Cover Story
High & Dry
Micronesia's Troubled Shipyards are Searching for Ships.
A shipyard in tiny Kosrae Island, in the Federated States of Micronesia, and a drydock in Majuro, the capital of the Marshall Islands both face a similar problem: how to attract enough customers to make the operations viable. Both were established to provide alternative and cheaper drydock maintenance services for the government-run field trip vessels traversing the islands, but also in the hopes of attracting ships from farther afield.
The Majuro drydock operation was established in the mid-1990s in conjunction with the American LaForce family that ran its own boat-building business in the state of Alabama. The Marshalls drydock didn’t only repair ships, it built from scratch a government landing craft, the Jeljelet Ae, which has been in service for several years hauling cargo to and from Tarawa, Kiribati, as well as domestically within the Marshalls. The Marshalls government in May, however, severed its ties with the American company and is looking for new management.
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Meanwhile, the four-year-old Kosrae shipyard — SEMO-Micronesia, Inc. — is a joint venture between the state government and a Korean company. Since its inception it has provided maintenance and repair service primarily to the state and FSM field trip vessels.
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Aside from the Navy shipyard in Guam, and a major ship facility in Fiji, these are the only two ship repair operations in the central Pacific. Historically, the Marshalls and FSM governments have bought ships in Asia and also sent them there, mostly to Japan, for drydocking. But, says SEMO-Micronesia, Inc. President In-Ho Jung, the Kosrae shipyard can do the repairs for about half what it would cost in Japan, largely because of lower labor and overhead costs in the islands. The Kosrae shipyard employs about 15 FSM citizens and five Koreans.
In late May, the FSM government’s “Caroline Islander” cargo ship had just been pulled out of the water on the tracks that serve as the repair location for the Kosrae shipyard. The vessel was expected to be under repair for up to three months at a cost about $200,000.
The difficulty, points out long time resident and state Department of Transportation administrator Bruce E. Howell, is attracting a steady stream of ships to the shipyard. Sometimes there will be gaps of several months in between the arrival of ships for maintenance. A locally-based longline fleet that accounted for some of the shipyard’s business recently pulled out of Kosrae.
One of the limitations of the Kosrae facility is that it can’t handle the deep-draft purse seiners that ply the waters of the FSM. Dozens of these fishing vessels from Japan, Taiwan and S. Korea fish in the area and are potential customers. It’s a problem that SEMO-Micronesia, Inc.’s manager James Park is hopeful will soon be rectified with additional dredging of the near-shore lagoon and the extension of the tracks used to pull ships out of the water. Presently, the Kosrae facility is limited to ships under 1,000 tons, Jung said.
The Marshalls facility, which uses a modular floating system, can be easily expanded to handle larger vessels, though it too has focused on ships in the 200-800 ton range. Both shipyards are attempting to lessen their dependence on maintenance contracts from governments in their islands by drawing in ships from other countries. Their challenge, and no doubt the key to their long-term survival, is convincing shipping companies outside these islands that they can do the job as well — and for less cash — than their Asian counterparts.
Photo: Floyd K. Takeuchi
