Hengli to Usher in Fresh Development Stage

Liu Zhiliang

How long will a large shipyard idle for 10 years take from being purchased to be ready for production?The answer from Hengli Heavy Industry Group Co Lts is six months.On January 28, 2023, half a year after completing the acquisition of South Korea STX (Dalian) Shipbuilding Co Ltd, Hengli Heavy Industry Industrial Park in Dalian Changxing Island held its operation ceremony, marked the 10-year idle assets officially entered the new operation stage, showing Hengli Heavy Industry making a milestone step towards the target of building a world-class green ship construction and high-end equipment manufacturing base.

An industry insider says the current global shipbuilding market has been in a long recovery cycle, Hengli Group with petrochemical business and shipping business entering the shipbuilding sector will not only seize market opportunities in the vibrant global newbuilding domain, but also expand Hengli shipping capacity,increase the proportion of goods shipped by itself, reduce petrochemical business transport costs, and realize the complementary advantages.Gathering “favorable time”, “favorable geographical position” and “support of people” factors, Hengli Heavy Industry will usher in a new stage of development.

Become a high-end coastal equipment base

STX (Dalian), the predecessor of Hengli Heavy Industry, began construction in September 2006. It is a shipbuilding and ocean integrated production base independently invested by South Korean STX Shipbuilding in Dalian, and it is also the largest foreign shipbuilding project introduced by China so far.STX (Dalian) took shipbuilding,heavy industry, ocean heavy industry,engine, heavy equipment and metals as main businesses. In the last round of shipbuilding peak period, it had more than 10 entity enterprises, and the work force in the production peak period once reached 30,000 people. However,since 2012, its parent company, STX Shipbuilding, had suffered severe losses due to a variety of factors, and a debt crisis came up in the first quarter of 2013. Afterwards, 13 enterprises under STX (Dalian) successively applied for bankruptcy reorganization, and entered the bankruptcy liquidation procedure in March 2015. After more than 9 years, more than ten auctions ended in failure, forming a large number of idle assets and wasted resources.

In July 2022, for the implementation of the State Council’s requirements on revitalizing stock assets and expanding effective investment, Hengli Group pressed onward the high-end coastal equipment manufacturing industry, set up Hengli Heavy Industry,and at a cost of 2.11 billion yuan successfully acquired STX (Dalian)assets including buildings, structures,land use rights, sea area use rights,projecs under construction, machinery and equipment, and smoothly accessed to the shipbuilding field.

Hengli Heavy Industry took the revitalization of the stock assets as the sally port, added 18 billion yuan investment, made full use of its advanced industrial chain and management concept and other advantages, mobilized its domestic and foreign advanced talents and industrial resources accumulated over the years,and built a high-end coastal equipment manufacturing base project. We learn that the project covers an area of 5.3 square kilometers, has a 460 m dry dock and four 700 m building slips,as well as a 4000 m wharf shoreline,equipped with a 1000 ton gantry crane and three 900 ton gantry cranes, and empowered with the construction capacity of 400,000 ton or below ships and marine engineering equipment.After full production, Hengli Heavy Industry Industrial Park will have the capacities of 1MMT/A steel processing and 40-ship delivery.

The insider says, different from“speculators” who entered the shipbuilding market in the shipbuilding peak, it is more out of the needs of their own business development that Hengli Group entered the shipbuilding field, especially Hengli Group’s mega refining and chemical and mega chemical businesses have a wide range of intersection with STX (Dalian) shipbuilding, heavy industry, marine heavy industry businesses. The acquisition of STX (Dalian) by Hengli Group can realize complementary advantages and coordinated development of petrochemical production and highend coastal equipment manufacturing.In addition, Hengli Group set up Hengli Shipping (Dalian) Co., Ltd., with a fleet.The establishment of Hengli Heavy Industry can not only seize the market opportunities in the currently active global new shipbuilding field, but also expand the transport capacity of Hengli Shipping, increase the proportion of cargo self-transport, reduce the transport cost of petrochemical companies, and realize complementary advantages.

Create “Hengli speed”

All signs show that the Hengli Group accessing to the shipbuilding market is a real move. After the acquisition, Hengli Heavy Industry completed the restoration of the site area and infrastructure in the shortest time possible, realizing the resumption of work and production, and creating the“Hengli Speed”.

With the restoration of key production lines, all businesses of Hengli Heavy Industry have gradually resumed. In terms of ship construction and repair business, on January 17 this year, Hengli Heavy Industry repaired the first foreign ship “Mediterranean Oliver”. At the operation ceremony,Hengli Heavy Industry signed the first-batch shipbuilding contract, and officially started the construction of the first ship. We learn that the first batch of orders involving shipowners including well-known domestic and overseas shipowners in addition to Hengli Shipping.

At present, Hengli Heavy Industry equipment manufacturing sector and precision casting sector have been put into production. In the engine business, Klaus Engberg, vice president of MAN Group, said at the operation ceremony that Hengli Heavy Industry will soon be able to produce marine diesel engines licensed by MAN patent. A Hengli Heavy Industry sourc revealed that Hengli Heavy Industry is currently seeking the MAN patent approval, and striving to achieve the first engine leaves factory by the end of this year.

Heng Group Chairman and President Chen Jianhua said at the operation ceremony his company will continue the concept “either don’t do it or do it for the best”, gather worldclass talents, integrate industry chain resources, bring in fine management,focus on construction of six sectors-- shipbuilding, marine engineering,engine, equipment manufacturing,precision casting and green building materials, and spare no effort in building a world first-class green ship building and high-end equipment manufacturing industry base.

Persevering Hengli speeds up development

To be successful, “favorable time”, “favorable geographical position” and “support of people”factors are indispensable. The industry insider said Hengli Heavy Industry having opened up a new stage of development undoubtedly has these elements.

For “favorable time”, the global newbuilding market has been in the recovery cycle. Under the influence of great changes in the structure of seaborne trade, accelerating green transformation of the industry and the intensive rollout of international rules, it is clear that the development of the world's newbuilding market is supported by long-term favorable conditions.

Li Yanqing, secretary general of the China Association of the National Shipbuilding Industry, said the current world shipbuilding industry is in the accelerated transformation led by“green, low-carbon and intelligent”.Global shipyards, equipment manufacturers and stakeholders are all updating their management ideas, providing innovative technologies and reshaping the industrial ecology for the major historic change.Hengli Heavy Industry has joined the shipbuilding industry at such a historical milestone of special significance,which has added new strength and injected development vitality into the transformation and development of China's shipbuilding industry.

For “favorable geographical position”, Dalian Changxing Island located in the Bohai Rim shipbuilding base, one of the three major shipbuilding bases in China,enjoys obvious location and resource advantages. The development of Hengli Heavy Industry has been strongly supported by Liaoning Province and Dalian City.

According to the industrial layout of the Dalian Changxing Island Economic and Technological Development Zone, the coastal equipment manufacturing industry focuses on ships and marine engineering equipment, new energy equipment, petrochemical equipment,high-end equipment manufacturing,gather a number of large complete equipment enterprises, build major technology equipment industry clusters,and realize the industrial output value of about 85 billion yuan for above the designed scale by 2025. In the field of shipbuilding and marine engineering equipment, Hengli Heavy Industry series projects have been listed in the key projects, to create a “1+10”industrial model.

For “support of people”, the operation of Hengli Heavy Industry Industrial Park has attracted extensive attention in the industry. At the operation ceremony, Hengli Heavy Industry signed strategic cooperation agreements with domestic and overseas well-known suppliers, technical institutions and design institutes,covering engines, steel plate supply,and intelligent ship development.A Hengli Heavy Industry source said taking the signing of the letter of intent as an opportunity, Hengli Heavy Industry will establish closer cooperative relations with its partners,give full play to their respective technical and resource advantages, and carry out all-round and multi-field in-depth cooperation in technology research and development, business cooperation and supply chain services.Li Yanqing said CANSI hopes that Hengli Heavy Industry can deeply develop the shipbuilding industry with perseverance, follow the market rhythm and accelerate the development with pro-cyclical business wisdom;exercise efficient lean management,and improve the level and efficiency of traditional shipbuilding with advanced manufacturing; stand at the forefront of green, low-carbon and intelligent development, and work with stakeholders to shape and build an industrial ecological alliance to support sustainable development.