Shipbuilding in Iran
       
 
 
 
 
 
 
 

By Farzin Entessarian, Member of the Board of the Iranians Association of Naval Architecture
and Marine Engineering (IANAME); Vice-President of the Iranian Quality Management Association;
and Managing Director of Iran Group of Surveyors


Mr. Farzin Entessarian was born in Tehran in 1946. When he finished secondary school he was accepted into the prestigious Tehran Polytechnic engineering school where he received his MSc degree. He then joined the Iranian Navy on a special military service programme and worked five years as an engineer in Khorramshahr Naval Ship Repair Yard. After the completion of this programme he remained in the same city port and began a long career in shipping, and ship and cargo survey.

When the war with Iraq erupted and he had to leave Khorramshahr he established himself in Tehran, but continued his surveying By Farzin Entessarian, Member of the Board of the Iranians Association of Naval Architecture and Marine Engineering (IANAME); Vice-President of the Iranian Quality Management Association; and Managing Director of Iran Group of Surveyors business in conjunction with three colleagues who acted as surveyors or office administrators, and one secretary. These five persons conducted and reported most of the surveys required in the southern ports of Iran, in those busy years of war, mainly in Bandar Abbas and Bandar Imam Khomeini.

Some years later Entessarian expanded his business to Management Consultancy and proved to be quite successful in this area too.

From a staff of five persons working in two small rooms close to Ferdowsi Square, his company, Iran Group of
Surveyors, has now grown into a large establishment employing over 200 people. The company is now engaged
in many other fields besides shipping, shipbuilding and ship and cargo survey. But, having spent a lifetime in marine affairs Entessarian is today Iran’s number one man in this field and one of the outstanding experts in the field, worldwide. He is presently writing his memoirs of the history of shipping and shipbuilding in Iran, which began almost at the same time as he joined the Navy and with which he has lived for the past 35 years. Excerpts from his memoirs and an article by him on shipbuilding in Iran, follow:
In 1972 I came from Khorramshahr to Tehran as a member of a delegation of Naval officers to visit the Tehran International Exhibition. I was then the youngest member of the delegation and very open to new experiences. During the visit of the exhibition I suddenly found myself facing a very large and impressive stand with a board on which the name of the stand was boldly written: “Persian Gulf Shipbuilding Complex”. As the technical director of Khorramshahr Naval Base, I was very surprised to know that there was such an entity, as were my other colleagues. So we decided to find out what was going on. Within the stand, next to a large model of the shipyard, a man was sitting pompously, who I later learnt was the deputy manager of the project. Upon
our enquiry as to the nature of the set-up he gave us a long lecture on the largest project in the Middle East, a shipyard that would build 250,000 ton tankers and 60,000 ton bulk carriers and… in Bandar Abbas. I, who knew all about the country’s then feeble potentials for shipbuilding, was flabbergasted. I knew that the potentials in
Bandar Abbas, which was still not even on the national Mr. Farzin Entessarian was born in Tehran in 1946.
When he finished secondary school he was accepted into the prestigious Tehran Polytechnic engineering school where he received his MSc degree. He then joined the Iranian Navy on a special military service programme and worked five years as an engineer in Khorramshahr Naval Ship Repair Yard. After the completion of this programme he remained in the same city port and began a long career in shipping, and ship and cargo
survey. When the war with Iraq erupted and he had to leave Khorramshahr he established himself in Tehran, but
continued his surveying By Farzin Entessarian, Member of the Board of the Iranians Association of Naval Architecture and Marine Engineering (IANAME); Vice-President of the Iranian Quality Management Association; and Managing Director of Iran Group of Surveyors business in conjunction with three colleagues who acted as surveyors or office administrators, and one secretary. These five persons conducted and reported most of the surveys required in the southern ports of Iran, in those busy years of war, mainly in Bandar Abbas and Bandar Imam Khomeini. Some years later Entessarian expanded his business to Management Consultancy and proved to be quite successful in this area too. From a staff of five persons working in two small rooms close to Ferdowsi Square, his company, Iran Group of Surveyors, has now grown into a large establishment employing over 200 people. The company is now engaged in many other fields besides shipping, shipbuilding and ship and cargo survey. But, having spent a lifetime in marine affairs Entessarian is today Iran’s number one man in this field and one of the outstanding experts in the field, worldwide. He is presently writing his memoirs of the istory of shipping and shipbuilding in Iran, which began almost at the same time as he joined the Navy and with which he has lived for the past 35 years. Excerpts from his memoirs and an article by him on shipbuilding in Iran, follow:
In 1972 I came from Khorramshahr to Tehran as a member of a delegation of Naval officers to visit the Tehran International Exhibition. I was then the youngest member of the delegation and very open to new experiences. During the visit of the exhibition I suddenly found myself facing a very large and impressive stand with a board on which the name of the stand was boldly written: “Persian Gulf Shipbuilding Complex”. As the technical director of Khorramshahr Naval Base, I was very surprised to know that there was such an entity, as were my other colleagues. So we decided to find out what was going on. Within the stand, next to a large model of the shipyard, a man was sitting pompously, who I later learnt was the deputy manager of the project. Upon
our enquiry as to the nature of the set-up he gave us a long lecture on the largest project in the Middle East, a shipyard that would build 250,000 ton tankers and 60,000 ton bulk carriers and… in Bandar Abbas. I, who
knew all about the country’s then feeble potentials for shipbuilding, was flabbergasted. I knew that the potentials in Bandar Abbas, which was still not even on the nationalfields. This time attempts are
more serious, it seems. Last time we were not successful. Let us hope this time we will be. As an expert in marine affairs I felt it my duty to give my comments. Perhaps they will help towards success in this industry.History of shipbuilding The history of shipbuilding is 4,000 years long. Shipbuilding was almost confined to wooden ships, down to late 19th century, although the wooden saildriven (wind-powered) ships
became very sophistical in the West, particularly from the Renaissance period onwards. With the advent of steel as the material for building the hull, and steam engines as the source of the driving power, the 20th century witnessed a long line of increasingly more sophisticated ships emerging one after another. Today,
modern sea vessels are extremely sophisticated and highly automated/computerized. Now, construction methods allow easy and rapid construction of very large vessels. The most notable recent change in shipbuilding methods is the adoption of the modular approach. In the old days ships were each built entirely in one place from keellaying to the final stage. Today, they are built in “modules”, ie separate parts, which are then fixed and fastened to give the final ship. These modules can be built in different yards or factories at the same time. Despite all the progress made in shipbuilding technology, the shipbuilding industry still needs and employs a large number of people, from engineers, inspectors and foremen down to the most unskilled worker.
And still building modern sophisticated vessels is in the hands of a few nations such as Japan and Germany.
However, during the 70s a number of Far Eastern countries became involved in building ships because they had cheap labour which is an important comparative advantage in this labour-intensive industry. They made great advances and staggering achievements such that many European and even some Japanese shipbuilding companies went bankrupt in competition with them. Developments in the Eastern Bloc in the 90s and the reunion of the two Germanies meant that a large number of workers became available to the new Germany, people who were prepared to work hard at low costs and for whom Germany had to provide jobs. So, the German nation renovated the old shipyards into modern automatic and computerized yards known as “compact shipyards,” and thus managed to survive somehow in this industry.

History of shipbuilding in Iran In the early 1970s the Iranian shipbuilding industry began its activities with the construction of the first and then the largest Middle Eastern shipbuilding yard, under the name of Persian Gulf Shipbuilding Complex (PGSC). It was aimed at building and repairing ships and tankers of up to 250,000 ton
capacity. The yard was situated in Bostano, a port 50 km from Bandar Abbas.

The company is now over 30 years old and during its lifetimehas spent some 1.2 billion dollars, which makes it one of the largest Iranian entities as far as investment is concerned. Unfortunately, despite such expenditures the company has not made any significant achievement thus far. A few years later, after the establishment of the PGSC shipyard, an American company built a small shipyard in Bushehr named Iranian Marine Industry
Co which was equipped with a 750 ton synchrolift. The company seriously and very actively became involved in ship repairs and began to construct small vessels, tugboats in particular.

Following the Islamic Revolution this company was transferred to the Iranian state and presently operates under the name of Sadra Co. This company is now fully developed and has established a number of shipyards along the southern and northern coasts of Iran and has thus far built a considerable number of fishing vessels,
tugboats, barges, and specially oil production platforms and oil rigs. In addition, there are several other shipbuilding entities in Bandar Abbas, and one named Arvandan in Khorramshahr, all of which build small vessels.

Along these industrial units, a number of educational and research institutes have emerged, and two major
technical universities (Amir Kabir & Sharif) as well as a few other universities now offer courses in naval architecture and marine engineering at the bachelor’s and higher levels. So far over 350 or so graduates
have passed these marine engineering courses.

Redesigning Iran’s shipbuilding industry The Iranian shipbuilding industry was initially designed before the Revolution, by the German company Blum & Floss, with a very high target and relying on large oil export earnings of the country. The same design was followed by PGSC or Sadra after the Revolution. But now
that conditions, both worldwide and regionally, have changed considerably, a review of the project seems to be necessary. In fact the whole project has to be redesigned. Iran’s potentials for a shipbuilding industry Iran has thousands of kilometers of coastlines at the north and the south put together. In both the northern and southern waters, the Caspian, and the Persian Gulf and Sea of Oman, and especially in the south, there is
heavy traffic of ships and cargo which provides ideal conditions for a shipbuilding/repair industry to develop. Besides this comparative advantage, Iran offers many others, notably:

large investments already made in the shipbuilding industry
educated young work force at low cost
effective infrastructure facilities
large and efficient steel, chemical, and petrochemical industries
a large domestic fleet which needs regular repair and maintenance
absence of large shipbuilding industries in the neighboring countries
support from a government that is faced with the crisis of high unemployment among the youth and must develop jobs
the need for offshore oil installations.

These are all excellent incentives to encourage and attract local and international investors specializing in the
shipbuilding industry.

Weak points Certain weak points present obstacles to the development of an efficient shipbuilding industry in Iran:

policy-making and strategy issues
problems concerning building of yards and the related structures
management shortcomings
legal difficulties
lack of subcontractors that provide suitable equipment and machinery.

Strategies proposed
The most important of the obstacles listed above are management-related issues. For years the major shipbuilding entities have been managed by the Iranian state and at the hands of public sector managers with their particular characteristics, notably inefficiency and red tape. The obvious solution would be to privatize these entities. However, so much wasteful investment has gone into these entities that no private sector firm would be prepared to buy them even at cost prices. The other alternative would be to find foreign investors and
establish joint ventures. This could be a feasible undertaking provided the necessary adjustments are made to the present laws and regulations. Some months ago, the Majlis (Islamic Assembly) passed an Act on Foreign Investment (an English translation is being printed in this same issue) which made foreign investment in Iran a lot easier and safer for the investor. But some more changes are still needed. The other alternative would be for
the state to retain the ownership of the yards but hand over the management to specialized foreign companies or at least to capable private sector entities. This is a possibility but utmost care must be taken by the state in the selection of the management companies. The government must also extend all possible help and ssistance
to such managements until such time as these entities stand on their own. The state must adopt an economic, in fact a business-like, approach towards the industry. It must also adopt a customer-oriented outlook.

Clients must be satisfied with our shipbuilding industry to want to come back again. Normally this outlook does not exist in sate-run industries that do not have to rely on incomes coming from clients through clientsatisfaction.

The new, redesigned project must be carefully based on the potentials and comparative advantages of the country. Also, the weak points, disadvantages and the obstacles must be carefully considered, and taken care of. The shipbuilding industry, like those of the automotive and construction, has the characteristics of a complete economy. We must consider that the value added in this industry is not confined to building ships but it also lies in producing parts, equipment, machinery, materials… which are used in shipbuilding, as well as the more general but related industries such as those of steel, paints, electronic, electrical, mechanical….

Finally, the development of this industry demands that policy-making should be comprehensive, coordinated
and cohesive. There must be no clashes in the relevant regulations, no discrepancies, no contradictions.

Furthermore, utmost effort must be made to specialize the industry by training and educating specialized and highly skilful personnel and human resources, from the very top down to the lowest level.

 
 
 

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