TTS Marine ASA has entered into agreement with Dalian New Shipbuilding Heavy Industry Co. (DNS) regarding the establishment of a joint venture company for supplying cranes to ships built at Chinese shipyards. This agreement is a milestone in TTS efforts
TTS Marine ASA has entered into agreement with Dalian New Shipbuilding Heavy Industry Co. (DNS) regarding the establishment of a joint venture company for supplying cranes to ships built at Chinese shipyards. This agreement is a milestone in TTS efforts in the growing shipbuilding market in China.
The agreement to establish TTS Bo Hai Co. Ltd. has been signed in Dalian by assistant Managing Director Li Dali in DNS and President and CEO Johannes D. Neteland in TTS Marine ASA. Both parties will own 50 % each of the company, which will be located in Dalian. In this city in the northeast of China, there are several major shipyards. Only Shanghai has a higher level of shipbuilding activity than Dalian. Recruitment of new employees will start when the registration of the company has been formally completed in March. According to the plan, a total of 23 engineers, sales representatives, fitters and administrative staff should be in place in a factory building of 4.500 square meters within the end of the year. Incidentally, Bo Hai translates into ”great ocean".
Each party invests approximately NOK 10 million as share capital in the company, and TTS will try to finance its share through a loan. Johannes D. Neteland will become chairman in TTS Bo Hai, and the company will have local staff with Li Dali as General Manager. The agreement entails that the result should be divided equally between both parties. In addition, TTS will receive a royalty for the use of technical licenses, and will also handle the after-market activities.
Same model as for other marine equipment
In China, shipbuilding activities are organised into two state-owned companies each covering their own geographical areas; CSIC (China State Industrial Corporation) in the north and CSSC (China State Shipbuilding Company) in the south. DNS is a part of the CSIC group in the north. A total of 1.200 larger and smaller shipyards are included in the two groupings. The agreement between TTS Marine ASA and DNS will follow the same model as for the joint venture company TTS Hua Hai Ships Equipment Co. Ltd, which is based in Shanghai. Here, Europeans and Chinese have cooperated on the development, production and sale of hatch covers and RoRo equipment for six years.
China has a marketshare of well over 10 % of the world's shipbuilding, and aims to become world leader within 2015. Through the cooperation with CSIC, TTS has ensured a strategically important position to become the leading supplier of most types of ship cranes in China. This will also strengthen TTS crane division in Norway and in Germany, particularly because the service and after-market activities to a large extent will be based on TTS expertise.
The total market for ships cranes in China was approximately NOK 500 million in 2004. This is expected to triple within 2015. In the joint venture company, TTS intend to expand the product specter to include also smaller cargo cranes and service cranes.
Export from China to other Asian countries
In the marine crane market, TTS is already established in Shanghai with the wholly-owned TTS Marine Shanghai Co. Ltd. This company was started in 2001 and has approximately 30 employees. Arne Knutsen is the General Manager. After the establishment of TTS Bo Hai, the company in Shanghai will focus on export from China to other shipbuilding markets in Asia, and it will also consider production of steel to cranes which are assembled and delivered to shipyards in Europe.
TTS Marine Shanghai is responsible for a third of TTS' total turnover in Asia, and has now a capacity of 50 – 60 cranes a year. The TTS aim is to double this volume in 2005.
Improvement also for other marine equipment
When it comes to hatch covers and RoRo equipment, the joint venture company between TTS and CSSC in Shanghai has experienced a substantial improvement. Orderbacklog at the beginning of 2005 was at approximately NOK 230 million. The company was established in 1998 by Kværner Ships Equipment and was later acquired by Hamworthy. When TTS in 2001 acquired Hamworthy's Dry Cargo Handling Division, a 50 % share of the Chinese company was included.
TTS Hua Hai Ships Equipment Co. Ltd has 50 employees and is managed by General Manager He Pu, with Sverker Møller from TTS Ships Equipment AB in Gothenburg as working chairman. The company focuses on engineering and sales. All production is outsourced to external subcontractors.
In the TTS strategy for operations in China, we have focused on building TTS as a brand through focused growth, good profitability and high product quality which so far has been a success.
Bergen, January 06, 2005
Contact persons:
President and CEO Johannes D. Neteland
Mobile: 918 46 906
E-mail: johannes.neteland@tts-marine.no
Director Ivar K. Hanson, division Marine Cranes
Mobile: 995 32 509
E-mail: ivar.hanson@tts-marine.no
Financial director Olav Bruåsdal
Mobile: 915 61 152
E-mail: olav.bruasdal@tts-marine.no