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Everything ship shape

Interview - February 10, 2012
Mr. Mangala Yapa, CEO of Colombo Dockyards, believes developing Sri Lanka’s maritime reputation can contribute to the country’s development

Sri Lanka is focusing on its development and there is a clear vision of where the country wants to go. The Mahinda Chintana is a strategy outlined by His Excellency President Rajapaksa in 2005 and planned until the year 2015.  This development framework aims to raise GDP (Gross Domestic Product) to over 8% and double per capita income to $4,000. What do you believe are the most important performance indicators to know whether the country is on the right track?

When it comes to seeing if the country is on the right track or not, you must look at multiple indicators: economic growth, the social development index, increase of disposable income, security, political stability and a number of other factors. In this sense, and looking at Sri Lanka´s history, the first thing that stands out is its resilience. After all, even during the war, our economy continued to grow at a constant rate. Also, if you look at a map, Sri Lanka appears as a small nation; a small nation standing next to a very large one: India. So, in order to survive this many years as a unique national entity and maintain our own language and our own culture would not have been possible if we were not a resilient people.

So when we look at our present situation, the end of our three-decade long war serves as a historical opportunity for us. And even more so if we consider the shift of global economics towards Asia, where two of the world´s fastest growing economies -China and India, are concentrated, we can be considered to be at a gateway to these two huge markets. In spite of being located in between these two giants, Sri Lanka has continually shown that it can do a lot of things on its own for the greater benefit of the world. For example, not only has Sri Lanka managed to maintain a neutral role between these two countries, but Sri Lanka was also able to broker a peace deal between both countries because of the faith they both had in our Prime Minister.

At the end of the day, you will find that Sri Lanka is a democratic country. By and large, the people of Sri Lanka are peace loving, educated and extremely hospitable. I strongly believe that the Mahinda Chintana will be accomplished because it is a vision of the people and for the people.

Sri Lanka has a unique geographical position, surrounded by dynamic markets such as Indonesia, China and India. At a moment when the economic fulcrum of the world is clearly pivoting towards Asia, how is Sri Lanka building competitiveness in global markets?

A few days ago, I had a visit from the Korean and Vietnamese Ambassadors. The Korean Ambassador was extremely impressed with Colombo Dockyards but he also confessed to me that in the 1970s Korea was earmarking Colombo and Sri Lanka as the level they wanted to achieve in terms of per capita and literacy rates. Yet, look at where South Korea is today. In spite of being quite advanced in the 1970s, Sri Lanka has, unfortunately fallen behind when compared to Malaysia, South Korea and even Thailand. These countries have surpassed us, they have moved along the right path of development and grown. I mention this anecdote, because even though it is true and spite of being surrounded by these dynamic markets, Sri Lankans are very capable people. And, again, I strongly believe that now that the war is over, Sri Lankans will once again rise to the occasion and embrace their future.

With regards to our company, Colombo Dockyards (CD) started in 1974. Back then we were a government entity and our mandate was to meet the requirements of Sri Lanka in terms of ship building and ship repairs. The socialist views of the party in power meant a protectionist approach and a self-sufficient philosophy.

Then, in 1977, there was a huge political change and the country embraced free market policies. As you can imagine, this meant a huge challenge for us, since we went from being protected by the government to having to compete globally. We had to adapt rapidly in order to survive. Then, soon after that, the war started. Obviously, the uncertainty of the conflict and the insecurity was not the most appropriate environment to promote foreign business and expect international orders for ship building. Times were hard, yet, the country grew. Today, we are an international business and since Sri Lanka remains a small country, our internal consumption is not very high and therefore, we continue to build for export markets.  

Another point in the Mahinda Chintana is turning Sri Lanka into a maritime hub. Sri Lanka is a country highly dependent on trade, albeit the need to have a large and well developed network of ports and harbours.  What is the potential of the country to become such a hub and also the main entrance gateway to the entire South-East Asian region?

Indeed I think the greatest potential Sri Lanka has is its enviable positioning. It is where all maritime routes converge; a hub point in the Asian silk route. Even in the 11th century it was a trading hub. Also, in the early 19th century, the British used Sri Lanka and the Port of Colombo. There was even a time when Colombo Port was the 7th largest in the world in terms of the cargo it handled and its efficiency. But when Colombo stepped out of the development path, countries like Singapore surpassed us and captured that potential.

Nonetheless our location is there and it is not the only advantage we have. Sri Lanka also offers minimum tide variance, absence of typhoons and earthquakes or heavy winters and extreme rain. Yes, we did suffer a tsunami but it is not a common phenomena; the one in the year 2004 was the first seen here in 100 years.

The bottom line is that the maritime industry is one that needs long term development plans and strategies. In this sense, there is no doubt that Sri Lanka has the right location. And even though we might lack the raw materials, as India grows, we will greatly benefit from their exports and they will benefit from our geographical location. So I do believe that Sri Lanka has the potential to become a regional hub and the main entrance gateway to the region, and most especially to the Indian market.

When it comes to Colombo Dockyards, and again, keeping in mind the country´s strategic location and the government´s efforts to turn the nation into a hub island, what differentiates it from regional competitors?

This question links very much with the previous one. Sri Lanka is not only unique because of its geographical location but also because it has very educated people. Even from way back in the 1950s we could boast of a literacy rate of over 90%.

When it comes to Colombo Dockyards, we are unique because we look for quality and always strive for improvement. This company constantly looks at harnessing these two local strengths. This is a people-oriented company that considers its workers to be its biggest asset. Much depends on what we do; up to the point that people´s lives depend on the quality of our product.

At Colombo Dockyards, it is not just about geographical location but more about the quality of our goods. It is above about human involvement and commitment to quality, which is what traditional Sri Lankan values are based upon. For example, look at Sri Lankan tea and cinnamon; it is all hand-plucked and man-made, and no one has been able to reach that quality level. Likewise our employees too put in a lot of passion and take pride in building these world class products.

In this order of things, I have to say that all Sri Lankans are very proud to be Sri Lankans. Our people around the world speak different languages and follow different religions. Nevertheless, they cherish their Sri Lankan roots and identity. That is the value of Sri Lankan-made products and of our brand. In spite of the cultural-mixing, traditional values remain. So what Colombo Dockyards has done, is to take those traditional Sri Lankan values and try to build them into a unique system of values that can take our company to the next level.

Here, I also have to mention our Japanese partners that came in and joined us in 1993. Imagine the combination of Japanese work ethic and Sri Lankan resilience? As a management philosophy, Japan is very different to most western philosophies. They believe in people and responsibility is assumed from the top. They are willing to bow down and accept when a mistake has been made. They are accountable. And those are some of the values we can bring into our industry. It is very easy to infuse this system of values along with technology. I personally consider this to be the greatest strength that Colombo Dockyards has.

Yes, Sri Lanka has a unique geographical location that gives Colombo, Sri Lanka’s commercial capital, a strategic advantage that can’t be taken away. But Sri Lanka is not just about location, it is also about expertise and know-how as well. How would you asses CDPLC technical capacity with regards to international standards?

In South Asia and with regards to ship repairs, we are at the top. That is undisputed. I am referring of course to India, Bangladesh, Pakistan and Sri Lanka. I am not comparing us to Singapore. If you ask me who my competitors are in ship repairs, I would say China, because they are competitive in terms of price. Otherwise, Colombo Dockyards offers much higher technological capability. With regards to any of these other countries I have mentioned, we are second-to-none. In terms of ship building, we are not the biggest South Asian ship building company, but we deliver quality products on time and with great value for money.

As a matter of fact, we were recently bidding to get pre-qualified in India for what would be our first Passenger Vessel. We were competing with a larger Indian company which, in the end, was disqualified. Colombo Dockyards managed to deliver a quality vessel on schedule. Furthermore, this year, the UTLA the Owners, requested the Government to close the tender to Indian ship companies because Indian companies are never punctual. And the difference here is that Colombo Dockyards is a private company, so we need to deliver, otherwise, we lose the business. Yet this other Indian company is public and while they want to support their national industry, in the end, the Government needs to be accountable how it spends public money. So if the ships are not delivered on time, they need to explain.

For us it was a great triumph, because the Indian Government was recognizing that a small country like Sri Lanka can produce and supply this type of products. The Indian Minister of Finance, in fact, mentioned Colombo Dockyards as a company which has contributed to the development of shipping in this region and has been able to take full advantage of Indian growth. And this has also been endorsed by others such as the High Commissioner of Sri Lanka. What this all means is that a small company like Colombo Dockyards, has been able to make a lasting impression because of its quality products and on-time delivery. As you can imagine, this is a great source of encouragement for us. It motivates us in our aim to go global, something that for us used to be “just a dream”, but that today is becoming a reality.

In addition to this, we are also building vessels for the offshore industry. This began in 2005, when we were commissioned by Greatship Group to build one for them. Up until then, we had not built a single international vessel for this sector. All we had done in this regard was to build vessels to satisfy local requirements such as Fast Patrol Boats for the Navy. Nonetheless, we agreed to deliver a vessel, irrespective of any issues by December 2008. The ship was ready to sail by 31st December 2008. We had a takeover ceremony on 2nd January of 2009 and the vessel sailed straight to an exploration sight. That is the level of confidence our clients have in us. His Excellency, President Rajapaksa, was kind enough to give us an audience that evening to congratulate us. Since that day, we have delivered 8 vessels to this company, which have now gone up to 11. Not only that, but we entered into an agreement that for every future project, we will be their preferred ship builders.

So I am quite happy as far as those achievements are concerned, but I also understand the challenges ahead of us. Bangladesh and India are growing and they have a lot of manpower. India has vast natural resources and its economy is growing at an impressive rate based on its domestic consumption. Based on all this, we want to convince the Indian ship owners to come and build with us; that we offer them a unique facility where we build quality products, on-time delivery and a competitive price. There is no need for them to go to Norway, Singapore or the Philippines. As I mentioned earlier, this is private entrepreneurship and we give value for money.

We see that in the year 2010, Colombo Dockyards received the Award for the Best Corporate Citizen for Governance and Economic Contribution. What significance does this carry for you and why is it important that key institutions in the country have strong Corporate Responsibility Policies?

Sri Lankan is a clean country and we love our environment. One of our core values is to protect nature, because we know that we are a small country and we cannot afford to damage it. Furthermore, our environment is unique in respect to this entire region. The biodiversity in Sri Lanka is one of the richest, not only in the region, but in the whole world. Not many people know this, but in terms of tourism, we have two of the world’s largest mammals: the elephant and the whale. But if we want to preserve them, we must invest in them and protect them.

When I was studying, the ship building industry was considered as dirty, dangerous and difficult. The reality is that the shipping industry is one of the most environmentally-friendly industries. Its carbon footprint is one of the lowest. In terms of tonnage in transport, it is one of the best modes of transportation. Nevertheless, we are committed to improving it further. But there is still a low volume of ships, so we will have to keep an eye on this as there is still room for improvement. Colombo Dockyards is at the forefront of that.

One of the main points of Mahinda Chintana is to turn SL into a maritime hub. Indeed we see that ports in the nation are being built or upgraded: Magampura Ruhuna, Oluvil Harbour, Colombo South Harbour, Galle Harbour, Kankasathurai Harbour, etc. What will be Colombo Dockyard´s contribution to this and what positive benefits could this carry for you?

All these developments are setting Sri Lanka on the right track. As for us, it is a positive indicator to move forward, but our decisions depend on business development decisions. Yes, we are extremely open but we need to do it on the right scale and at the right moment. In this sense, one good thing for us is that the Japanese are very conservative decision-makers. Colombo Dockyards sees great opportunities for the future and is open to them. Therefore, we will make rational decisions when the time comes.

Colombo Dockyards is officially 72% owned by companies from Japan and UAE. Nevertheless, it creates value to the national economy with Sri Lankan expertise and skills and distributes that value to over 3000 Sri Lankans. Furthermore, it proudly claims "we are the frontiers of Sri Lanka's industrialization". In what ways can CD contribute to the international image of the nation?

We have already identified that we want Colombo Dockyards to become the pioneer and vanguard of industrialization in Sri Lanka. We are talking about a company that has been successful in this industry, competing and sustaining its business for 37 years. And we have done this irrespective of government policy changes, as well as political, social and economic setbacks. I believe that this inspires people and gives them the confidence to get involved with us.

We spoke before about the vessels that we built for the offshore sector. We have built others for Petrobras in Brazil. These ships are receiving fantastic comments for they can operate anywhere in the world; not just in Brazil but in Indonesia, as well as the Middle East. This capacity that we have serves as a source of inspiration to many in Sri Lanka, especially when you consider that out of 3,000 people, we have only 3 Japanese workers. So we are talking about Sri Lankans building ships in Sri Lanka that are receiving international praise.

Colombo Dockyards has developed its own training process. We call it the 3Ps training: people, processes and product. We train the people by changing the way they interact and do things and the way people think and behave in certain situations. If you can address that issue, then the first P is taken care of. Our processes need to be more efficient, cost-effective, quality-oriented and environmentally-friendly. Then, there is the third ‘P’, which is product. We are very conscious of what goes in to building our products. I must say that some of our vessels use Japanese technology such as engines, propulsion systems, accommodation modules because we know that their technology is state of the art. And we also use European technology. It is simply a question of selecting the right technology, depending on the product we are building.

That is the unique proposition of the triple ‘P’ chain – People, Processes and Product. We know our strengths and our weaknesses, so we outsource some things. For example, we outsource all of our designs, because the R&D base in Sri Lanka is not big enough to support it. You have to understand your strengths and capabilities and understand that there are certain things that you cannot do.

How would you like people to perceive the Colombo Dockyards brand?

I would like people to remember its uniqueness, its pioneering role and its resilience in a difficult market, as well as its commitment to health and safety and the environment. Like our country, we are a very resilient company.

In 1983 Colombo Dockyards decided to expand its capacity and build its fourth dock in what became the single largest private investment in Sri Lanka. No one would have ventured into such an investment at a time when the country was going into its intense civil disturbances. I joined this company in 1984 and it was then that we decided we would not give up what we had started. In 1988 we opened that fourth dock. That is how determined we are.

When addressing millions of people in the US and around the World, what final message would you like to give?

Believe in Sri Lanka. The ‘Made in Sri Lanka’ brand means quality. We have proven it in tea, in cinnamon and we will prove it in any other projects we undertake.