program.
– Three Type 209 Submarines for Indonesia including construction assistance of additional submarines at PAL Indonesia in Surabaya.
– One new (plus one option) frigate for the Royal Thai Navy (RTN).

More recently, several Turkish shipbuilders, including Koç Holdings’ RMK Shipyard and Dearsan have entered the naval export business. Dearsan has a recent win in Turkmenistan with the sale of Tuzla fast patrol boats, and STM is providing the design and material kits to Karachi Shipyard in Pakistan for the construction of an AOR for the Pakistan Navy. AMI is also beginning to see Turkish shipyards as bidders on nearly every worldwide naval tender.

The value proposition these new yards offer is significant savings in labor costs. These savings can run upwards of US$50-60M on the total cost of a modern frigate, some 10-15% in savings.

However, these emerging naval shipbuilders still face some challenges in the world market including;

– Maintaining good quality work.
– Developing well performing naval designs.
– Ensuring selection of good mechanical and electrical solutions.
– Ensuring complete combat systems and weapon integration skills
– Providing through life support for these exported naval vessels and their systems.