Ship breaking biz booms in Guj due to slump in global trade
Ship breaking at Alang in Gujarat has once again become booming business thanks to the slump in global trade, where owners would prefer scrapping their ships than seeing them sit idle. Now, if only they could take better care of their migrant labour.
The view from the top of a ship at Alang, in Gujarat, is surreal-ten kilometres of beach on which hapless ships, in various states of dismemberment, lie listlessly in one of the 140 ‘yards’-a shadow of their former seagoing selves. Many are lined up in the waters off the beach like lambs to the slaughter. Nearby, a cross-section of seven floors is what remains of a 23-year old 10 MT Japanese vessel that was once a car carrier, two months after it docked at Alang. Around 200 workers have been hired to help scrap the vessel. While some are working in the yard cutting the steel sheets, taking out the nuts and bolts of the ship machinery, others are dismantling the ship from inside.
Alang, once a desolate dot on the Gujarat coastline, is arguably the world’s most famous graveyard for ships, a repository for much of the world’s navies and merchant lines. What makes it ideal for this task is a beach endowed with gentle slopes as well as high tides that allow ships to simply glide onto sand as if they were hovercrafts. The shipbreaking industry here started in 1983 and was sailing along at a decent clip before, running into headwinds. When economies boom, ship breaking suffers as ships are in high demand. Conversely, an economic lull spells a boom as idle ships can make more money as scrap. Between 2006-07 and 2007-08, the pre-crisis years, only 272 ships were scrapped in Alang. However, in the last three years alone from 2008-09 to 2010-11, the number has more than tripled to 969. This year, Alang is expecting a record number of around 400 vessels to coast up onto its beach and die.
“In the last two years we have done 60 per cent of the global ship demolition here,” says Haresh Parmar of Shiv Ship Breaking Co. Parmar, like most other ship breakers, complains about how the rupee depreciation is burning a hole in Alang’s pockets as buying ships has become costlier. He also complains about all the negative publicity that the place has garnered mainly because “westerners don’t like to see our growth,” he says.
Slowdowns aside, depressed global freight rates since 2009, and high prices for steel scrap have been big catalysts for the spurt in ship breaking. In 2009 and 2010, the volumes in global ship breaking aggregated around 44 million gross tonnage (GT)-twice the volumes of the four preceding years. CRISIL estimates that, of the 180 million GT of global shipping capacities that are more than 20 years old, around 55 million GT will be available for breaking in the next 24 months. The ship breaking industry meets 30 per cent of India’s requirement for steel scrap.
Yet, it is worth asking if anything has actually changed in Alang since its inception in 1983. The Supreme Court did issue guidelines on specific norms to be followed in the yards that came out in 2002, but it did nothing to deter ghastly incidents like the one five years ago where 200 workers died in a ship explosion. The common slogan “Safe Alang, Green Alang” that you can around town may just be nothing more than writing on the wall.
Cheap labour, cheaper lives
What really makes Alang tick, is the cheap labour-some 50,000-strong-that comes flocking to this beach from states like UP, Bihar and Orissa. Average wages are around Rs 6,000 to Rs 7,000 per month and accommodations are shacks with no running water or toilets-which is why Alang is entirely occupied by non-Gujaratis. The managers, officers and owners of yards come from the nearby and prosperous district of Bhavnagar.
Yet, most workers in Alang have been stuck here for over 20 years due to lack of employment opportunities back home. It is only in the past two years that they have been provided with some protective gear-gloves, boots and hard hats. In spite of this, the nearby private clinic receives some 35 injured patients everyday and runs a houseful 14 bed nursing home. “Most accidents take place because of fatigue. Earlier, Sundays were also not an off, but now it is a holiday,” a worker from Gorakhpur said. Although the apex court specified that the work will go on from 7 am to 7 pm, most yards have limited this rule only to the ‘gas-cutting’ activity (cutting the ship with LPG and oxygen) and function well into midnight carrying on with other tasks in the yard.
Several other rules are also broken in the process of breaking a ship. The engine room, one of the darkest places in the ship, is supposed to be lit up before any work takes place there but that seldom happens. A senior industry person elaborating on the occupational hazards created by the ship breaking industry said, “All personnel protective equipment has to be provided as per Supreme Court guidelines. But not a single worker has been given a mask to shield himself against the toxic fumes which come out in the gas cutting process.”
According to the managers of these yards, out of the total accidents that take place in the ship breaking process, 20 per cent take place on the ship while the other 80 per cent in the yard. “The smaller the size of the yard the greater the incidence of accidents,” one of the yard managers said. The smallest yard size in Alang is just 30 meters and there are some 80 of them out of the existing 140. Each yard has appointed a ‘safety officer’ with educational qualification of up to 12th standard.
Business as usual
Gujarat Maritime Board and Gujarat Pollution Control Board (GPCB)-the monitoring agencies in this case have not taken any action against the yards for not adhering to the rules. Before the process of shipbreaking starts, the first step is to remove oil from its tank. After this, the shipyard is supposed to get an environmental clearance certificate from GPCB to proceed with further work. According to some senior ship breakers, the decontamination certificate which is to be obtained from the GPCB after all the oil is removed from the ship to continue with ship breaking is made readily available after a certain payment. “There is a lot of corruption that takes place since a lot of permissions etc have come into play. No one is really concerned about the occupational hazards,” a senior ship breaker said.
The port officer, S Chaddha, GMB however doesn’t see any reason for all the hue and cry surrounding safety. He says that a plan to provide dormitory facility to the workers of Alang is in the works. “We should be getting carbon credits for producing so much steel without using any iron ore, water and so much wood without cutting a single tree,” said Chaddha.
India’s ship breaking industry wants to resolve some of these issues by putting some onus on the ship-owner as well to make sure that a ship coming in is free of sludge and environmentally sound. The idea has not found any resonance in Pakistan and Bangladesh, the two other countries which resort to the ‘beaching’ method for ship breaking, as both fear a loss in business. Meanwhile, the International Maritime Organisation (IMO) in its Hong Kong Convention is contemplating a set of rules and regulations for safe and environmentally sound ship recycling. “The proposal by IMO is such that it is pointedly against the beaching method which is unfair to our country. We are trying to approach the matter along with the other countries which will be affected by such a move -Pakistan and Bangladesh,” a senior ship breaking association member said.
Boomtime
In the meantime India’s ship breakers are expected to grow their global market share from the existing 35 per cent to 40-45 per cent in the next two years, according to a CRISIL study. “New ships ordered in 2006-08 will be ready for delivery by 2012, and result in expansion in global capacities by more than 25 per cent. However, global trade is expected to slow down, driving reduction in freight rates in the next two years. These factors will together improve the economics for increased scrapping of older ships,” said Gurpreet Chhatwal, Director, CRISIL Ratings. Uncertainty regarding legal restrictions on ship breaking in Bangladesh, and China’s higher ship breaking costs will help India’s players bid more competitively on ship purchases, say experts. The shortage in supply of iron ore, following ban on iron ore mining in Karnataka, and possibly other states, is another shot in the arm for the industry, ensuring robust future demand for scrap.
Pretty good news for an industry that deals with death.
Source: Business Standard
