“Of course it will sink if you put a hole in it,” Clive Palmer told reporters last week, as he announced his plans to build a working replica of the Titanic. The Australian mining billionaire promised that the vessel would be equipped “with all the technology” to prevent a repeat of the 1912 disaster which saw the huge ship sink after hitting an iceberg. But he still couldn’t quite restrain himself. “Of course, if you are superstitious…you never know what could happen,” Palmer joshed.
That means it’s time to buy iceberg futures, quipped a columnist at the Sydney Morning Herald, on news that Palmer’s company, Blue Star Line, had signed a preliminary deal with state-owned CSC Jinling Shipyard from Nanjing. The plan is to build Titanic II on the same dimensions as its predecessor, with 840 rooms and nine decks.
But the jibe also reflected scepticism in the Australian media, not least with the suggestion that the new vessel would sail from Shanghai to London in four years time under Chinese naval escort.
Also noted was that Palmer had dropped his bombshell on the same day that he announced his intention to challenge deputy Prime Minister Wayne Swan for a Queensland seat at the next federal election.
Getting less coverage was that Blue Star says it will also contract with Jinling for a fuller fleet of cruise ships.
In a further commercial component to the deal, Jinling will build four 64,000-tonne vessels to carry nickel ore to a refining plant Palmer purchased from BHP Billiton three years ago.
By contrast, the Chinese media took Titanic II far more at face value, and there wasn’t an iceberg pun in sight.
Perhaps that was because the news was being seen as a commercial lifeline for an industry in desperate need of new business.
China’s shipbuilders are now into the fourth year of an industry decline that began with the global financial crisis in 2008. The downward spiral continues: completed tonnage dropped 22.5% to 11.2 million deadweight tonnes (dwt) in the first quarter this year, according to the China Association of the National Shipbuilding Industry. New orders did even worse, down by almost half to 5.6 million dwt.
Local governments have done their best to keep the yards going with cheap financing. But now even this is drying up, and many smaller operators have little choice but to shut their doors. It doesn’t help that there was a rush to open new yards in the years before the financial crisis, especially in Zhejiang province, reports Economy & Nation Weekly.
The example given is the city of Zhoushan, home to just a handful of shipbuilders 10 years ago but hosting more than 180 today. At the market’s peak, even clothing manufacturers were trying to get a piece of the action by starting up their own yards, the newspaper suggests.
The problem is that most of this bloated capacity is lower tech production, and trails Korean and Japanese rivals. China’s small-and-medium-sized shipbuilders are often stuck in a lower-value segment. According to statistics released by the NDRC, the state planning agency, cargo-carrying bulk vessels made up 71% of new-build contracts last year. Policymakers would like to see more of a push into container ships and LNG transporters.
Of course, luxury liners are another alternative, hence the trumpeting of the deal for Titanic II, even though 21CN Business Herald queried last week whether Chinese yards have the technical know-how to construct such large, luxury vessels.
A little ominously, Zhang Guangqin, chairman of the China Association of the National Shipbuilding Industry, agreed that this skill set wasn’t currently available, although he also expressed confidence that the “technology accumulation” stage would soon be complete.
Let’s hope that Titanic II is as unsinkable as his optimism.
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