Marine Equipment Sector to Break the Situation

By Wu Xiuxia

Chinese marine equipment industry stabilized and strengthened its main business of supplying marine and offshore engineering equipment, developed and popularized a number of energysaving, efficient, high-technology, high value-added equipment and new-type environmental protection equipment, and made major breakthrough in independent R&D of high-end products such as high-, medium- and low-speed diesel engine and partial dual fuel engine and gas engine in 2017 amidst the fierce market competition. Meanwhile, by accelerating exploration of non-ship equipment industry, the industry opened a new horizon for electrical integration and onshore power station integration markets.

Tough Market Situations

In 2017 new ship prices kept falling, orders held at hand substantially decreased, and marine equipment market size shrank dramatically. With demand decline, marine equipment manufacturers suffered a marked decrease in production,a substantial increase in inventory, a decline in sales revenue and harder profitability.

Order shortage is a problem widespread among marine equipment manufacturers. The persistent downturn pressure on the shipbuilding market continuously conducted to marine equipment manufacturers in 2017.Starting beginning of the year, orders received kept falling year-on-year,and the trend lasted to the year end. At the same time, affected by insolvency and bankruptcy, M&A and regrouping,marine equipment manufacturers had orders at hand cancelled in addition to insufficiency of orders received. Moreover,order drain happened due to factors of marine equipment product technology,quality, delivery date, after-sales service or quoted price not as good as overseas products.

Furthermore, “hard to make money” and “difficult to deliver” have become huge resistance to the efforts to reduce accounts receivable and tied-up capital by inventory. Some executives say frankly insufficient orders received and production task shortfall make it hard for enterprises to complete the annual plan.Meanwhile, prices of steel and other raw materials kept rising, prices of marine equipment products kept dropping,product delivery was frequently postponed,shrinking profit space, and imposing huge pressure on sustainable growth and continuing profitability.

Strengthen Main Business and Consider Relevant Diversity

Despite limited market demand in 2017, keeping main business from decline remained the theme or many marine equipment manufacturers. Some started all over again, adjusted the product mix,shifted to onshore market, vigorously boosted diversified development and promoted transformation and upgrade of marine equipment and non-marine business. Some persisted in proper diversity, developed non-marine business and preliminarily realized the goals of two-leg walking of marine equipment industry and relevant multiple industries and shifting from simplistic shipbuilding market to multi-sector market.

In stabilizing the main business of supplying marine and offshore engineering equipment, Chinese ship machine enterprises strengthened market exploration of power new products of new machine type, dual fuel engine and energysaving environment-friendly device; step up operation of generator sets, deck machinery and marine boiler products; give a priority to exploration of diesel engine energysaving refitting, ballast treatment system,deck, cabin and other electromechanical equipment retrofitting market, step up market segment operation and win survival defence war.

In the development of diversified industries, some marine equipment manufacturers actively widened comprehensive power system sector in a bid to take market advantage. For example, China Shipbuilding Power Co Ltd displayed good situations of multiple flowering and rapid development in SCR system, electric propulsion product and onshore power station sectors and formed relevant diversified product clusters with priority, characteristics and potential; Hudong Heavy Machinery Co Ltd took advantage of the driving force of the development of the Chinese nuclear power industry, made innovative development, the world first 1E grade LV nuclear power emergency diesel engine generator set 6PA6LN diesel engine designed and manufactured by Hudong Heavy Machinery completed bench test and was successfully delivered,it also made constant exploration in power station product investment cooperation and shield financing and lease in a bid to yield positive results in multiple sectors. Some manufacturers actively sought domestic and overseas cooperation, and through joint venture,cooperation, independent R&D and patent introduction, strive to develop onshore power station, distributed energy and environmental protection, water treatment, nuclear power equipment and large complete equipment and relevant diversified industries and constantly cultivate new sectors for economic growth.

Insist on Innovation Drive, Follow Energy-Saving and Environment-Friendly Hot Points

2Despite shipbuilding market downturn in 2017, marine equipment technology innovation grew vigorously,with emerging of new products and new technologies. Chinese marine equipment manufacturers put pressure on themselves, strengthened new product R&D in line with market demand, particularly energy-saving,environment-friendly, cost-effective and efficient equipment. Some equipment manufacturers grasped opportunity to realize breakthrough in independent technology and product R&D by implementing priority projects and won batch orders.

The newly launched energy-saving,environment-friendly and efficient marine equipment concentrated on marine engine and propulsion device as well as water treatment and onboard waste treatment equipment sectors. In the marine machine sector, Chinese manufacturers have made exploration and innovation in independent brand marine machine product R&D and manufacturing since the beginning of 2017. Anqing CSSC Diesel Engine Co Ltd made breakthrough in ACD320 series natural gas engine from patented manufacturing to brand creation; CSIC No.711 Institute successfully developed 8M23G natural gas engine; CSSC Wartsila Engine (Shanghai)Co Ltd made major headway in dual fuel engine and gas supply system, microignition dual fuel engine, 46DF dual fuel engine and relevant product development;Hudong Heavy Machinery completed development of its first DF main engine and ME-GI main engine in marine lowspeed dual-fuel diesel engine; the world first CMP-MAN 23/3 micro-ignition dual fuel engine manufactured by China Shipbuilding Power was successfully delivered.

In energy-saving eco-friendly water treatment equipment, domestic relevant equipment manufacturers made progress in ballast water treatment system, ship SCR system and other new technology and new product sectors. For example, BalClor ballast water treatment system developed by Qingdao Shuangrui Ocean Environment Engineering Co Ltd and with independent IPRs obtained USCG type approval certificate and the company became Asia’s first and global fourth certified manufacturer of marine ballast water treatment system; Hudong Heavy Machinery delivered China’s first 6S60ME-C HPSCR marine lowspeed diesel engine with independently developed HV SCR; China Shipbuilding Power and overseas institution jointly developed SCR system and obtained orders of almost 100 marine mediumspeed engine SCR systems.★