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The Extraodinary Evolution of MEC Panama

The Extraodinary Evolution of MEC Panama

MEC Panama began as a small marine pollution, prevention and consulting services firm back in 1999 and has grown into an international firm serving clients with an extended range of shipyard solutions. These services include shipyards, afloat ship repairs, underwater services, marine contractors and chandlering. Its operations include three dry docks, as well as one slip-way with up to seven positions, at their shipyards in Balboa and Veracruz in Panama.

The speed with which MEC has transformed itself from a small consulting firm to a multiservice shipping yard firm has been quite remarkable. The transition began when MEC’s leaders became aware of the lack of cost-effective and high-quality ship repair services in Panama. The Panama canal’s huge seafaring transit meant that there was consistent demand for these services which wasn’t being met.

In 2002, it completed its first major naval reparation on a Panamax Bulkcarrier Vessel under ABS Class. Having successfully repaired their first sea vessel, company management believed there would be more opportunities in repairs for the firm down the line. But for this to happen, a rebranding from marine pollution consulting would be required. A decision was taken to rename the firm Marine Engineers Corporation (Panama) Inc., or MEC.

From 2002 onward, the company’s lower-cost high quality model of ship repair brought it a lot of busines from ships passing through Panama. By 2005, it was already established as one of Central America’s main shipping repair companies and began working with the Panama Dry Dock Facility. Its success here first led it to become the shipyard’s main contractor, before management took the decision for MEC to operate a shipyard of its own.

The first steps were taken towards this with lease agreements with several small shipyards in Panama, including the facility in Mount Hope (with a capacity for 120×20 metre vessels) and the Astilleros Veracruz International on the western side of the Panama Canal. Just 11 years after founding, in 2010, MEC purchased the shipping yard at Veracruz.

The Veracruz shipyard is currently being upgraded to service vessels of 100 metres. In June 2012, MEC was awarded the concession for the next twenty years for the Balboa Panamax dry dock in Panama – formerly the Braswell Shipyard Facility and the largest dry dock in Panama and this part of Central America with over 12 hectares of industrial shipyard facilities. The three dry docks at the facility have been operating since February 2013.

Although MEC has experienced a rapid rise to its position in the shipyard industry, it hasn’t always been a smooth process. Current Sales VP Jose Borrero began in the company’s afloat repairs division before moving through the ranks. When he began business development in Panama, visiting firms operating in the industry. “We encountered some difficulties along the way,” he notes. “Nobody knew MEC as a dry dock operator – they knew us as afloat repairs.”

Once the dry dock began operating, there were a range of issues to contend with. In the two to three year period that it had been closed, its regular clients had already begun using the services of other dry dock facilities. But MEC’s strategic partnership with local Panamanian bank, Towerbank, provided it with some provenance once it had been constructed.

MEC also had to compete with other dry dock facilities which were given an unfair advantage by some local regulations: Latin-American shipping firms are not allowed to enter Panamanian dry docks very easily. Panamanian shipping firms faced no such difficulties for using foreign facilities and in fact, also have to pay the government an annual $3 million to lease the dry dock from them. It is a testament to the value that MEC adds for its clients that it didn’t experience signifcant falls in client numbers despite these hurdles.

Other obstacles faced by the firm include having to compete with more established yards in the Caribbean and varying degrees of government bureucracy: even when shippig firms had agreed to use the dry dock services to be offered by MEC, delays owing to red tape meant MEC couldn’t begin, ultimately leading to an uncomfortable situation for the firm. Sales Manager Jose Borrero is sanguine on the issue: “It’s all stacked against us but it comes with the territory.”
To date, MEC has invested $12 million in its dry dock to make it a top class facility. Much of this investment has been ploughed back into the local Panamanian economy using partners such as Pesqueros, S.A., for marine industrial equipment and Eko Clean for Marpol services. MEC has also established partnerships with international firms such as Hines Brothes for services like ultrasonic testing, and Wilhelmsen for ship servicing.

Despite the considerable investments so far, still more is planned. This investment includes the purchase of at least six new cranes for the shipyard (three of which have already been purchased and installed), and the complete reconstruction of the existing three on-site cranes, a purchase of Miller Dimension 652 multi-process welding machines, which will allow MEC to move from Manual Arc to Semi-Automatic when they are in place – simultaneously reducing overheads and work timeframes for the firm. When implementd, the firm will have a total capacity of 26 tonnes a day steel renewal rate.

Management plans that these investments, combined with others such as more efficient pumps and electric system components and painting, mechnical and compressor equipment, will allow MEC to move up the value chain. Having consolidated its operations over the past five years, the plan is now to build a brand around its service offering: a model previously created by the World Class Shipyard Group.

Aside from brand building, many of MEC’s investments have also kept sustainability in mind – low energy consumption has been at the forefont of the company’s thinking. Mr. Borrero points out that the the company also has a younger workforce profile, which is pushing the sustainable agenda. The young workforce will be an asset to MEC as it looks to execute its plans for the future. These include gaining ISO 9001 certification for its quality system – which would be another huge landmark in the company’s short history to develop its strategic partnerships and to continue to over-deliver for its customers.

Written By Michael O’Byrne

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