Shipbuilders Bring R$2B to Rio Economy

By Andrew Willis, Contributing Reporter

RIO DE JANEIRO, BRAZIL – The local Rio economy is enjoying a large injection of funds from the state’s shipbuilders, as local content rules and strong orders from Petrobras, Brazil’s semi-public oil company, put pressure on suppliers. The shipyards are currently pumping around R$2 billion into the purchase of materials, equipment and services from local suppliers in the state, the O Globo newspaper reported last week (August 18th).

Transpetro, the transport-orientated subsidiary of Petrobras, has placed orders for nineteen vessels with Rio shipyards, with an estimated R$2 billion to be spent on purchases within the state.

Of the nineteen, four vessels are product ships, two of which (the Celso Furtado and Sérgio Buarque) have already been delivered by the Maua shipyard in Niterói.

Another twelve ships are being made in the Eisa shipyard on Governor’s Island, with orders for three more ships, designed to carry fuel oil for maritime transport, placed with the Superpesa shipyard.

Rio state’s economic development secretary, Júlio Bueno, has said that shipbuilding is a natural vocation for the state, predicting that many companies will move to Rio in the coming years, attracted by the qualified labor and the market surrounding the shipbuilding industry. “This concentration of activity in one place makes a difference to costs and deadlines, and this helps Rio win international competitiveness,” said Bueno.

In a bid to develop local industry, Brazilian government rules require 65 percent of Petrobras’ equipment to come from national suppliers. While analysts agree this has helped bolster many Brazilian businesses, it has not come without cost.

“Money spent in Brazil is good for the Brazilian economy but the platforms or vessels will cost more and will be delivered later than if they were built outside of Brazil,” Jim Kappeler, a long-time American expat working in the oil industry, told The Rio Times. “Those additional costs will be paid by the Brazilian people,” he added.

The shipbuilding boom is not unique to Rio state, with yards across the country benefiting from strong orders. “All shipyards in Brazil, even some that have not even been built yet, are booked up solid for the foreseeable future,” said Kappeler.

The shipbuilding industry in Rio employs about 30,000 workers at the moment. The department of economic development estimates that over the next five years a further 12,000 direct and indirect jobs will be generated.

The number is expected to reach 20,000 by 2020, with the entry into operation of new shipyards in Rio owned by OSX, the ship building company run by Brazilian entrepreneur Eike Batista. The new Superporto do Açu yards will be located at São João da Barra in northern Rio state.

Julia Butter, an expert on industrial competitiveness with the Federation of Industries in Rio de Janeiro State (Firjan), confirms that orders in the naval sector are helping to heat the local economy. “Orders are through the roof, with many companies expanding their capacity and others moving to the state on account of this demand,” she said.

In addition to shipbuilding, over the last three years the percentage of ships arriving in Rio’s Guanabara Bay has increased by 146 percent, according to the Companhia Docas (Dock Company). Statistics by Docas show in 2009, 1,568 ships entered in Guanabara Bay, in 2010 it were 2,374 vessels. In 2011, 3,861 ships entered, an annual growth of 63 percent.