Developing mechanics worthily - Instalment II: Changing to develop

We need new ways of thinking

      Lilama General Director Le Van Tuan reckons it is not the case the State paids no attention to invest in mechanics. The State had issued bonds to develop the ship building branch in the past but dispersed & spread way of investment made ineffectiveness. For the time being, many mechanical enterprises have the thought of innerness, they just wait for favourable policies from State, they forget the outer world to highten their competition and they cannot break through. Moreover, many businesses have not yet escaped from the "non-professional shirt“, the quality of their orders is unequal, all these make their partners “go and not come back”. Even in Lilama Corp., there are tens of manufacturing factories, mechanical workshops, which brings about a spread and ineffectiveness. We should have broken through if we got such favour. Besides, bankruptcy proceedings are very complicated, affecting the re-organization of enterprises, whereas re-organization is a mode of reinforcing financial ability, management, helping enterprises, especially the mechanical ones maintain their production activities.

   There is a situation now that many mechanical businesses misspend their workshops, machineries and equipment whereas some enterprises are not able to "own" these sources. This was the result of a series of wrong policies, a lot of investment outside the branch since many years in the past or the ability to approach markets of those businesses was not so good as the expectation or they met with numerous risks. At the same time, they had no good preparation for the attached sources, which brought about low competition and their orders were very few... On the contrary, if these equipment belonged to other units with stable output, they would be used more effectively. For the time being, to avoid waste of sources which are very limited of the nation, it is high time the State promulgated policies of arranging, transferring sources to achieve the highest effectiveness. According to Lilama General Director Le Van Tuan, if State has the policy to transfer equipment, production lines, workshops for supplement like owners' capitals, it is certainly that enterprises are ready to receive and use them more effectively because they “have the profession” and they assure the output. However, the policies should be clear and obvious so that enterprises can make their production plans proplerly.  

     One of the matters to be more concentrated on by many mechanical enterprises is designing. This is a phase that our mechanical businesses are weak in but it brings about the most value in comparison with procurement and installation work. General Director of Vinashin Dung Quat, Former General Director of PVShipyard Phan Tu Giang comments previously lots of domestic mechanical enterprises used to concentrate much on the production phase and did not care about designing section. Since the establishment in 2007, the company has paid attention to designing phase and grasped technologies because being master of design, the work of manufacture would be optimal. Design & manufacture must be a group and then we would have enough profit, accumulation to develop, otherwise all expenses will be paid for procurement, design and gain from manufacturing work is very low. For example in Samsung Company (Korea), previously, the designing work was separate, manufacture was transfered to other countries having cheaper manpower source. However, up to now, they have to transfer designing work to these countries for synchronization and optimum of work effect. "As for PVShipyard at the moment, except large technological designs having copyrights, most designs of components, subsidiaries on self-lifting oil-rig Tam Dao 5 are undertaken by PVShipyard engineers, gradually reducing the dependence on foreign experts", said Mr Giang.

Taking full domestic advantages to develop

     This is a story that many mechanical enterprises forget or follow for a long time "great" things but neglect the “near” ones. VAMI Chairman Nguyen Van Thu has an analysis that with the advantage of long seaside, various rivers & streams, we should have a strong sea economic branch, aquatic products & seafoods, and an indispensable industry i.e shipbuilding. Formerly, the State had invested in this field already, however due to wrong method of investment, shipbuilding industry was not formed, businesses went bankcrupt or die young. Thus, if we donot invest in shipbuilding mechanics, it is too wasteful. We can purchase iron & steel materials and main machines, but we will be master of designing and assembling ships. When we have already trained a designing force, formed a shipbuilding market, we can order components, systems and equipment all over the world. However, this requires a high specialization, work allocation and professionalization. The same thing happens to agriculture. There are a number of fields for mechanics in agriculture to be developed, we should not think that agriculture is just rice, coffee trees, pepper trees… but a system of agricultural care, processing technology after harvest… Agriculture occupies 70% of national economic structure, so, if we can not take the initiative in developing mechanics for it, it can be considered as “waste”. At the moment, agricultural machineries are almost imported from foreign countries whereas they can be produced by domestic mechanical enterprises.

     From the angle of a business, General Director of Vinashin Dung Quat shipbuilding Co. Phan Tu Giang comments that the way of investment is to form gradually a shipbuilding market from which domestic companies and foreign firms will concentrate on this branch automatically. Moreover, to develop mechanics we should rely upon our ready advantages and the State should pay much attention to this field, other domains should be expanded for privatization, foreign investment. For example in shipbuilding branch, we should not only give care to develop offshore fishing ship teams, but also take interest in large ships for logistics of fishing trade. This helps save money, increase effectiveness and reduce risks. 

     One of the advantages of Vietnam is the cheap value of employees and population in labour age is very crowded. This is one of the important elements “attracting” orders from foreign countries. For mechanical enterprises, export orders come and go a lot due to many subjective and objective reasons. To be accepted by foreign partners, participate in global value chain, domestic businesses have to try their best continuously. Vice General Director of Lilama 18 JSC Pham Van Van let us know that for the time being approximately 20% of mechanical export of domestic factories belongs to Lilama 18 with the value of about VND400 billion per year. The company has manufactured cranes for Koch (Germany), equipment of cold steel laminating furnace for Danieli (Italy)… They are all famous firms in the world in this field. To be accepted by these partners, Lilama 18 has spent a process of “changing the look” from all production phases to caring for labourers' living standard under supervision of the partners. Although profit from mechanical export is higher than manufacture inside the country, it is still much lower than foreign mechanical companies because Lilama 18 has been paid money per tons of materials only (about USD2–4/kg) whereas others are paid per tons of equipment, i.e there is an intelligent content in the wage and the price is about USD10/kg and above.

Mechanics copes with weather changes
We are now still puzzled by weather changes, rise of seawater. Many countries in the world have solution scenarios already including retaining dams to prevent seawater, flood-tide. We also have experience accumulated through various large scale projects such as: Son La, Lai Chau hydro power plants...  regarding dam building, we manufactured valve , cánh phay for retaining dams, if this experience is applied to build sea-embankment it is sure to be success and domestic construction and mechanical enterprises are quite possible to undertake the work. 

Nguyen Van Thu
VAMI Chairman

Xuan Thuy - Duy Tinh