Keys to Continuous Profitability of Two Shipbuilders Amidst Downturn Market Explored

Wu Xiuxia

For more than a decade, in the course of interviews with Jiangsu shipbuilding enterprises, characteristic enterprise management methods of CSSC Chengxi Shipyard Co Ltd and Jiangsu Yangzijiang Shipbuilding (Holdings) Ltd left a profound impression on the reporter,such as corporate culture, innovative development thought and technological innovation. Despite different institutional mechanisms and product orientations of the two enterprises, there are some interlinked management secrets. After years of development and accumulation,the two shipbuilding enterprises have been exploring in the process of shipbuilding, and have formed good experience suitable for their development.As a result, they have been operating in the black with various shipbuilding indicators at the forefront of peers.

Demand Success from Executive Power

CSSC Chengxi has constantly strengthened the whole staff crisis consciousness and the development consciousness, condensed the thought consensus of "turning danger into opportunity". All cadres and workers further emancipated their mind, raised their stance, unified understanding, and condensed a strong ideological consensus for various reforms and integration work.Through overall planning, CSSC Chengxi set up a number of working groups to fight the "annihilation war", accelerated the integration of resources in the three places in a relatively short period of time,successfully completed the three dock displacement project, broken through the bottleneck of insufficient ship repair resources, ensured the orderly operation of ship repair business, avoided the risk of breach of contract of handheld orders,and ensured that the total amount of ship repairs does not decline. Not only that, CSSC Chengxi accelerated the industrial transformation of Xinrong Company, focused on tapping the market,and achieved breakthroughs in the wind tower internals, balanced weight and other external markets. In addition, since the beginning of this year, the company has steadily grown in the three main businesses of ship repair, shipbuilding and application industry, realizing a new historical leapfrogging, not only handing over a beautiful report, but also solving some outstanding and difficult problems in the reform and development. The obtaining of these achievements is due to the persistence of Chengxi people and the spirit of forever striving for the first place, as well as the consciousness of the mission of Party members and cadres,which condenses a strong executive power to promote reform and innovation.

Every year, Yangzijiang Shipbuilding sets the cyclical targets for each ship from commencement, docking, launching to ship delivery. At the same time,Yangzijiang Shipbuilding has drawn up a strict red line of big plans around the four nodes of commencement, keellaying, launching and ship delivery.Every management cadre and front-line staff have made every effort in the big node plan to ensure the node, grasp the accuracy and improve the quality, ensure that the previous working procedure does not makes trouble for the next working procedure, and continuously improve the integrity of intermediate products and the management level of shipbuilding precision with tough execution. The breakthrough of every shipbuilding index benefits from the cooperation between departments and firm executive force of the enterprise.

Demand Benefits from Management

In recent years, CSSC Chengxi and Yangzijiang Shipbuilding have not only pursued efficiency from technology, but also created benefits through "tactics",using fine management as a breakthrough to resolve the crisis and improve quality and efficiency.

In the process of deepening lean management, Yangzijiang Shipbuilding’s practice can be used for reference in promoting renovating the over-grinding project and introducing the production management system software (YSS). Since 2016, Yangzijiang Shipbuilding has made every effort to promote the treatment of excessive grinding project, constantly improve welding quality and weld surface forming quality, and strictly do lean shipbuilding management. Meanwhile, the whole company changed its thinking, carried out the consciousness of "large quality",extended the quality management forward and backward, strengthened the process control of the supply chain such as equipment and raw materials,attached importance to dealing with the typical quality assurance problem of shipowner feedback after ship delivery,and transformed the original extensive development mode into the intensive development mode, which mainly relies on fine management and scientific and technological progress, and embarked on the connotative development path of continuously improving the quality of economic operation. The system makes the production process visual, changes the previous paper-based extensive production mode of dispatch list, and through this system, the whole picture of the production site can get understood via "one key", large schedule, medium schedule and small schedule in large terms, frontline operation daily report and dispatch list in small terms, all of which are generated in the system,which is of great significance to the production management of the "large troop formation" operation enterprise. It also plays an important role in planning control, employee organization, man-hour management, cost control and so on. The successful application of the system in Yangzijiang Shipbuilding depends on the cooperation of each manager, first-line construction personnel and outsourced team, and it is also the embodiment of all staff protecting nodes, grasping the accuracy and controlling the quantity.

CSSC Chengxi is located in Jiangyin City of Jiangsu Province. In terms of resource allocation, the home office has limited coastline, with relatively backward equipment and facilities. In the product structure, the product under construction is low in price and short in period and transformed product costs are high. The company has continued to promote lean management, improve the production efficiency of working hours,improve the product quality, improve the process, strictly control each link,and tap potential and reduce cost. At the same time, the shipyard has deepened"Modeling 2.0" and improved the production efficiency of shipbuilding.By taking berth period of main building type and dock commissioning period as the core, the shipyard has established the standardized shipbuilding period, boosted rhythmic and orderly production； given full play to PDM product data management system and realized rapid improvement of new products in the middle product manufacturing logic chain integrity, threedimensional digital modeling design and the like； implemented new technologies and new methods to advance the overall improvement of the quality and process of the main building type.

At present, CSSC Chengxi and Yangzijiang Shipbuilding are improving their own technologies and management mode in an all-round way, and are fully catching up with the Japanese and Korean shipbuilding enterprises in quality control,cost control, process flow and so on.

Innovation for the Future

After the outbreak of the international financial crisis, the global shipbuilding industry fell into a “severe winter”, and the number of ships in the orders enterprises received fell sharply.In the face of the changing market,passive response can only solve the crisis for a while, only taking the initiative to lead the transformation of enterprises with long-term development strategy is the fundamental way out of the crisis.However, the shipbuilding market "cake"is always limited, breakthrough around the single shipbuilding industry involves too much pressure, transformation and upgrading have become the only way out for enterprises, non transformation means a survival crisis； slow transformation cannot survive as slow fish will be eaten by fast fish. At the critical moment, CSSC Chengxi and Yangzijiang Shipbuilding created a new idea of development with a keen sense of smell, sized up the situation,and advanced the corporate transformation and development in a rapid, accurate and stable fashion.

CSSC Chengxi mainly focuses on ship repair and modification business. In the face of the long-term ups and downs of the ship repair market and the problem of "poor profitability", the company foresaw the possible reversal and hidden crisis in the shipbuilding market long ago.While expanding and strengthening the main business of ship repair, it assessed the situation, innovated development ideas, strengthened strategic planning,started ship type development in 2007,and developed the shipbuilding business quickly, accurately and steadily. By 2016,the comprehensive breakthrough and leap-forward development of shipbuilding business have been realized, not only achieving a qualitative leap, but also got rid of the burden of overcapacity after the outbreak of the international financial crisis in 2008, and grasped the initiative to deal with the crisis.At present, Chengxi has successfully developed and built multi-type bitumen carriers, chemical tankers, oil tankers,sawdust carriers, dump bulk carrier and feeder container ships, realizing the full coverage from the three mainstream ship types to the special ship market, and has formed brand advantage in the market of small and medium-sized ships under 80,000 tons, substantially improving competitive strength. While promoting the transformation and upgrading of product structure, CSSC Chengxi has increased the research and reserve of key technologies, and won a place in the market of high technology and high value-added ship repair, such as LNG carrier, LPG carrier, marine engineering ship and so on.

Yangzijiang Shipbuilding did not "sit back and wait" for industry reshuffle, but stole a march to take the initiative to meet head-on. Upon the requirements of the shipping industry for energy-saving, low-emission and largecapacity ships, increasing requirements for new energy transport ships and new energy powered ship as well as potential demand for special ships, super-large energy-saving low-carbon dry bulk cargo ships in the post-financial crisis era, Yangzijiang Shipbuilding increased investment in technology research and development and created new market demand with effective supply of superenergy-saving, low-emission, highintelligent products. Meantime, aiming at the world's advanced shipbuilding management level, Yangzijiang Shipbuilding fully implemented the modern shipbuilding mode, took the initiative to introduce and apply TRIBON M3, SB3DS, AM, YSS, PDM and other advanced shipbuilding design and management software, gradually realized the three-dimensional design of the ship and the integration of shipbuilding design, production and management. At present, by the technology innovation and upgrading of the existing ship type,it eliminated the existing old products,developed new products, participated in the domestic and international market competition with more competitive and cost-effective products, so that it has superior products while others have products. At the same time, in the tech R&D, more attention is paid to the secondary development of the product.Upon the demand of international large-scale shipping companies and ship owners, the company worked with R&D institutions to carry out secondary development of traditional products,and through continuous optimization and upgrading, the company has built its own competitive products.