Kyokuyo Shipyard
Kyokuyo Shipyard

News 203 : 2016 Season's Greetings from the President

Katsuhiko Ochi, President - Kyokuyo Shipyard CorporationDear customers, friends and colleagues, happy new year to you all. I want to take a moment to bring you up-to-date on Kyokuyo's plans for 2017.

In 2016 we had a series of unpredictable events, such as Brexit and Donald Trump's victory. It may be a big "No!" from the "thick middle class" people to the enlarging gap between rich and poor caused by the globalism. I am particularly interested in how these decisions will influence other countries' direction and the global economy.

On the other hand, the overall maritime industries are still in the midst of a rough sea - some even call it "historical depression". Major shipping companies are pursuing alliances and M&A in order to survive. We can not see clearly when the sunshine will come back, with some predicting that better demand and supply balance from the latter half of this year will help the market gradually recover, while some others warning that a real tidal change cannot be expected without growth of seaborne cargo traffic based on the expansion of the world economy.

In the shipbuilding industry, the shipbuilders feel like experiencing an endless storm. Some company could receive orders, in 2016, for ships in niche sectors, like passenger boats or RO/RO, but orders were generally scarce, especially in dry cargo sector. Whilst most factories are running normally so far, without reducing output, it has become difficult to obtain new orders, as the price gap remains substantial between buyers and sellers. Unexpected Yen depreciation since the end of the last year is certainly a tail wind for Japanese shipbuilding companies, but obviously it is not enough - the industry will have to face serious problems sooner or later, without the long-awaited recovery of the shipping market.

Cement Carrier "Kiyoyasu Maru" - Kyokuyo Shipyard Corporation

SSS-bowed Cement Carrier "Kiyoyasu Maru"

That being said, Kyokuyo Shipyard Corporation built and delivered 5 ships during 2016 as scheduled : 1 unit of 7,200m3 LPG carrier, 3 x 11,000m3 LPG carriers and a cement carrier equipped with our globally patented "SSS-bow". The cement carrier project was a technical challenge for us as higher standards, unique to Japanese coastal ships, were imposed on the design and construction. I would like to thank each of the shipowners and classification society professionals for their support and cooperation.

In spite of the head wind, we could win some orders too, for gas carriers and reefer boats in 2016. We even expect to add some more, as the negotiations are currently approaching final stage for a couple of projects. We will keep focusing on specialized ships in these niche markets, with business conditions not being ideal.

Container Carrier 'Natori" - Kyokuyo Shipyard Corporation

SSS-bowed Container Carrier "Natori" and the awards she won (so far)

One good news about Natori, SSS-bowed coastal container ship we built at the end of 2015, and which won the "Best Small Cargo Ship" category in the Japanese Ship of the Year. As I told last year, our engineering staffs got onboard to collect various data about the ship's energy-saving perfomance in real conditions, and the results proved that our SSS-bowed ship performed almost as designed in terms of fuel efficiency. We are working on refining the product further in order to get new orders.

Another good news is from our repairing team : they maintained the similar level of sales as in the previous year with the same head wind, thanks to patronage by domestic customers.

Ochi's Seminar at Sea Japan 2016 - Kyokuyo Shipyard Corporation

Seminar at Sea Japan 2016

Under such situations, the company's priority for 2017 is clear : getting orders. We will try our best to secure, during the first half of this year, order backlog for 42 months, or till the end of 2020 on delivery basis. For that, we have to accelerate the development of product line meeting NOx tier III and SOx regulations.

Last April, I was offered an opportunity to give a seminar at the biggest maritime event in Japan : Sea Japan 2016, where I emphasized that a company like Kyokuyo should try "to be a global technology leader among the builders of small ships." While seeking to reinforce our strengths in marketing, designing, manufacturing and finance, I want, this year too, Kyokuyo Shipyard Corporation to sail ahead of competitors, by creating technically advanced products.

Finally, the cost competitiveness must be more strengthened. It is always a mission, or a challenge, for a shipbuilder to provide its product for a price that meets shipping market situations. We will further increase our productivity by streamlining operations in purchasing division and every other section within the company.

L.P.G. Carrier "EPIC SHIKOKU"  - Kyokuyo Shipyard Corporation

11,000m3 L.P.G. carrier "EPIC Shikoku"

Before concluding I would like to express my sincere gratitude to shipowners for awarding us an order, trading houses and brokers for introducing projects, as well as our other stake holders for continuous support and cooperation. It is thanks to all of them that Kyokuyo can be running this way.

Permit me (again) to end my words by repeating the same phrases used last year and 2 years ago, because I am uncompromising on these points and feel no need to change !

"I want Kyokuyo Shipyard Corporation to be always a busy and lively place to work. I want all its staffs and subcontractors to share a sense of unity as a team. The company may be a small for a shipbuilder, but who says good things come in big packages ?"

NEW YEAR HOLIDAYS
We will close from December 30, 2016 to January 3, 2017 for the new year. We wish all of you a happy new year !
Calendar

"Each of us is committed to do his/her best, in a honest way, with the pride of a ship manufacturer, keeping safety-first in mind, for the sake of himself/herself, company, local community, and our valuable customers and other people involved who have given us opportunities to build our ships."

Your continued patronage shall be highly appreciated !

Katsuhiko Ochi
President
Kyokuyo Shipyard Corporation
[2017/01/01]

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