MT Sea Harmony, the 13 years old oil product tanker is one of the many tankers under renowned operator, Equatorial…
All Hands (and Sea Legs) on Deck
In this exclusive interview with Onward, Mr Ng Sing Chan, President, Marine of ST Engineering, shares about navigating the future amid a tenacious pandemic and finding fresh opportunities in environmental engineering, vessel conversion and line extension.
Q: COVID-19 has taken the world by storm, how is the pandemic affecting operations of ST Engineering’s Marine sector?
The world has gone into 2020 not expecting that it soon would be immersed in a global pandemic of unprecedented proportion. As countries rushed to suppress local infection with a mix of financial support and draconian control measures, the global economy crashed from the abrupt curtailing of consumer demands which set off a domino effect affecting every industry. Although a few sectors saw a sudden surge in demand, most of the economies around the world took a heavy beating.
In Singapore, the government’s financial assistance to companies through both Solidarity and Resilience Budgets has softened some of the financial impact on businesses. As a company providing essential services to support the defence and maritime industry, we are able to continue with our core operations when the first social distancing measures were introduced starting March this year. This is not withstanding some supply chain issues we are experiencing in our shipbuilding and environmental engineering projects.
As the pandemic situation evolves, an increasing number of migrant workers in Singapore began testing positive for COVID-19. The Singapore government acted swiftly to isolate the foreign workers living in dormitories in a bid to contain the spread of the virus. However, some of our workers were still infected, and the productivity at the yard was affected.
To make matters worse, the collapse of consumer demand globally has led to an oil glut, precipitating another oil crisis that is adversely affecting some of our long-standing customers in the Middle East. We can expect a tightening of belts as capital spending gives way to more maintenance and repair.
Q: What are some measures ST Engineering has taken to support customers and employees during this difficult period?
Throughout the entire crisis, we maintain a small but effective task force to deal with the changing landscape of the virus, whether it is about new positive cases, new measures imposed by the authorities, including gazetting certain dormitories as isolation zones, or changing needs of customers due in part to the falling oil prices.
Customer engagements have become even more crucial at times like this. We have taken proactive steps to assure all our customers on project delivery and service availability, and support their operational priorities. Each customer is assigned an account manager who stays in constant contact to update on the evolving situation and reassure the customer.
Internally, the management is regularly communicating with our employees through townhalls, emails and messaging apps to reassure and update them on the situation as well as to encourage safe distancing practices and good personal hygiene at work and at home. For our colleagues who are working remotely, we are actively adjusting both processes and practices to support more effective telecommuting and employee engagement.
ST Engineering has implemented and enforced all the preventive measures recommended by the authorities. In fact, we have exceeded the regulatory requirements in some areas, like stricter contact tracing at our premises. In the event of an infection, besides quarantining everyone who has been in close contact with the infected worker, we require anyone who has been in contact with the infected worker for less than 30 minutes contact and at more than two metres away to stay home for 14 days to mitigate the risk of infection at the workplace.
We are looking after the welfare of all our workers who are living in locked-down dormitories or alternative accommodations, such as hotels and flats, provided by the government. We keep their morale high by sending them goodie bags, along with self-made videos containing messages and photos of the management showing our deep appreciation for their contributions to the company. For those who are returning to work, we welcome them back with personalised EZ-Link cards as a simple gesture to show our care and solidarity.
Q: ST Engineering has a strong order book that bolstered its financial resilience. What are some of these projects?
In April last year, our U.S. Yard, Halter Marine in Mississippi won the S$1B contract to design and construct the first Polar Security Cutter for the U.S. Government for delivery in 2024. There is an option for another two more vessels when exercised will bring the total contract value to S$2.6B, the largest defence deal to-date.
In March 2020, Halter Marine started work on the fourth Auxiliary Personnel Lighter–Small (APLS) for the U.S. Navy, under a contract for an initial two vessels with an option for four additional vessels, of which two have been exercised. These will be delivered progressively from 2020 to 2021.
The APLS are used as mobile berthing barges that can be towed to new bases and shipyards to house U.S. Navy crew when their ships are in the port or during inter-deployment training cycles. At 82 meters long, each vessel is a self-contained floating dormitory fully equipped with offices, classrooms, washrooms, laundry facilities, medical treatment areas, a barbershop, a fitness centre, and a dining hall that can seat 280 people, making the ALPS suitable for humanitarian missions and other temporary assignments.
In Singapore, the progress on the two main shipbuilding programmes was on track until COVID-19 hit us, first with supply chain issues coming out from China and India and later with workforce disruption. We are preparing for the gradual return of the workforce and to the normalcy of our operations.
More than a decade ago as part of our diversification strategy and to cushion the knocks of the marine industry, the company ventured into the business of providing environmental engineering products and solutions. Our foray into this segment, which has now become an integral part of our smart city solutions business, is paying dividends. We have in the last three years secured contracts in excess of S$500m. Environmental engineering is large scale engineering business and requires very similar skillsets in design, system integration and project management as seen in the new shipbuilding segment.
We started selling products such as compactors and subsystems such as materials recycling and recovery plants; and pneumatic waste collection systems. We then moved onto providing engineering, procurement & construction (EPC) services and design-build-operate-transfer (DBOT) / design-build-operate-own (DBOO) solutions in the water and solid waste management.
Q: Given all the challenges, what future is ST Engineering charting towards?
Our roots are in defence engineering. ST Engineering is and will continue to be a strategic partner to Singapore’s Ministry of Defence and the Singapore Armed Forces. In the recent Budget 2020, Defence Minister announced a defence budget of $15 billion, which is an increase of 3.2% over the revised defence budget allocation in 2019. Singapore’s Maritime Security Task Force is also looking to improve its operational capabilities with new, purpose-built vessels. We see opportunities in these areas and will actively pursue them with our strong suite of systems and solutions.
In the U.S., there are plans by Department of Defence (DoD) to ramp up Navy shipbuilding efforts for multi-mission platforms. In addition, many Cold War Era defence vessels have reached the end of their useful life and will need to be replaced.
Broadly in shipbuilding, we will re-position our products in clusters with key account holders so that our focus will be a lot sharper in terms of product knowledge and market depth.
We are taking steps during this COVID-19 period to boost order book and add resilience to our revenue stream when the market returns to normalcy. For example, we develop designs that leverage our strengths and track records in the unmanned and green technologies for the defence and commercial segment respectively.
Key products include the Super Swift series of high speed aluminium craft and the Vanguard series to support coastal and maritime security respectively. Both series are capable of harnessing the unmanned technology, which is a key strength of ST Engineering.
For defence exports, geographically, we are focusing more on countries such as Bangladesh
in South Asia and Oman, Kuwait and the UAE in the Middle-east. Given the current situation, these economies will turn inwards to support their industries and job markets. We foresee opportunities to provide design, materials and project management through intellectual property and technology transfer.
In the commercial segment we have garnered a strong track record in the design and build for the highly customised vessels, such as LNG Container Roll-on/Roll-off (CONRO), LNG Bunkering Articulated Tug and Barge, and the world’s first Fi-Fi III CBR firefighting vessel.
Like the Super Swift series which are designs out of high speed aluminium hulls and to reach out to the renewables segment we developed a series of Crew Transfer Vessels (CTV) for the windfarm industry. In the U.S., renewables are also gaining interest, with a number of experienced European operators looking to build Jones Act service operations vessel (SOVs) or partner with local operators to use re-purposed offshore support vessels (OSVs). The industry is pushing for the use of greener fuels such as LNG and fuel cells to meet IMO’s strict regulations, resulting in an increased interest in LNG-fuelled vessels. This favours shipbuilders like us with LNG capabilities. The large dual fuel LNG catamaran Fast Crew Boats (FCB) to support the oil and gas industry was launched as part of our initiative to capture a slice of this market. The two series of aluminium hull designs have crew comfort and safe operations as the top design criteria.
In ship and rig repairs, we added facility in Mississippi since 2018 which is co-located next to our shipbuilding yard in the U.S., it is currently operated by ST Engineering Halter Marine and Offshore. Over a short period of two years, the company has built itself a reputational of being a yard of choice in the Gulf of Mexico when it comes to ships and rigs for repairs and upgrades, naval and commercial.
In Singapore, our yards have established excellent track record in a few niche areas, namely complex repairs and refurbishment of dredgers, conversions of offshore supply vessels into seismic support vessels and retrofitting of scrubbers and ballast water treatment systems.
Our capability to repair and convert OSVs and SSVs in short turnaround time will allow us to leverage the booming FPSO for further growth. Before COVID-19, we witnessed an increase in demand for maintenance and refits in credible yards in Singapore as yacht owners make detours to the island to get these services. As we remain one of the largest repairers of dredgers in the region, we are confident to take advantage of the increase in demand for dredging and reclamation activities in the region when the world is back on its feet again. Singapore remains a preferred place for dredger owners to have repairs and upgrades done.
In the U.S. our proximity to the major oil fields in Gulf of Mexico puts us in a good position to leverage the slowly recovering rig activities in the area. The high level of dredging activities around the Gulf Coast fuels demand for servicing of these dredgers. Our target customers are Great Lakes Dredge & Dock and Weeks Marine.
In environmental engineering, globally, ageing infrastructure for solid waste treatment facilities are on the rise. We will witness an increase in demand for potable water in China, Thailand and Vietnam in key industrial areas/cities/new economic zones. As they are mega infrastructure projects, ST Engineering will continue to look for partners who are like-minded and can complement us in technologies and market outreach. Our recent wins in Singapore will position us well to be a global player in this field in the not too distant future.
In summary, our resilience is preceded by our solid track records, sound financial standing and strong capabilities. We will be tapping on these strengths to weather the stormy seas ahead, and hopefully with some fair winds on our side, enter the new world full-sailed.