Cosco Closing Down Yards

On Dec. 16th, 2016, the opening ceremony of COSCO Shipping Heavy Industry Co., Ltd. was held in Shanghai. Photo: China Cosco Shipping Group

By Aiswarya Lakshmi

COSCO Shipping Heavy Industry Co is planning to cut
the number of shipyards that are able to manufacture offshore
engineering products from five to two by 2020, China Daily
reported.

China's third largest shipbuilder by output makes this move as
the company's latest effort to cut overcapacity, since the global
market is unlikely to see a notable upturn anytime soon.

Under the plan, its shipyards in Nantong, Zhoushan and Dongguan
will be shut down. The company will keep manufacturing bases in
Qidong and Dalian as they are capable of producing high-end
offshore engineering products such as polar ships, oil drilling
platforms and cattle carriers.

A few months ago, China Cosco Shipping Group has integrated all
of its shipbuilding assets into one unit - Cosco Shipping Heavy
Industry (CSHI).

The state-owned China Cosco Shipping is a merged entity of China
Ocean Shipping (Group) Company (Cosco) and China Shipping (Group)
Company (China Shipping).

Cosco owns six shipyards and operates two joint-venture yards
with Japanese Kawasaki Heavy Industries, while its compatriot
China Shipping owns five yards.

The move to close down the shipyards will effectively optimize
valuable resources to cut overcapacity and avoid defaulting
orders made by unstable foreign shipowners, as well as prevent
price competition between its subsidiaries.

The Shanghai-based company will also cut delivery capacity of
offshore engineering products from 18 to 9 by the end of 2020, as
the demand for these types of products has notably dropped in the
past three years.

Mar 4, 2017

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