Right after the turn of the new millennium in Bangladesh, several marine professionals and two businessmen were sitting down, having a discussion in Chittagong, Bangladesh. They’d spotted a gap in the shipbuilding sector that appeared ready to fill. With so much ship construction then completed overseas, and often with less than desirable quality and customer service, the group felt it was time to create something local; a company that cared as much about its customer’s satisfaction as it did the quality of its construction work. Western Marine Shipyards (WMS) was born.
For the next seven years, the company operated from a single hectare plot in Chittagong, home to Bangladesh’s largest marine port. Setting up a shipyard with what it takes to become internationally recognised is no joke, and the first seven years were tough. But by the time 2007 came around, and in spite of a recession looming heavily in the air, the company moved onto a 16 hectare site. By this time, the 200 strong workforce had grown to around 700.
In spite of the tough times, by the end of last year, the company employed 3,500 local staff. Not only did WMS make a significant contribution to the local economy, it also afforded workers the opportunity to fly overseas and learn the latest ship construction techniques before apply them to vessels reaching up to 100 tonnes. Major employment contributions and significant skilled labour opportunities became available locally in Bangladesh.
In a country where government safety legislation is arguably less stringent than many Western countries, injuries were a problem. But the seriousness of the issue wasn’t lost on the founders. As managing director, Sakhawat Hossain, pointed out, “a 10% investment on safety could produce over 200% of return”. Shortly after, a partnership between Western Marine and Deutsche Gesellschaftfür Internationale Zusammenarbeit (GIZ) saw strict measures implemented that reduced injuries by a massive 99%. By 2009, WMS had become the international standard in health and safety regulation. And, as we’ll discuss more later, the knock-on effects for such an accomplishment in a country like Bangladesh are extensive.
Today, business is booming. Of the 300-odd small to medium shipbuilding companies in Bangladesh, WMS is the largest and is one of only 2 to export its products globally. So far, it’s received 142 orders, 86 of which are delivered, with 13 more in the works and another 27 in the order book.
It’s no secret that the world’s macroeconomic structure has been shaken up in the past few years, and with the Eurozone crisis leaving a lot of its overseas clients struggling to secure financing from cautious banks, Western Marine Shipyards looked to its home turf for growth. Several intelligent strategies were implemented, the first of which was an opportunity that arose when the Bangladeshi government sought to reduce road congestion by using local waterways. With Bangladesh boasting one of the fastest growing economies in the world, both the roads and the waterways surrounding the ports were becoming congested.
The local port authorities began demanding more port utility vessels such as tugs, water supply vessels, survey vessels, workboats, dredgers and many more to enhance the local capacity. Friendly government legislation also offered tax breaks for shipbuilders, allowing WMS and others to import equipment and materials without paying duty, an ideal turn of events to support the increased local demand. With such a solid history behind it and a strong output capacity, Western Marine secured many of these orders which helped them to weather out the financial storm conjured up by a recovering global economy.
Western Marine even manufactured inland tankers as the local government issued licenses for new double hull vessels, as was necessitated by the recent IMO legislation updates designed to prevent spillages in the event of unforeseeable disaster. Private fishing boat owners had also placed orders for additional deep sea fishing vessels after the government extended the international fishing zone for Bangladesh, simultaneously releasing further licenses for operating fishing vessels in the private sector.
With a view to utilize the inland waterways for the first time, the government allowed operation of inland container vessels in the country to carry inbound & outbound containers all across the waterways, especially from Chittagong to Dhaka, the Bangladeshi capital. Western marine is building many of these inland container vessels, each capable of carrying 176TEUs of containers. That means significantly reducing the number of logistics vehicles travelling on the roads, reducing congestion to allow for a more fluid logistics infrastructure to encourage further economic prosperity for Bangladesh. The smart moves designed to take advantage of domestic growth opportunities while the rest of the world was struggling made a huge difference to both WMS’ success and that of their home country.
The ship building industry’s supply chains are often project-based, with supply chain relationships developing as required by individual projects. However Western Marine Shipyards has built local partnerships in Bangladesh where it sources in the region of 50% of required materials and equipment. This is not only a reflection of how established the Bangladeshi Ship Building industry has become, but also of how WMS’s understanding of the importance of local engagement in building a sustainable business. The WMS vessels not only meet the strict IACS (International Association of Classification Society) construction standards, but every ship that comes out of they also has a strong Bangladeshi identity.
Engagement with international supply partners continues to play a significant part in WMS’ operations. When TSBR spoke to some of these long-standing supply partners including ZF Marine Middle East LLC, Breman Shipping Installation, MTU Asia PteLtd just to mention a few, we noticed something unique about these relationships. There was the undeniable presence of a personal and professional touch that extended beyond the mere transactional. It was the synergy of companies that come together with the sole aim of quality & client satisfaction and that knew they all shared this important aspect of good business ethos.
Later on, and as the global economy improved, WMS set its sights on the booming liquefied natural gas (LNG) sector and securing market share from other countries including Africa and the Middle East. Now, 50% of its total orders come from overseas, once again making a major contribution to the Bangladesh economy, increasing its ship exports four times over in the 2010 fiscal year. Now, the relatively small country’s economy is widely believed to hold the second largest potential in Asia, falling behind the significantly larger Indian economy.
But what about Western Marine’s outlook towards CSR? Well, it has an impressive track record of making contributions back to society including a computers-to-schools programme, a type of initiative which has a long history of making significant contributions to a country’s economy over the medium to long-term. It subsidises staff meals and provides medical attention for both employees and the local community. WMS set up a clinic where the health Ministry pays for a nurse and the shipyard employs a part-time doctor who also attends the local community in addition to its staff.
This brings us once more to the safety issue. Reducing injuries by 99% in a potentially lethal construction environment is a serious demonstration to CSR. But in a country where an individual worker often provides for a large extended families, an injury that results in several weeks or months of downtime has a devastating impact on a country’s development. It means not only quality of living for small communities but, in many cases also school fees, further hindering future development.
Furthermore, with injuries being so few and far between, the medical staff at the local clinic can focus on more general health care for both staff and locals, producing an even healthier, more productive population. Good safety regulation is something that’s taken for granted in many countries, but in Bangladesh, it’s not just about avoiding someone having broken arm, some pain and discomfort and a little inconvenience, but rather has serious knock-on effects. With Bangladesh coming under intense international pressure to overhaul labour laws and working conditions, WMS has set a very high bar to which other companies must now aspire.
And that bar is potentially about to be raised again. The organisation is currently building an Unrestricted International SOLAS Passenger Ship for New Zealand that’s designed to sail in the pacific with up to 60 passengers. The ship is being built in a way that means lower fuel consumption to save energy. It’s also in discussions with one Japanese buyer who intends to build 100% eco friendly & less expensive small cargo ships which it plans to supply in Africa among other underdeveloped countries. If successful, the initiative will bring great changes in the lives of these underprivileged populations.
In any intrinsically technological industry, it’s never been more important to have a strong vision of the future tightly woven in with CSR policy. WMS looks after its own people in locally in Chittagong, contributes enormously to the country’s economy as a whole and makes the significant contributions of more affordable and very high-quality vessels for the global market, it’s already establishing itself as a key player in pioneering the more environmentally friendly waterways of the future.
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