Ship Breaking Industry - Essay Example

Introduction

The current recession or economic crisis has affected almost the entire world and the entire industry sectors. It came at an unexpected time and many countries and industries failed to take any precautionary measures to tackle it. India as a country escaped from the recession without many injuries. In fact, the Indian ship breaking industry has got more business in the current recession period compared to other years. The ship recycling industry at Alang in Gujarat, the world’s largest graveyard of ships in terms of capacity, has faced a rush from companies docking vessels for disposal to avoid a downturn in freight rates (Recession proves to be a boon for ship breaking at Alang, 2010). This paper analyses the recession and its influence on the Indian ship-breaking industry.

Effect of recession

The article Effect of recession, written by Nagpal N in 2008 mentioned that unemployment increased a lot because of recession. He has also mentioned that the companies were forced to cut down their expenditure on advertising and media activities because of the recession. Stock markets all over the world have shown negative results because of the recession.  Those who invested in housing, car, security, and insurance schemes suffered a lot of damage. Expatriates in America from countries like India lost their jobs and started to return because of the recession. As the dollar value falls, the American economy started to decline. The cheap goods manufacturers, China and Thailand like countries were also suffered a lot of problems because of their market loss in America (Nagpal, 2008).

The article Impact of global recession on India by Sonia Verma explained recession in terms of demand, inflation, and deflation. Indian companies getting good outsourcing businesses from America and any economic problems in America may affect India also. Exports to America from India also suffered major setbacks because of the recession. America stopped new hiring which is another concern for the Indian expatriate community in America. Around one crore persons could lose employment because of a recession in America itself in a financial year. IT industries, financial sectors, real estate owners, the car industry, investment banking, and other industries were the major sufferers of the current recession (Verma, 2009)

Indian shipbreaking industry

The article Recession proBoonboon for ship breaking at Alansingle singleinglsingle-hull hull tankers more than 25 years old are banned from international waters from 2015-end by the International Maritime Organization which is another reason for the increase in ship breaking industry in India (Recession proves to be a boon for ship breaking at Alang, 2010)

On the other hand, the article, Ship Breaking Industry - In Coma, posted by Nadir on 11/6/2008, has expressed concerns about the survival of ship breaking industry in India. He has mentioned that the scrap prices dipped to $ 200/ton when the recession started, from $ 700/ton before the recession period. He has also mentioned that the overhead costs and the labor costs were increasing even though the scrap cost is decreasing. Moreover, ship owners are reluctant in selling their old ships because of the low demand and price for scrap (Nadir, 2008).

Both articles are differing in their core opinions. The first article argues that a boon is recorded in the Indian ship breaking industry whereas the second article argued against it. Both the cles cited genuine reasons for proving their claims.

Effect of reclasscession in the Indian ship breaking industry

Statistics and reports from different shipbreaking industrial units in India showed contrasting results. While some of them reported big increase in business, some others reported major setbacks. “The Ship-breaking industry in Gujarat foresees sunny days ahead, provided banks fund ship-breakers to acquire the large number of old ships that are being offered for demolition worldwide, a member of the industry said here”(Ians, 2008). Different people have different opinions about the recession's effects otofhof thee n Indian shipbreaking industry. Some people believe that the recession served as a blessing to the ship breaking industries in India whereas some others believe that the recession has affected the Indian ship breaking industry. Many people lost their job and the share prices come down drastically even for bigger companies. Moreover, rising steel prices and a dip in business forced old ship owners to sell their ships to exist in the market. At the same time, scrap prices came down drastically so that the survival ship breship-breakingaking business was in jeopardy in some parts of India. “The health of the shipping industry is indicated by the fall in the Shipping Index from the 11,000 mark in June 2008 to the prevailing mark of 800” (Recession deals a big blow to small industries, 2008). But generally ship breaking industry in India experienced a boon in the recession period even though most of the other industries suffered severe setbacks.

Conclusions

Shipbreaking industries in India have reported mixed results during the recession period. Many old ship owners came forward to dispose of their ships for survival, At the same time, dipping scrap prices, and increasing steel prices caused problems to many ship-breaking companies in India. India is a country of  ethatscaped from the recession without much damage and the ship breaking industry a lshas o shown mixed results.