Society of Maritime Industries (SMI) chief executive designate Tom Chant explains how UK companies can leverage their skills to penetrate an ever-more challenging supply chain environment
The Society of Maritime Industries supports companies in their efforts to win business, both overseas and in the UK. As the maritime environment in Asia changes and the regional markets reorganise to meet growing protectionist challenges, the impact on those companies up and down the supply chain will be significant and sometimes severe. We are already seeing a shrinking market and a markedly reduced number of newbuilds. For many state-owned companies there will be a natural tendency to ensure the supply chain remains local and benefits the national interest.
Countries are investing huge amounts to keep their yards going and understandably they want to get as much business into their local supply chains from that investment. And it is not only Asia; we have seen similar in the US under the Trump administration, with its ‘Make America Great Again’ mantra.
China has taken a similar approach with its Five-Year Plans and is looking to move its supply chain further up the value chain, distancing itself from the lower priced items and getting into the higher technology.
Critical to any business looking to penetrate these massive, state-controlled institutions is the ability to get onto a makers’ preference list; that is paramount – without inclusion on that list then basically, you are going home.
An obvious place to start is to look at pricing; when a shipyard is under huge pressure itself, it is going to look for the lowest price possible and the best margin. It is very, very tough for the supply chain.
UK businesses must focus on being faster, better… and cheaper – which sounds something of an impossibility but there are partners who can help. Trade bodies can point firms in the right direction and universities offer massive potential for innovative thinking and smart solutions.
In terms of business models, manufacturers should look at their agents and distributors and recognise that they might have to work directly with the yard. If that is not an option, then it may be necessary to establish a presence in a local market, where relationships can be made and contracts discussed directly between parties.
And those relationships do not have to start and end with the yard. Firms need to engage with designers, owners, ship managers, even charterers, to establish a presence and become firmly engrained in the local landscape.
From a marketing perspective, companies must not overlook the importance of presenting themselves at the highest level. They must offer strong marketing material, written and presented in the local language.
Ultimately, the consolidation and reorganisation we are seeing play out across these shipyards in Asia is going to mean companies have to sharpen their focus to win the business that becomes available.