Competition in rig building

• Main Author: Toh, Jermaine Yahui.
• Other Authors: Teh, Kong Leong
• Format: Final Year Project
• Language: English
• Published: 2013
• Subjects: DRNTU::Engineering::Maritime studies::Maritime management and business
• Online Access: http://hdl.handle.net/10356/52679
• Institution: Nanyang Technological University

In offshore rig-building, the fundamental interest of both rig-builders and rig owners lies in on-time deliveries that are completed within agreed costs and specifications. This is a critical attribute that has contributed to Singapore's success in the global offshore rig-building industry today. Meanwhile, the global nature of rig-building constantly exposes rig-builders to a wide range of external influences, both positive and negative, that are often beyond their control. Of which, rising competition is one most imminent external threat faced by Singaporean rig-builders. This phenomenon has been amplified by the bleak outlook in shipbuilding industry, that impelled greater involvement in rig-building from traditional shipbuilding yards, particularly those in South Korea and China. As a result of competition, the project margins and global leading position of Singapore in offshore rig-building has inevitably been undermined. This paper sets out to evaluate the competitiveness of Singapore relative to her two biggest rivals, South Korea and China, in the global rig-building industry with special focus on the three main MODU types, namely jack-up rigs, semi-submersible rigs and drillships. In the face of rising competition, strategic positioning has become ever more important for Singapore to keep up with developments among competitors and to stay responsive to changing market conditions and customer needs. For this purpose, a combination of economic data analysis models were employed to qualify the competitive performance of Singapore from various viewpoints. PESTLE looked into the macroeconomic environment of global offshore rig-building industry, SWOT explored the internal strengths and weaknesses as well as the external opportunities and threats faced by Singaporean rig-builders while VRIO integrated the internal and external perspectives to determine the competitive implications of Singapore's resource strengths. The rig-builders were then further evaluated based on a list of seven parameters identified via in-depth interviews with a group of industry representatives. Finally, the BCG matrix was applied to evaluate the market performance of the product portfolio of Singaporean rig-builders. In order to enhance the long-term sustainability and competitiveness of Singapore's offshore rig-building industry, further business diversification in three dimensions, namely geographical diversification, vertical integration and horizontal integration, has been recommended. By proactively venturing into new markets and competencies, it would allow Singapore to enjoy first mover advantages and at the same time distant herself from competition.