Reflecting on This Year.

BYLINE: By Peter Cairns, President , Shipbuilding Association of Canada

As we are now into the fourth quarter of 2007, I thought it might be useful to look at some of the events of this year and how they have affected the shipbuilding industry in Canada.

Internationally, shipbuilding is booming. It is being fuelled by the continuing expansion of global trade at a rate of five per cent per year with no sign of any reduction in the near to mid-term. Consequently, the demand for ships to move cargo is driving ship charter rates to unprecedented highs for some types of vessels.

Fairplay magazine recently reported that a 2004 constructed 175,000-deadweight-ton capesize bulker fixed an 11 to 13 month charter at an unprecedented rate of $125,500 per day. The owner stands to receive about $50 million, close to half the value of the vessel.

China continues its relentless drive to achieve its stated goal to become the world''s number one shipbuilder. Currently in third place, a position it has held for 12 years, China''s shipbuilding capacity is forecast to exceed 40 million deadweight tons a year by 2010 according to data from the China Association of National Shipbuilding Industries.

The China State Shipbuilding Corporation in conjunction with one of the nation''s premier steel makers will invest US$1.25 billion in the constriction of two production lines at one of the countries largest shipbuilding bases.

The Chinese government is also working to drive outdated production facilities from the market. Not only will China provide some of the industrialized world''s cheapest labour, it will be combined with the very latest in production facilities - a tough combination to beat.