Safinat’s Vice-President Ivailo Getsov: “Shipbuilding industry suffers the same problems that afflict our society”

It is well known that a powerful Russia's navy is not possible without the development of the domestic shipbuilding industry. This is what the Government and businessmen agree with. Currently, the shipyards in Russia, as a rule, have low competitiveness compared to foreign companies. The PortNews IAA correspondent met recently with Ivaylo Getsov, the vice president of the transport and logistics of Safinat Logistic investment group.  Mr. Getsov who has had a experience working in foreign shipping companies agreed to give his opinion on what dockyards  are the most profitable for ship contracts and why, as well as measures that could make the domestic shipyards more attractive for orders by private shipping companies.

- Mr. Getsov, do you think that Russian shipbuilders could compete with their foreign rivals in different classes of vessels, in price, quality, job schedule and contract date?
 
- Actually, there are major factors that determine the current level of Russia's shipbuilding industry competitiveness: the lack of state-of-the-art facilities and own production of components (main engines, diesel generators, VTS equipment), lack of qualified personnel and effective government support. For truth's sake I would mention the positive factors - all the negotiations and technical documentation are maintained in Russian. There is an understanding of navigation on inland waterways. Regretfully, Russia's shipbuilding industry is obviously unable to compete with foreign counterparts. First, we are outrun by our rivals, East European and Chinese shipyards.
- Where it is more profitable to order small vessels (bunkering, tugs, etc.) - in Russia or abroad? Why?
 
- Yes, foreign shipyards are surely far more profitable for a new ship contract. As of now, Russia, barely has adequate facilities for shipbuilding.
 What do you think could be done for improving the competitiveness of Russian shipbuilding enterprises?
 
- It is necessary at the federal government level to implement a program enabling the development of the industry. Perhaps, through establishing of a special fund for shipbuilding industry. Priority should be the funding of new shipyards and factories that could manufacture ships components (engines, avionics equipment, technical means of navigation, etc.). Definitely we have to start with the licensed production, since our technological gap is so large that it’s almost unreal to catch it up with foreign manufactures.

There is no doubt that shipbuilding industry suffers the same problems that afflict our society. Namely, young professionals shortage in the industry, research work. The link between skillful workers and their younger colleagues is broken. Research institutes have lost contact with the real economic life. The time-consuming and thorough job lies ahead for rehabilitation of the shipbuilding industry and its related sectors.
 
Ships building require "long-term" cheap money. The shipbuilders need free access to government credit lines for a period of at least 10-15 years with an interest rate at LIBOR+0.5. The financing of ships construction should not depend on the customer jurisdiction, as it is done in China and Romania. Import of all the components should be duty free. Purchasing of imported vessels should also be free of value added tax (VAT) as well for public as private consumer. Execution of all these measures by regulatory authorities, the tax inspectorate, the transport police, Prosecutor’s Office, customs authorities, should be simple, transparent and controlled.
- Do you think economically reasonable to build in Russia "super yards" capable to build VLCS?
 
- Without federal government development program for shipbuilding it seems to be unreal that such a project could be attractive for private investments. Even if the government becomes an investor the system changes will persist for effectiveness issue of such super dockyards.
- What is the Safinat LIG’s shipbuilding program - the number and purpose of vessels, contracts date and contracted shipyards?
 
- As of now, the Safinat’s fleet competitive advantages are its mobility and the demand for smaller sized "river-sea" ships. We have projected in our 5-year plan the building of 20 to 25 7-13-dwt ships.
 
Our major priorities are the quality, financing terms, the total cost. To date, the quality-cost-term ratio in their service is provided by shipyards in China and Romania. We are also considering the building of a shipyard in Astrakhan.
 
Interviewed by Vitaly Chernov