Podetti, Raúl Rafael,

Podetti, Raúl Eugenio

ARGENTINE SHIPBUILDING INDUSTRY – 100 Years (1937-2036)
Ciudad Autónoma de Buenos Aires, Argentina, Octubre, 2018.
128 pages; 21 x 29,7 cm.
ISBN: 978-172-6705-81-3
1. Shipbuilding Industry. I. Non fiction>Transport>Ships and
Shipbuilding>General . II. Title

Design : Lohfeldt, Dolores and Podetti, Raul Eugenio

© Raúl Podetti, 2018 – All rights reserved
Printed in Amazon
It is strictly forbidden any form of reproduction, distribution, public comunication or
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TEAM
Podetti, Raúl Rafael – Author
Podetti, Raúl Eugenio – Author
Lohfeldt, Dolores – Graphic Design
Komel, Fernando – Illustrations
Otsubo, María Claudia – Literacy advice and text corrections
Floria, Silvina – Translations
Meyer, Nicolas - Translations
Otsubo, Eduardo – Editorial advice
Wuhl, Félix – Editorial advice
Abregú, Ana – Digital advice
Luco, Martha – Texts assistance
Podetti, Martha y Sofía – Godmothers

ACKNOLEDGMENTS
Alvanese, Fernando - Álvarez, Miguel Angel - BenÍtez, Natalia – Berardi, Martín - Brañas,
Carlos María - Contessi, Domingo - De Mendiguren, Jose Ignacio - De Monte, Marcos - Godoy,
Enrique - Gomez Saa, Soledad - González Eliçabe, Lelio - González Climent, José Luis -
Marini, Rolando - Marta, Ernesto - Martínez, Horacio - Masseroni, Pablo - Montes, Víctor -
Narvaez, Martin - Nöel, Pablo - Ojeda, Hilda - Pagliettini, Guillermo - Pellegrino, Gustavo –
Podetti, Mariana - Poire, Andres - Preusche, Martín - Sánchez Checa, Fernando - Scala, María
Inés - Speroni, Juan -Torresin, Juan
CONTACT
www.industrianaval.com.ar
[email protected]
To Martha, beloved wife, and to our children, Malu, Raúl,
Martín, Claudia and Nacho, from whom I have recived
encouragement, understanding and affection.
To Rolando Marini and Andrés Garro, unforgettable friends
and partners with whom I have shared the same Argentiine
passion.

RRP

To Martha, Sofía and Claudia, incredible women whom I

received as a gift from life.

To the nation´s President, current and future. Without his

firm decision this pat of Argentina will never reborn.

To Argentines, current and future. So that they will know that

this part of our nation is possible and necessary.
REP
THE AUTHORS

Raúl Rafael Podetti

was born in 1931 in Villa Mercedes, San Luis, Argentina. Having attended
the Military Naval School (80th graduating class), he later graduated in Naval
Architecture and Marine Engineering at the University of Buenos Aires.
Retiring from the Navy as Lieutenant, in 1964, with Rolando Marini, he co-
founded a marine engineering firm named SANYM – Society for Marine and
Mechanical Applications – which later evolved as a dynamic shipyard,
specializing in middle-sized ships, with a strong exporting bent.
He also set up SIPIN-AFNE, the largest public-private consulting firm of
marine technology of its time, which designed the most significant ships
planned and built in the country.
He has been a strenuous institutional advocate and promoter of Argentina’s
marine engineering and industry, an activity which he engaged in up to the
end of 2017, actively participating in the leadership of the Argentine
Association of Naval Engineering (AAIN, in Spanish) and of the Federation
of the Argentine Shipbuilding Industry (FINA, in Spanish).

Raúl Eugenio Podetti was born in 1958 in the city of Buenos Aires,
Argentina. He studied at the Colegio Nacional de Buenos Aires and graduated
as a Naval Architect at the Instituto Tecnológico de Buenos Aires (ITBA).
He earned a Master of Sciences in Engineering (MSE – Shipbuilding) at the
University of Michigan, US, and an MBA at the IAE, Universidad Austral,
Buenos Aires.
In the US, he worked in the production of offshore jack-ups at Marathon Le
Tourneau Texas, and in Argentina he undertook several entrepreneurial
ventures in diverse sectors, such as shipbuilding, fishing, marketing and
tourism.
From 1976, he worked in the technical office of SANYM, in the shipyard and in
its offshore area, and was the company CEO for eight years, from 1994 until it
ceased operations.
He was vice-president of the state-owned Río Santiago shipyard, and for over
ten years he has been part of the Board of the Federation of the Argentine
Shipbuilding Industry (FINA), being its vice-president up to the end of 2017.
Contact :mailto:[email protected]
EXECUTIVE SUMMARY

Authors Raúl Podetti Sr. (86) and Jr. (59) add up to a century devoted to the
shipbuilding industry, in which they have pursued their career as naval
architects and marine engineers. Here they contribute their view as active
players in the sector, having managed private and state-owned shipyards, as
well as professional and industrial business entities.
It is a book about industrial shipbuilding policy that runs through its history,
providing a thorough (and unique) qualitative and quantitative analysis of the
sector’s performance, then moving into the study and discussion of cause and
effect relationships between state policies and development, and lastly
providing proposals for the future.
The first three sections of the book (History, Industry and Policies) cover
eighty years, from the birth of the modern shipbuilding industry in 1937 to
our days. The fourth section, from 2017 onwards, is aimed at projecting the
twenty years to come.
Certain chapters stand out, such as the one on SANYM, in which the
authors describe, in a first-person account, the origin, development and
forced closure of their own shipyard, which had created over one thousand
jobs and exported one third of their production to Europe, Africa and the
Americas.
The chapter on the Global Context examines over twenty countries,
mapping them according to the relation between wealth and shipbuilding
development, thus giving rise to continents outlining a new naval worldmap.
It further tracks Argentina’s course and discusses the current direction.
In reference to the government’s role it examines the “Regulator State,” in
legislation as well as in administration; the “Shipowner State,” and
especially, a detailed analysis of the “Shipyard State” by comparing the cases
of Tandanor and Río Santiago (ARS) to those of other state-owned shipyards
worldwide.
One of the most controversial chapters is Naval Cases, which presents
research on specific cases having a negative impact on the country, with
descriptions, anecdotes, identification of accountable players and estimations
of the impact on employment, tax revenue and foreign reserve losses. Some
refer to historical difficulties (Navy, Coastguard, Fishing and the Paraná-
Paraguay Waterway), while others are more recent cases (OPVs, River Patrol
Boats, INIDEP, Enarsa), with epicenter in 2016. The book undertakes an
analysis that unveils the modus operandi and the system which funded one of
the country’s worst sectorial policies of the country – importation of second-
hand ships – which is worlds apart from international good practices.

The final section – Future – revolves around the previous chapters and, with
realistic optimism, submits proposals to relaunch the sector. Feasible
scenarios are projected up to the year 2036, thus rounding out an analysis that
embraces one century of the shipbuilding industry.
In a large format, this book has a carefully designed presentation, combining
texts, photos, graphics, and ad hoc illustrations. Hard information is balanced
with personal anecdotes of the authors’ meetings with presidents and national
and foreign officials, as well as with other key players of the business,
academic and marine union spheres. ( http://www.industrianaval.com.ar )
NUMERIC SUMMARY

1.295 ships built (over 20m long and excluding pleasure boats).
5.855 MMusd is the present value of local ship constructions.
60.000 jobs was the total shipbuilding employement peak (1979).
70% of units were fishing and river transportation vessels.
0,26% GDP was the peak level of shipbuilding output (1981).
40% of employment and value was provided by Rio Santiago yard.
46% of value was for government: Defense (26%), Transport (20%).
1979 was the year of the last Navy contract in Argentina
9% of total value was financed by National Merchant Marine Fund.

Private sector
91% of vessels have been built by private yards.
2.109 MMusd is the value of shipbuildings in private yards.
24% of total value was built in the three large private yards.

Exports & Imports

26% of value was exported to USA, Paraguay, Poland and Germany.
336 MMusd is the balance of Export-Imports in private yards.
72% was the national content of private yards.
100% of Coast Guard and research vessels are imported.
79% of Navy and Coast Guard vessels are imported (61% used).
85% of fishing fleet are second hand imported units (Age: +36).
90% of river transportation fleet is imported and second hand.

Last decade (2006-2017)

85% of vessels have been built by private yards.
60% of value was exported to Colombia and Paraguay.
73% of direct employment was provided by private yards.
200 MMusd is the operative anual loss of the public shipyards.
70 MMusd is the average annual output of argentine shipbuildings.
0,007% GDP was the level of argentine shipbuilding output.

Projection (2018-2036)
60.000 jobs would be created by 2036.
76% would be the local shipbuilding industry market share.
0,07% of GDP could be the level of argentine shipbuilding output
TABLE OF CONTENTS

INTRODUCTION
TEAM, ACKNOLEDGMENTS, CONTACT
THE AUTHORS
EXECUTIVE SUMMARY
NUMERIC SUMMARY
100 YEARS
THE BOOK
PREFACE

HISTORY
EARLY TIMES
INDUSTRIAL EVOLUTION
INDUSTRY LEADERS

INDUSTRY
VALUE & EMPLOYMENT
STATISTICS
FOREIGN TRADE
ARGENTINE SHIPYARDS
Shipyards comparison
STATE OWNED SHIPYARDS
AFNE - ASTILLERO RIO SANTIAGO (ARS)
 ARSENAL NAVAL PUERTO BELGRANO
TANDANOR
STORNI (ex Domecq Garcia)
CINAR

LARGE PRIVATE SHIPYARDS

ASTARSA
PRINCIPE , MENGHI & PENCO
ALIANZA
MIDDLE SIZED PRIVATE SHIPYARDS
SANYM

POLICIES
Shipbuilding industry. A Privilege
GLOBAL CONTEXT
NAVAL WORLD MAP
MARINE FINANCING
THE STATE ROLES
THE ¨REGULATOR¨ STATE
THE ¨SHIPOWNER¨ STATE
THE ¨SHIPYARD¨ STATE
NAVAL CASES
The Navy (ARA) Case
The Coast Guard (PNA) Case
The Waterway Case
The Fishing Case
The INIDEP Case
The ENARSA Case
The River Patrol Boats Case
The OPV Case
GOVERNMENT POLICY IMPACT
The “Menem + Kirchner” Administrations
The Macri Administration

FUTURE
Matters to be solved
CINAR 2.0
OPV @ CINAR 2.0
THE NETHERLANDS, MARCH, 2017
2036 PROJECTION
Naval Demand WordMap
ECONOMIC PROJECTION
Tax Revenue
Foreign Exchange
Employment
Marine Financing
Final Analysis

AFTERWORD

A CENTURY IN PERSPECTIVE
NEW OPPORTUNITIES
AUTHOR´S CLOSING WORDS
ABOUT THIS FIRST EDITION
NOTICES RECEIVED

ANNEX
ARGENTINE SHIP CONSTRUCTIONS LIST
REFERENCES
IMAGES´ CREDITS
100 YEARS

Several are the reasons that led to the inclusion of the concept of “one
century” in this book’s title. Some are historical, some concern projection,
and, lastly, there are strictly personal reasons.

100 YEARS have recently passed since the famous publication by the then
Commander (Capitán de Fragata) Segundo R. Storni, on “Argentine
Maritime Interests” (La Prensa, 1916).

100 YEARS were marked in 2017 since the first shipbuilding union
organization, which gave rise to the current Argentine Union of Shipbuilding
Workers.

100 YEARS is the period analyzed. Starting in 1937 – going back eighty
years in history to the beginning of modern shipbuilding industry with the
construction of the series of Parker-type military vessels, ordered by the
Navy from the local industry. Reaching up to 2036 – projecting twenty years
into the future in order to achieve a consolidation of the nation’s industrial
activity at levels of employment and exports similar to the maximums
reached in the past.

100 YEARS is additionally the time added up by the authors in their

professional maritime dedication to this engrossing activity.
THE BOOK

Of late, books have been written about the life of major institutions in
Argentine marine industry.
Such is the case of the recent volumes that tell the histories of Astilleros
Alianza, of Astilleros Contessi and of the Argentine Union of Shipbuilding
Workers, as well as those, some years back, on the Professional Naval
Engineering Council and on Astillero Río Santiago.
But forty-five years have passed since the last book regarded as fundamental
and having an overall regard over the sector. Such was the case of “History of
the Argentine Shipbuilding Industry,” by Aurelio González Climent, in 1972.

Argentine Shipbuilding Industry, 100 years (1937-2036) seeks to provide an

outstanding contribution to the recreation of this industry which is possible
and necessary.
This industry is very broad and in order to analyze it, it can be divided along
at least three dimensions. According to the type of service, into Construction
or Repairs; according to the type of vessels, into Heavy or Light; and
according to position within the industrial chain, into Shipyards or
Parts/Services Suppliers to the shipbuilding process.
The focus of this book is on the Heavy Construction industry of ships, from
the standpoint of the Shipyards .
PREFACE

After almost two years of intensive work, I am able to state that one of the
biggest maritime projects which I have undertaken is finished.
The previous ones were the design, repair or construction of very varied
ships, which can be counted in the hundreds, something that speaks of my
advanced age and of the vigor of this industry in the past. Today, the
maritime work that we are “launching,” is a book.
Like any other maritime project, it went through stages of conceptual and
detailed design, of structural work, of completion, and of meticulous testing,
arriving at the key moment in which it is ready to sail – on this occasion,
through a sea of readers.
Its daily runs shall have both calm and stormy days, since the work includes
some warm memories and a lot of strong criticism of a reality which it is
attempted to change.

Like many previous projects, this is another that was undertaken together
with Raúl Eugenio, my eldest son, to whom fell the hardest part, and with
whom we share more than the name and the profession. Both of us have
realized at some point in our lives that, through this industry, we would be
helping to build a better nation.
Together we have designed and built many ships; between the two of us, we
add up to a hundred years in this career; and today, we present the work that
best reflects our common passion. A book that speaks about tradition and the
past as well as about continuity and the future; and about an industry that
began with the Spanish conquest, which reached greatness forty years ago
and which at the present time offers all the conditions for recovering.

This work seeks to be a contribution and a respectful but firm demand to

those in charge of governmental policies, which are required so that the ships
we need are built here. I exclude from my respect those officials, civilian and
military, who have not fulfilled their obligation to guard Argentine work and
who, on the contrary, have facilitated the shady dealings associated with the
mass importation of ships, particularly second-hand ones, which could have
built in the country.

Lastly, and complying with an established naval tradition, we shall ask the
godmothers, Martha and Sofía, by breaking the bottle against the bow, to
christen this naval book.
Good daily runs!
Raúl Rafael Podetti
 … The history of shipbuilding industry is molded out
of concrete, tangible and incontrovertible facts. But this
is a book of unwanted reading by those who, speaking
low, at the service of outside interests, hang about
government offices trying to convince second-ranking
officials to see to it that foreign ships are bought. This
book is ignored by those who in Congress, in haste and
ill informed, seek to pass laws that provide facilities for
the importation of vessels that can be built by the dozen
in the country, instead of legislating systems for the
promotion and protection of the Argentine merchant
marine and shipbuilding industry…

… The same slogan continues to be embraced: the

urgency of obtaining this or that ship, the financial
facilities and the advantages that will be derived from
the increase in repairs […]

…It is time to adopt the effective measures implemented

in other countries. It is time to do away with vested
interests and to set bounds on the indolence and
arbitrariness of certain government officials […].

Capitán Enrique Carranza

 President of AFNE
Launching Ceremony
Lago Aluminé – ELMA, (1965)
HISTORY
EARLY TIMES
The first historical revelation is that the Spanish conquerors’ true intentions
were much more industrial than foundational: they intended to repair and
build ships in order to move ahead with the conquest and take all seized
riches to Spain.

- I declare the inauguration of the First Shipyard at these lands.

- First Shipyard? Where does this guy think that we have been building our vessels all these
years???
- Quite crazy… History will remember us as founders of Buenos Aires city and our intention was
simply to repair and build our vessels….

Such was the spirit underlying the first shipyards in the region, gradually
established along the basin of the River Plate, as well as inland, to make use
of the rivers to sail their products down to Buenos Aires, and in the far
southern region, to repair those ships that were wrecked while trying to make
their way through the extreem South, around to the Pacific Ocean.

This nascent industrial development was soon caught between opposing

forces, those who advocated the import of ships and parts, and the promoters
of national development, whose champion was General Manuel Belgrano,
creator and defender of the Argentine Maritime Interests concept.

General Manuel Belgrano, creator and defender of the Argentine Maritime Interests
INDUSTRIAL EVOLUTION

The last eighty years (1937-2016) of Argentine Shipbuilding Industry history

fall into four stages.

The Groundwork phase, with the first significant military shipbuilding

project, in 1937, commissioned by the Navy from national private and public
shipyards. On the basis of the Navy’s attitude, momentum gathered, and
infrastructure and institutions were created, laying the foundations for future
development.

Only in 1966 did the then-prevailing development-minded intentions

strengthen and result in suitable governmental policies for the times, which
enabled a steady progress towards the second, Growth stage of the activity.
Following a worldwide trend, promotion and protection schemes resulted in a
great demand for ships from governmental and private shipowners, supported
by ample public financing, similar to that in other countries, and with
subsidies to match those received by foreign shipyards in their attempt to
enter the Argentine market. It was a time of great development, which ended
in the early 1980s.

Due to external reasons, internal crises and changes in policies, the

government stopped buying ships in the country and suspended shipbuilding
financing. Thus started the stage of the Collapse of this industry, during
which the largest private shipyards died out. What’s worse, as of the 1990s, a
most dubious policy promoted the tax-free import of second-hand ships,
which became the rule – and the most lethal sectorial policy – in the early
years of the new century.

This course means that even to this date, the sector remains deeply sunk in
undeserved Underdevelopment – the name of the fourth phase – from which
this book attempts to provide escape routes.
Newbuilding orders define history phases

These four historical stages are also clearly seen when graphing the different
contract values for newbuildings in argentine yards during the last 80 years.

Starting with the contract date, the authors developed graphics showing
the actual total demand
.
In othe other graphs are showsn the components of :
1. Carrier State (ELMA, EFFEA, YPF) named ¨State Owned Ship Owner¨,
2. Argentine Navy, and
3. Private and Foreign shipowners.

This helps to understand the classification into historical stages and the
impact of the demise of the “Shipowning State,” which altogether amounted
to 45 percent of the total industrial value. The maximum commissioned rate
was reached in the late 1970s, totaling over 400 MM US dollars annually.

Growth stage starts by mid 60´s when a new development policy is put in
motion by Government action: Demanding vessels for its own needs and
funding private national newbuildings.

Collapse starts in early 80´s when Government stops ordering ships from
local market and suspends all type of financial schemes to build units for
private owners and for export.
INDUSTRY LEADERS
Some of the most important industry leaders are mentioned, from the
business, union and professional spheres.

Segundo R. Storni
Navy Officer, Navy School Director, Argentine Navy Chief of Staff, Writer
and promoter of Argentine Maritime Interests (1916)

Amelio D´Arcangelo
Navy Officer, Naval Architect & Marine Engineer; Professor at the
University of Buenos Aires, at The Virginia Polytechnique Institute an the
University of Michigan, Ann Arbor, USA

Edmundo Manera
Navy Officer, Naval Architect & Marine Engineer; Founder of NA&ME
carrer at the University of Buenos Aires; Designer, Builder and President of
AFNE/ARS

Enrique Ricardo Carranza

Navy Officer, President of Astilleros y Fábricas Navales del Estado AFNE /
Astillero Rio Santiago ARS
Hector Rodriguez Zubieta
Navy Officer, Naval Architect & Marine Engineer; Founder and Director of
Astilleros Alianza

Federico Menghi
Founder and President of Astilleros Principe, Menghi & Penco, Avellaneda,
Buenos Aires.

Enrique Ramillo
Naval Architect & Marine Engineer; President of Federación de la Industria
Anval Argentina FINA, Director of Astilleros Astarsa

Federico Preusche
Naval Architect & Marine Engineer; Board Member of Flota Fluvial del
Estado and ELMA; Technical Director of Astilleros Corrientes

Cayo Sotero Ayala

Union leader, General Secretary of Shipbuilding Workers Union / Sindicato
Argentino de Obreros Navales SAON; Congressman
Federico Contessi
Founder and President of Astillero Federico Contessi, Mar del Plata, Buenos
Aires

Andres Garro
Navy Officer, Naval Architect & Marine Engineer; Director of Astillero
Sanym, Professor at Buenos Aires Institute of Technology, ITBA

Anibal Vanoli
Naval technician, Founder and President of Astilleros Vanolli, Necochea,
Province of Buenos Aires

Federico Tombaco
Founder and President of Astilleros Mestrina and Union de Constructores
Navales UCN

Jose Suarez
Navy Officer, Board Member of Federación de la Industria Naval Argentina
–
FINA
Mario Cagnoni
Contador, Board Member of Astilleros Mestrina, the Union de Constructores
Navales, Federación Industria Naval Argentina FINA

Rolando Marini
Navy Officer, Naval Architect & Marine Engineer; Founder and President of
Astillero Sanym.

Raúl Rafael Podetti

Navy Officer, Naval Architect & Marine Engineer; Founder and President of
Astillero Sanym and Board Memember of Fed. Ind. Naval Arg FINA and
Asociación Arg de Ingeniería Naval AAIN

Horacio Martinez
Lawyer, Board Member of Union Industrial Argentina UIA, and President of
Federación de la Industria Naval Argentina FINA

Vicente Forte
Naval Architect & Marine Engineer, President of Astilleros Forte, Tigre,
Province of Buenos Aires

Lelio Gonzalez Elicabe

Lawyer,
President of Astillero Rio Santiago ARS

Mario Colpacci
Naval Architect & Marine Engineer; President of Consejo Profesional de
Ingeniería Naval CPIN

Miguel Angel Alvarez

President of Cámara Santafesina de Industria Naval
CASIN

Juan Speroni
Union leader, General Secretary of Shipbuilding Workers Union / Sindicato
Argentino de Obreros Navales SAON
 Horacio Tetamantti
Naval Architect & Marine Engineer, President of Astilleros SPI,
Undersecretary of Ports and Waterways, President of ABIN

Juan Torresin
President of Astillero Coserena and Federación de la Industria Naval
Argentina
FINA

Carlos María Brañas

Naval Architect & Marine Engineer; Consultant, President of Asociación
Argentina de Ingeniería Naval AAIN, Board Memeber of federación de la
industria Naval Argentina FINA

Ricardo Ferrer
Naval Architect & Marine Engineer; President of Consejo Profesional de
Ingeniería Naval CPIN
 Miguel Angel Sanchez
Manager of Astilleros SPI, President of Asociación Bonaerense de Industria
Naval, ABIN

Domingo Contessi
President of Astillero Contessi and Cámara de la Industria Naval de Mar del
Plata, and VP of Federación de la Industria Naval Argentina FINA

Raúl E. Podetti
Naval Architect & Marine Engineer, CEO of Astillero SANYM, VP of
Astillero Rio Santiago ARS, VP of Federación de la Industria Naval
Argentina FINA

Enrique Godoy
Board member of Cámara de la Industria Naval de Mar del Plata, President of
Astillero Tecnopesca Argentina TPA, and Federación de la Industria Naval
Argentina FINA
Fernando Sanchez Checa
Naval Architect & Marine Engineer; Consultant, Congressmen Advisor ;
Manager of Federación de la Industria Naval Argentina FINA

Pablo Noel
Lawyer, President of Astilleros Unidelta and Federación de la Industria Naval
Argentina FINA
INDUSTRY

In a distinctive contribution, the authors have worked on statistical

shipbuilding archaeology, to identify the building data on thirteen hundred
ships throughout the country since 1937 – excluding smaller (<20m) and
plesure units.
The work resulted in the industry’s first ship production data base in
Argentina. Using technical parameters, assessment was made of the
economic Value (in US dollars of today) and the Direct (Standard)
Construction Man Hours applicable to each unit, which in turn made it
possible to classify information under these two criteria (Value and Jobs) as
applied to shipyards and vessels so greatly different from one another.
VALUE & EMPLOYMENT

From the analysis of the constructed value by shipyard type, the authors
found that the state-owned Río Santiago shipyard (ARS, in Spanish)
delivered 40 percent of the total value, although in the last decade it
contributed only 15 percent.
The large private shipyards delivered 24 percent of the total during their short
lifespan.
Middle-sized shipyads have grown the most in relative contribution to the
total value percentage, from 36 percent of the total to 85 percent this last
decade.
When combining this value contribution to the generation of productive
employment, the authors cmonclude that, at present, the shipbuilding industry
increasingly depends on middle-sized yards.
As regards the employment criterion, each ship is assigned the standard direct
production hours adjusted by type of shipyard and construction period. This
made it possible to reach an estimate of the necessary amount of productive
staff needed for ships actually built at a given time, which is here defined as
“Direct Newbuilding Employment.”
“Total Employment in Shipyards” was reached by combining sources
(INDEC, economic census, publications, information from shipyards, etc.)
and also includes production workers in excess of actual building demand
(for instance, in repair), and indirect personnel. Direct construction
employment necessary to produce what was really built reached a peak of
9,000 workers in 1979.
ARS provided 41 percent of the total of the productive workforce then, but
only 27 percent in the last decade.
Total Employment in shipyards is much higher than Direct Construction
Employment, for repair work has always been very sizable and requires large
amounts of labor.
STATISTICS

Over eighty years, 1,295 ships were built with an aggregate value of 5,855
MMdollars (ARS, 40%; middle-sized private shipyards, 36%; large private
shipyards, 24%). Statistics are analyzed according to the markets supplied,
their financing, the shipowners that bought them, and the shipyards that
built them.

Markets:
Waterway and fishing markets required 70 percent (900) of the units, though
they merely represented 24 percent of the value. They were stocked almost
entirely by medium-size shipyards.
Overseas Transport and Defense required just 9 percent (124) of the vessels,
yet 60% (3,500 MM dollars) of the value. In the case of commercial vessels,
value was split equally between the large private shipyards and ARS, which
concentrated 97 percent of the Defense market.

Financing:
Seventy percent of the units received export or local private financing, and 56
percent of the total funded amount came from public funds.

Shipowners:
The state bought 17 percent (221) of the units with 35 percent of the total
value (1,718 MM dollars), mainly for the Navy, ELMA and YPF.
National private shipowners purchased 56 percent (725) of the units for 1,600
MMdollars, and the rest (worth 1,537 MM dollars) went to overseas
shipowners.
Shipyards:
The Río Santiago shipyard (ARS) built 73 units (6%) for a value of 2,296
MM dollars (40%); large private shipyards, 138 ships for 1,395 MM dollars
(24%) and middle-sized shipyards, 1,043 units at 2,109 MM dollars (36%).
Astilleros Alianza stands out among the large private shipyards, representing
14 percent of the total value with 45 vessels.
FOREIGN TRADE

Argentina built 349 units for export, valued at 1,537 MM dollars, to 16

countries.
Standing out among them are offshore platforms by Astilleros Corrientes for
Reading & Bates of US, bulk carriers by Alianza for Poland, barges by Punta
Alvear for Colombia, container ships by Astarsa for Sri Lanka and by
SANYM for Germany, added to several river vessels for Paraguay, salvage
vessels and fishing research ships for Uruguay, funded by the IDB and the
World Bank.
In terms of foreign currency balance, private shipyards show a surplus of 336
MM dollars, with 72 percent local content, while ARS, because of the kind of
vessels built (mainly military), used less local content, and its imports turned
out to be 1,141 MM dollars higher than the value of its exports.
ARGENTINE SHIPYARDS

Before getting into further details of the argentine shipyards, the following
graph shows the cronolgy of these companies in the last eight decades.
Shipyards comparison

Though a young company, Punta Alvear was the shipyard delivering the
highest number of units, because it is engaged in the serial building of river
barges. Second comes Contessi, with a large number of fishing vessels and
much older as a company, closely followed by SANYM and Tecnao, younger
yet combining more diversified markets.
Leadership in built value belongs largely to ARS, followed by Alianza and
then Corrientes, Astarsa, Punta Alvear and SANYM.

Bar charts show some relevant comparisons and in the following pages main
argentine shipyards are briefly descibed.
STATE OWNED SHIPYARDS
AFNE - ASTILLERO RIO SANTIAGO (ARS)

The Río Santiago shipyard was founded in, by president Juan D. Peron, as
part of the State Shipyards and Naval Factories (AFNE, in Spanish),
including the General Workshops of the Río Santiago Navy Base.

Its concept, design and management was undertaken by the Navy as part of
the leadership exercised by the naval force regarding the shipbuilding
industry in foundational and development times.
ARS was the industrial expression of a time marked by the Soviet model of
overstaffed mega-factories, with maximum vertical integration (from rivets to
large marine engines), which also fulfilled a strategic role in training naval
architects, marine engineers, technicians, craftmen and workers who would
continue the industry over the years.

Originally, ARS played a military role, soon shifting its focus in order to
meet the needs of the national merchant marine, especially the one owned by
the state.

The shipyard built 73 highly significant vessels, standouts among them being
the training tall ship ARA Fragata Libertad, virtually all the nationally built
navy fleet, YPF’s largest oil tankers, and several multipurpose merchant
ships for ELMA.

In the last years, construction was of bulk carriers and oil tankers, exclusively
for export. The capacity of its machining workshops is one of the most
significant in the whole region.

Traditionally, ARS was a major employer in the shipbuilding industry,

representing 25% of total historical employment in shipyards, with a
maximum record of eight thousand employees in 1970 and a minimum of
eleven hundred in 1992.

Remarkably, over the last decade it represented 47% of total shipyards

employment, with some three thousand four hundred agents, despite its
production being much reduced – providing only 15 percent of the period’s
total industrial value.
Fifty-nine percent of the shipbuilding value was made up by military vessels,
followed by overseas merchant vessels for the state-owned ELMA and YPF.

Considering current shipbuilding operations, its exports amount to 9 percent

value of its overall historical production, having also worked for private
shipowners (4 percent).
From 1976 to 1983, it added value exceeding 100 MM dollars annually,
understanding that in this analysis, value is split over the term of
construction, as is employment.
The relationship between total Employment and Value produced is a ratio
that shows a shipyard’s productive features.
It is worth noting that from the mid-1950s through the early 1970s, for ARS,
this index increased to high levels – 230 jobs per million dollars of value – on
account of its high vertical integration, the training of apprentices, and the
shipyard’s construction by its own personnel. But as of the
“provincialization” process, in 1993, this index increased markedly, reaching
the exorbitant level of 300 jobs per million dollars of value, thus pointing to a
productivity ten times worse than the rest of the state-owned shipyards of the
region.
This resulted from the unfettered increase in personnel not related to
production (the effect of the shipyard’s politicization) and the reduction in
real productive activity.

This situation is deemed to cause a loss of about 170 MM dollars annually, a

situation that has lasted for over two decades, independently of the kind of
government in charge of the shipyard.
ARSENAL NAVAL PUERTO BELGRANO

Throughout the years, a large variety of state-owned yard ventures were set in
motion. At the main navy base close to Bahía Blanca city, in the south of
Buenos Aires Province at the beginning of 1900 it was built the Navy Arsenal
Puerto Belgrano, mainly devoted to navy ship repairs.
TANDANOR

In 1972, many of the state-owned workshops and docks were merged into
Tandanor. Six years later, it started work to install the largest ship lift system
(Syncrolift), which enabled Tandanor to place large ships in dry dock and
move them to workstations, thus providing the largest and very latest ship
repair capacity in the region.
It was the center of one of the first and worst privatizations of the early
1990s, which ended up in a scandal, followed by bankruptcy and
renationalization in 2007, with 10 percent of the shares held by employees.
STORNI (ex Domecq Garcia)

Along with the construction of the Syncrolift, the Navy partnered with a
German shipyard which sold submarines and a highly modern shipyard that
was supposed to build more of them, though this never actually happened.

This magnificent shipyard is under the authority of the Ministry of Defense,

and was originally named Astillero Ministro Domecq García and then
renamed Almirante Storni.

Of all shipbuilding facilities in the country, Storni is the best, with the highest
potential, yet also the most wasted asset of all.
CINAR

This aerial picture shows on the left (yellow line) the STORNI (ex
submarines yard) huge facilities, with almost no use in the last few decades.
The orange line marks the perimeter of TANDANOR, the largest repair
facility in the región with a Syncrolift and ample wharfs for repairs.
The CINAR complex (Tandanor + Storni) is located at a premium real estate
area in downtown Buenos Aires city, only blocks away from the rich Puerto
Madero zone and the Pink House (Government Headquarters)
LARGE PRIVATE SHIPYARDS

Promising state policies of the mid 1960s fostered the modernization and
enlargement of traditional shipyards from the district of Tigre and the
Riachuelo in Buenos Aires province.
These three yards are Astarsa, Principe Menghui & Penco and Alianza.
ASTARSA

First, ASTARSA was relaunched to continue the historical Hansen and

Pucini (1927) in the district of Tigre, already a player in the modern
shipbuilding industry since 1937.

It built some 35 ships of considerable size, totaling 210,000 DWT. Apart

from ships up to 30,000 DWT, it built locomotives and road equipment.
Worth mentioning are the merchant ships of the Río Limay series for ELMA,
the bulk carriers of 11,500 DWT for Astramar, the research vessel Puerto
Deseado, and Ro-Ro and container ships for Sri Lanka.
PRINCIPE , MENGHI & PENCO

In the area of the Riachuelo, partners Principe and Menghi associated with
Penco to form the second large private shipyard in 1967, which built some
ten large ships, mainly for the Argentine Navy, the polar ship ARA Bahía
Paraíso standing out among them. It also built a series of lash type barges for
an American shipowner, and several river vessels for the regional market.
ALIANZA

A few blocks from Principe, in the early 1970s, naval architect and marine
engineer Héctor Rodríguez Zubieta established the region’s most efficient
and state- of-the-art shipyard, Astilleros Alianza. This yard built over thirty
large ships, 750,000 DWT on aggregate, and raised the Argentine
shipbuilding industry to the highest productivity standards in history.
Alianza’s sales to Chile were the first exports of large ships for the national
industry, and exports to Poland were the largest exported ships. Altogether, it
exported over 300 MM dollars, representing 37% of its production value.
It also delivered the dredge Capitán Núñez, reefers of the Glaciar series,
Freedom ships and oil tankers.
Led by Alianza, the three large private shipyards taken together built 10% of
the total of units, invoicing 24% of the value, and their clients procured 71%
of the National Fund of the Merchant Marine (FNMM, in Spanish),
conceived to finance and subsidize national shipbuilding.
MIDDLE SIZED PRIVATE SHIPYARDS

The authors studied the performance of some 54 middle-sized private

shipyards from 1937 to our days, which on aggregate delivered 81% (1,043)
of the units, generating 36% (2,109 MM dollars) of total sales, at an average
of four vessels per shipyard per year, mainly supplying markets of fishing,
river transportation, tourism and port services, with vessels that had an
average value of 2 MM dollars per unit.

On the basis of these dynamics and an atomized sector, the authors provide a
brief description of the 17 cases which remain active today or did so until
relatively recently.

These yards are set up along the maritime and river coastline of the provinces
of Corrientes (1), Santa Fe (2), Buenos Aires (12), Chubut (1) and Santa Cruz
(1). They are all SMEs combining shipbuilding and repair capacities.

The newest ones – Punta Alvear and Río Paraná Sur – are in fact “serial
barges factories,” oriented almost exclusively towards the waterway market.
Such is also the case of the modernized plant of Alnavi, in charge of SPI, and
the frustrated investment project of SABB in Rosario.
Worth noting is the construction for export of two jack up offshore platforms
by Astilleros Corrientes, of tugboats by Forte for Cuba, of two container
ships by SANYM for Germany, and the series of river barges by Punta
Alvear for Colombia.
Among the best known products of this sector are the fishing vessels by
Contessi, SANYM and Vanolli, and the tugboats, dredges and beacon boats
by Mestrina.
In recent years, Tecnao and Unidelta have been the main suppliers of tourist
vessels, and it should be noted that recently, SPI and Unidelta have built very
modern and powerful port ASD tugboats .
TPA, Comodoro and Coserena are mainly oriented to the fishing market.
Fifty-nine percent of the value of ship exports was created by this private
industrial sector, and it provided 66 percent of sales to national private
shipowners. Its market share to supply government needs was minimal.

Middle-sized private shipyards were mainly financed with private and export
funds, using only 19% of those available in the public funding system of
FNMM.
It follws a series of pictures and main data of most of the private medium size
shipyards in Argentina.

Astillero COMODORO
Comodoro Rivadavia, Chubut, Ship repairs ; Fishing Boats ; Inactive; Emilio
Bressan

Astillero VANOLLI
Necochea, Buenos Aires; Fishing Boats; Active in repairs; Vanolli family
Astillero MESTRINA
Tigre, Buenos Aires; Workboats, Repairs; Active in repairs

Astillero PUNTA ALVEAR

Punta Alvear, Santa Fe; River Barges; Low activity level

Astillero SPI
Mar del Plata, Buenos Aires; Ship repairs ; Fishing Boats; Very active;
Horacio Tetamantti
Astillero ALNAVI
Campana, Buenos Aires; River Barges; Active; Horacio Temantti

Astillero SANYM
Dock Sud, Buenos Aires; Sea & River Workboats; Inactive; Marini, Garro,
Podetti

Astillero CONTESSI
Mar del Plata, Buenos Aires; Fishing Boats; Very active; Domingo Contessi
Astillero TECNOPESCA
Mar del Plata, Buenos Aires; Ship repairs ; Fishing Boats; Very active;
Enrique Godoy

Astillero RIO PARANA SUR

Lima, Buenos Aires; River Barges; Active; Marcos Del Monte

Astillero CORRIENTES
Correintes, Corrientes; River Barges; Inactive; Family Gutniski
Astillero COSERENA
Puerto Deseado, Santa Cruz; Ship repairs;; Fishing Boats; Very active; Juan
Torresin

Astillero FORTE
Tigre, Buenos Aires; Workboats, Ship repairs; Inactive; Vicente Forte

Astillero UNIDELTA
Tigre, Buenos Aires; Workboats, Tourism ; Very active; Pablo, Lucio y
Emilio Noel y Adrian Irigoyen

Astillero TECNAO
Tigre, Buenos Aires; Tourism; Very active; Family Tanoni
SANYM

This was the authors’ shipyard, to which they passionately devoted their best
entrepreneurial endeavors. Founded in 1964 by young ex navy officers, naval
architects and marine engineers Marini, Garro and Podetti, SANYM initially
focused on the design, construction management and administration of
fishing vessels projects, as well as on the repair and transformation of
vessels.

Worth mentioning among them were ships to transport cattle on the hoof to
Persia. Owner representative was Mr. Blanco Villegas, uncle of Mauricio
Macri – future president of Argentina- who used to visit the yard on saturday
mornings.
Jointly with Astilleros y Fabricas Navales del Estado (AFNE), the state-
owned shipyard, SANYM formed SIPIN, which designed the largest locally
built oil tankers (60,000 dwt) that state oil company YPF was planning to
import from the US, but President Perón was persuaded by AFNE president,
Cap. Carranza and SIPIN director Raúl R. Podetti to design and build them in
Argentina. The Project was a great success.
In the 1970s, SANYM had its own yard, in the district of Dock Sud, but it
was five blocks away from the water. Finished ships had to go through a
number of streets on a trailer, until they reached the channel where they were
launched with a huge floating derrick.
In 1980, SANYM was already operating at its final location on the
Riachuelo, at the confluence with the Dock Sud channel. There, production
of fishing vessels (mainly S92 type) increased with a highly successful serial
system.

Thanks to investments, productivity improvements and its own ship designs,

SANYM won significant international bids, exporting tugboats to Costa Rica,
fishing ships to Equatorial Guinea, salvage vessels and research ships to
Uruguay, barges and pusher craft to Paraguay and container ships to
Germany.
The german project was the most demanding for the company.
The argentine crisis of the 1990s caught the shipyard highly exposed in
financial terms, on account of the heavy investments undertaken. This
exposure was added to the vanishing of its natural local market.
It was time for a generational turnover in management, with Raúl Podetti Jr.
as CEO and Martín Podetti as CFO, in order to face, with their father, a
distressing downsizing, a comprehensive refinancing of liabilities, and the
necessary opening to new markets with international strategic alliances.

Soon they were taking part in the infrastructure market for petrochemical,
nuclear and telecommunications companies and large metallic structures,
such as the red bridges over the General Paz beltway, and the swing bridges
in Puerto Madero.
On the company’s 30th anniversary, it delivered its ship number 100 and
entered into a strategic partnership with P&O, an international shipping and
ports company which was starting business in Argentina.

Beacuse the main and virtually only ship demand sector was the Paraná
Paraguay Waterway, SANYM partnered with he world’s two leading builders
of inland pushers and barges, American Halter Marine and Trinity Industries.
These partners brought financing, collateral and business connections, for the
waterway’s new shipowners were also American corporations; SANYM
contributed engineering, labor, services and market proximity.
Trinity Argentina started a significant long-term investment requiring it to
expand the shipyard’s production, on an adjacent vacant lot in the port,
partially used for years by the shipyard.

The provincial government rejected Trinity Argentina project and evicted

SANYM from the lots that it had held in legal use for several years, forcing
the closedown of the shipyard. This action would facilitate the expansion
project of a neighboring container storage facility owned by an extreme
friend of top government officials
 .

As reported in Newsweek, in 2002, Sanym closed down and the yard was
handed over to the workers by the owners. It ended the story of a shipyard
which, in 1990 was staffed with some eight hundred employees and had a
turnover of 23 MM dollars. SANYM exported 32 percent of its production
and, having 76 percent of local content, with a foreign trade surplus of 22
MM dollars.
POLICIES

Effective actions, rather than discursive speeches, generate public policies.

And it is these policies that indicate what rulers really think and intend to see
happen.
Ministers, following presidential guidelines, regulate, bid and contract for a
certain thing to occur, allegedly in the nation’s best interest. Legislators,
following their convictions or the instructions of their political leaders, draft
laws that rule and orient reality in one direction or another. This “given
direction” towards which they tilt the balance marks the intention of a public
policy and reveals whom it really benefits.
It is thus worth looking into the impact of state actions (or omissions) through
the government’s executive and legislative deeds. This enables finding out
the relations among state policies and development, the latter being measured
through concrete notions, such as employment, tax revenue and foreign
reserves.
To do this, the authors examine sectorial policies and their effects, the
international context, financing, government roles and, finally, six specific
naval cases of recent times, in each case assessing the impact caused by the
policies
Shipbuilding industry. A Privilege

Some nations travel the hard path to attain this development, and after many
years of striving only a few reach an internationally noteworthy level. And
still, many countries reach sufficient development to at least meet the
domestic demand concerning fishing, defense, port services, and coastal trade
– among others. There is barely a record of nations which have gained such
strength only to subsequently waste it.
A recent study carried out by the OECD reveals the importance assigned by
governments to the shipbuilding industry, concluding that 90% assigned great
significance to its employment generation as well as to the increase in
industrial and technological capacity.
After analyzing over twenty cases of shipbuilding nations on four continents,
embracing over 97% of world output, virtually all of them have in common a
resolute state involvement as promoter of the industry’s development,
through financing schemes, protection on the domestic market, and support
for an increasing export-oriented competitiveness.
Among the reasons for state support are: the concept of strategic industry for
defense, security in domestic trade, easy access to international markets,
demand for diverse qualified jobs, protection of foreign reserves, and
generation of technological development.
Although virtually all explanations are valid for the Argentine case, two
reasons are specially worth considering, and they both come from Brazil,
namely, governmental policies endorsing the shipbuilding industry as a
means to distribute natural wealth and as a way to add value to other
economic activities.

Natural Wealth
In 2003, having found great offshore oil wealth, Brazil’s President Lula
defined a vital state policy summarized as:
This oil does not belong to Petrobras, nor to the oil-field workers, much
less to the Brazilian government. It belongs to all the Brazilian people. If
the benefits of this great natural wealth are to reach the highest number
of inhabitants, ships and platforms for their exploitation must be built in
Brazil.
His speech didn’t come to nothing. Brazil applied positive policies regarding
financing, support and supervision, so that the shipbuilding industry might
play a role as competitively as possible.
The outcome was an exponential industrial and employment growth; in only
fifteen years, employment rocketed from 2,000 to 80,000 jobs in the
shipyards, and was three times higher when including concurring industries.
Argentina is blessed with extensive waterways and abundant aquatic life.
Shouldn’t the benefit of this natural wealth be more widely distributed among
its owners, the Argentine people?
Unlike Brazil and its offshore oil, in Argentina, decades ago, policies
regarding fishing and waterways transportation became oriented almost
exclusively towards the excessive benefit of a tiny group of brokers,
shipowners and (probably) government officials, minimizing the involvement
of most Argentines through the shipbuilding industry and ship part suppliers.
Added Value
Years ago, to explain why Brazil promoted its shipbuilding industry, a
Brazilian government official – in a simple gesture – held up a soybean. He
rightly said that,
At the end of the day, what Brazil and Argentina produce the most is this –
soybeans. Almost without added value involved. But from the farm’s gate
to the end consumer market, the highest value added is freight by ship.
 Therefore, to add this extra share of value to our main production, we
must build the ships to transport soybeans. We do that in Brazil. You do
not, in Argentina.
We should build all barges and pusher to carry the soybeans to the shipping
port; tugs and port service vessels to enable huge bulk carriers to maneuver;
dredges and bouy tenders to help them take their load from our ports – and
hopefully, one day we will again be competitive in building (and crewing)
huge oversea bulk carriers vessels.
GLOBAL CONTEXT

In order to understand what it is that those countries performing better than

us do differently, the industry is analyzed from a more comprehensive, global
perspective.
The authors present worldwide historical cycles where dominance shifts
among Europe, the US, Japan, Korea and China, acknowledging the minimal
role played by Argentina in the global picture (0,002% Gross T built of the
9% corresponding to the ¨Rest of the World¨ after thre three giants)

No correlation was found between a country’s shipbuilding industry and its

overseas merchant marine at a world level, although the local markets for
vessels for fishing, defense, port service and coastal traffic are almost always
reserved for national shipyards.
The cases are examined of some twenty countries representing 97% of
worldwide ship production, looking into the policies of Brazil and the US in
special depth.
When analyzing the relative importance in each economy, it is noticed that,
except for Korea and Croatia – whose shipbuilding industries reach 2 percent
of the GDP – in the rest it is below 0.5 percent, while Argentina’s is barely
0.007 percent – 38 times lower than in 1981 (0.26% GDP).

In order to compare competitiveness, apart from the countries’ labor costs,

productivity was measured according to the amount of jobs required per
production unit. ARS stands out negatively, with a productivity over fifteen
times worse than the rest of the world and national private shipyards.
NAVAL WORLD MAP

Five types of countries are identified by present shipbuilding industry level of

development: Megaproducers, Technology leaders, Developed contries, On
Development nations and Underdeveloped/Importers.

The authors have built a new map displaying Wealth (GDP per capita) vs.
Development (in shipbuilding) coordinates. A series of countries are charted,
eventually forming the “continents” of a new naval worldmap that responds
to given ship construction models.
The countries in the Technological model are those of greatest wealth and
development, selling marine equipment with very high added value.
Mega-producers (China, Korea and Japan) concentrate the highest
shipbuilding volume, dominating the world market in cost and capacity.
This right hand side hemisphere of the new map also embraces the
Developed countries (Brazil, India, Portugal, Australia, Iran, etc.) which meet
their own needs, with some of them crossing over to the select group of ship
Exporters, among them Romania, Taiwan, Ukraine, Croatia, Malaysia,
Vietnam, Indonesia, etc.
Most of the Latin American countries are located in the Developing
continent, where they strive to become self-sufficient in their marine needs,
generating employment and protecting their foreign currency reserves.
The Importers (left) hemisphere has two continents. To the north, the more
affluent countries (oil or Caribbean countries), import new vessels because
they do not have strong enough shipyards.
To the south, the poorer, less developed countries, lacking shipbuilding
capacity (Africa, Haiti, Bolivia), get second-hand ships discarded by other
nations for being unsafe, non-ecological and non-competitive. These
countries receive them readily, because it’s assumed that this is what they
deserve: their structural poverty, government corruption or poor state policies
keep them immersed in this “Scrap” model that describes their destiny.
Argentina has been forced, by last administrations, into this undeserved
corner of the world.

The navigation course followed by Argentina ever since 1937 is drawn on

this naval worldmap.
In 1967, it crossed the Producer hemisphere and a tail wind lifted Argentina
up into the select Exporting continent, from which, since the mid-1980s, it
has been falling precipitously under a series of steersmen who stayed a steady
course towards underdevelopment, where Argentina has beached.
At the close of 2015, a new steersman took control promising course
changes, yet so far, they haven’t been promising. Depending on present and
future steersmen, there are two possible outcomes: the deepening of
underdevelopment (A), or the deserved destiny of greatness (B-C).
MARINE FINANCING

Without proper marine financing systems, there is no chance for a

shipbuilding industry to function properly.
Given this understanding, all states that are determined to attain this
development conceive mechanisms to ensure that shipbuilding projects will
not lack financial flow. Sometimes the government intervenes by
contributing any necessary collateral, so as to smoothen the access of
shipyards and shipowners to the capital market; at other times, the state
directly funds sound operations with promotional schemes.
State intervention is almost a constant, and moreover, it is one of the
most common ways to provide incentives, subsidies and competitiveness
enhancement to its maritime industries in the global context.

In Argentina, most ships have been financed by private funds (42 percent) or
by export funds (27 percent), representing 17 and 26 percent, respectively, of
the total industrial value.
Public financing of shipbuilding came primarily from the National Merchant
Marine Fund (FNMM, in Spanish), which provided barely nine percent of the
built value. Other public financing sources, such as the BIRA, BIND, Banade
and Leasing, contributed a mere one percent extra. Using all these forms of
public financing, 14 percent of the units were built.
Several private owners (Astramar 17%; Ciamar 14%; Maruba 13%; Del Bene
9%; Esso 5%) used the FNMM for new constructions, almost exclusively at
the large shipyards (Alianza, 48%; Astarsa, 17%; Príncipe, 11%; AFNE,
10%).

The US policy (guarantees provision) contributed an average of 600 MM

dollars a year to the system, while Brazil went through two distinct stages. In
the 1970s, Brazil and Argentina converged in setting in motion their
Merchant Marine Funds, yet on a very different scale: Brazil (direct funding)
assigned 400 MM dollars/year, while Argentina barely 40 MM dollars/year.
Brazil second phase started at the year 2000 and for more than fifteen years
thereafter, Brazil contributed an annual average of 900 MM dollars to finance
(and activate) the marine industry.
Also evident is the link between ship financing and job generation in all three
countries. The US and Brazil’s initial stage converged at a rate of 10,000
dollars/job, meaning that for each million financed dollars, one hundred jobs
were created in the shipyards.
The same analysis shows that the complete demise of marine financing in
Argentina since the mid-1980s is one of the main causes of the lack of
employment in local shipyards.
There are other financing schemes involving less state intervention (or none),
as is the case with foreign marine industry groups. In these cases, the
assumption is that the foreign group contributes any necessary imported
equipment, technology and financing, while the local shipyard provides
labor, local goods and services, thus giving rise to a win-win situation among
marine industrial players.
THE STATE ROLES

Three state roles are typical in shipbuilding countries. These roles are named
Regulator, Owner and Shipyard.
THE ¨REGULATOR¨ STATE

Among the government’s roles in this industry, regulating the activity is done
through Congress, in its legislative function, and through the presidency by
way of the management exerted by the cabinet ministries related to the
marine sphere.
For many years now, a marine regulatory framework has been under
consideration, and at the end of 2017, Congress granted approval to
legislative bills on the Merchant Marine and Shipbuilding Industry. These
laws, very poor, became even worse by a governmental veto of the only two
promotional articles.
Regarding the state’s “managerial” role, there are manifest and serious short-
sightedness, bias and narrow-vision disorders that have long prevented the
development of this industrial sector. It is evident that the state does indeed
act as an active curb on development.
THE ¨SHIPOWNER¨ STATE

The Argentine state played a very active role as the main overseas carrier
over the 1940-1980 period, with its height in the 1970s with the creation of
the merchant marine company (ELMA) and the enactment of the Cargo
Reservation Law. Also significant, though smaller in size, was Flota Fluvial,
a river transportation company.
The state also played this role through the YPF and YCF oil and carbón
carrier fleets, until it gave up this function (mid 1980s) as a result of new
rules governing the international market and other definitions in national
politics and economy.
Aside from the discussion on whether or not this last step was propitious, the
truth is that it was a global change impacting harshly on the larger local
shipyards which worked primarily for this market
But there were other “shipowning” roles which the state logically kept for
itself, for they are vested upon it and cannot be delegated, as is defense (the
Navy, or ARA), security (the Coast Guard, or PNA), port and waterways
maintenance (SSPyVN) and fisheries research (INIDEP).
When analyzing the reltionship between the above institutions and the
Argentine shipbuilding industry, it is found that:
- The PNA and the INIDEP have avoided, in all possible ways, providing
work for Argentines, always seeking to import, in ways usually contrary
to the national interest.

- The Navy was itself an important initial driver of the shipbuilding

industry, but it has long forsaken that fundamental role, which is part of
the maritime interests that it must defend. For the last 38 years, the Navy
has failed to buy any significant ships in the country, and has fallen to
the worst degree of fleet obsolescence in the region (over 40 years old).
Only 21 percent of the PNA and ARA fleet was locally built, 50 percent was
imported second-hand and, in 2016, there was a multimillion-dollar
negotiation to import a fleet of ships that could be built locally in a more
convenient way.
THE ¨SHIPYARD¨ STATE

Internationally, state-owned shipyards peaked from the 1950s to the early

1970s (ARS, 1953; Tandanor, 1971), on account of the political and
economic views of the times.
Towards the close of the century, those massive shipyards began to reduce
their size or to become privately owned, to fit the guidelines of the new world
economic policies.

The European post-communist nations resolved to cease underwriting the

significant losses of the state shipyards, which proved to be overstaffed,
unproductive and unable to compete.

These nations thus decided to reorient their scarce resources to other

priorities, such as health, education, and the reconstruction of a new
productive system.

A group of shipyard cases is analyzed, involving twelve countries and over

230,000 jobs, which after the reorganizing process downsized their staff
almost to a third and increased production, which reveals the large
unproductive overstaffing inherent in state-owned shipyards.

There is no single transition model. Sometimes, it involves active

participation by the workforce, either by purchasing part of the capital or by
changing the kind of relationship (from employee to supplier); in other cases,
there is a first stage of internal reorganization, followed by privatization
under better conditions; often, processes are undergone through trial-and-
error steps; external investors and national groups may become involved; in
some cases, the option is for concessions, while in others it’s for plain
business closure, with lay-offs and the sale of assets.

A vital role has been played by relevant social programs aimed at mitigating
the negative effect of lay-offs over the short term. This is a delicate process,
and the government must stand alongside those who lose their job, so that
they may find truly productive work as soon as possible. Social programs are
never the final solution, but they are an essential temporary palliative.
The Australian Maritime Complex (AMC) is an interesting successful
modern model.

In addition to China, today most countries maintaining state shipyards assign

them primarily to military projects, almost the last stronghold of their
(arguable) strategic reason.

That does not apply to the largest industrial defense machine, which is the
US, which entrusts private shipyards with the building of military ships. Nor
is it any longer the case of Germany, the UK, Israel, Portugal, or the former
Soviet bloc.
Noteworthy is the case of India, whose significant military contracts render
their state shipyards appealing to private investors on the stock market.

LatAm’s State-owned Shipyards

In the case of Latin American countries on the Pacific, where private
construction shipyards are a minority, special situations arise. Their navies
actively control the governmental shipyards, which also are highly dominant
in their shipbuilding industry.
They stay profitable, avoiding overstaffing and unnecessary expenses, and
they are awarded naval contracts at fairly competitive values, generating
employment, tax revenue and saving foreign reserves. Political and military
powers are in genuine tune with the state shipyards and trust in them. Almost
the opposite has been happening for some decades in Argentina.

A ¨Social Value – Economic Result¨ matrix yields, on one hand, a successful

group of state shipyards which generate real social value without economic
loss-making, and on the other, a cluster of national state shipyards which
have shifted from a strategic position of Social Value generation with low
losses to the worst quadrant, with a very arguable value contribution and high
structural economic losses.

When comparing the performance of Argentine state shipyards with similar

ones throughout the region, it is found that in Argentina overstaffing is
significant, a very high percentage in administrative tasks, with lack of labor
flexibility and a very low production level. Thus, productivity rates
(Employment/Dollar MM) are much worse than those in neighboring
countries, and structural losses have remained unresolved for years.
This is partly due to a very poor industrial state policy in general, in this case
further worsened by low confidence of the government in its own shipyards –
a state from which the governmental yards expect to receive contracts,
collateral and financing.
And this constant situation has existed in Argentina for decades, regardless of
the political colour of government in office .
NAVAL CASES

A number of cases are examined, where sectorial state policies have doomed
the Argentine shipbuilding industry to an undeserved regression.
Each case provides significant statistical data, context information and
estimations of its impact as regards loss of jobs, tax revenue and foreign
reserves.
The Navy (ARA) Case

Only in the brief 1970-1982 period were a few ships contracted in Argentina,
but 70 percent of the military fleet was imported. Moreover, 75 percent of
these imports were second-hand vessels averaging over 17 years of age, and
in the last two decades, this mean age of imported ships have exceeded 30
years. While the world’s navies are the primary promoters of national
shipyards, in the case of Argentina this hasn’t been the case at all for a long
time.
It’s been almost forty years since a military ship has been contracted in the
country, even though it had a fit and competitive industry.
Regional navies have done exactly the opposite, generating large profits for
their countries.
The Coast Guard (PNA) Case

Some countries are uncertain whether whether or not they can build military
ships, but few fail to supply their own Coast Guards, with much lower
requirements than warships. This is why these vessels are nearly always built
by local shipyards. But this is not the case of Argentina.
PNA has never contracted a medium-sized new ship. Instead, it imported
plenty of them, especially new ships from the Netherlands, Germany and
Spain. From 1978 to 1982, PNA imported over 36 units, 100 percent of
which could have been built in Argentina, and it’s still doing the same today.
The Waterway Case

In the 1990s began a huge development of the river push transportation

system, requiring a large number of barges and towboats that Argentine
shipyards were more than able to build at competitive values. But a
governmental policy prevented this, instead prompting the tax-free import of
thousands of second-hand barges and towboats from the Mississippi. This
revitalized the US shipyards, for the system found a marginal – scrap- market
(Argentina) to which to send ships that were too old to be safe and
competitive.
During the last twenty-five years, Parana Paraguay Waterway fleet increased
enourmously as the following graphs show (in DWT Total , DWT/u for grain
and tank barges and HP Total, HP/u)
Due to bad policies combined with corruption, Argentina has only managed
to obtain 10 percent of this ¨brown water¨ market valued at 3,500 MM
dollars.
Its industrial capacity and competitiveness would have enabled access to over
70 percent, but despite all efforts shipyards can never build second-hand
ships.
The Fishing Case

As of the 1970s, Argentina used the wealth of the national fisheries as a

bargaining chip to negotiate other priorities (financing, foreign policy, and
more), favoring foreign ships with fishing permits, to the detriment of the
fishing vessels built in the country, for which the catch quotas “were no
longer sufficient.”
Of the 185,000 m3 hold capacity of the fishing fleet (485 ships), 85 percent
was imported, and 91 percent were old ships whose mean age exceeded 36
years. In twenty-five years, this state policy merely enabled Argentina to get
a 13 percent share of a fishing-ship market of 1,700 MM dollars, despite its
capacity to take all of it. By 2017, the importation of fishing ships is still
being enforced under the policies applied by the Argentine Fishing Under-
Secretariat.
The INIDEP Case

Funded by the IDB, Argentina’s National Fisheries Research and

Development Institute (INIDEP, in Spanish) offered two tenders for the
purchase of fishery research vessels - between late 2015 and 2016 – ideal
type of ships for the national industry.
A shipyard in Vigo, denounced for corruption in Panama, surprisingly was
the only bidder in one case, and the winner of both. The tender was accused
of being oriented from the outset towards this Spanish shipyard. To this end,
it was hired an international expert who startlingly determined that Argentina
had to be excluded from the tender. As it turned out, the consulting firm of
this “expert” happens to be the neighbor of the shipyard winning both bids,
and was awarded with the construction supervision contract, worth millions,
of these vessels. Additionally, it had acted similarly in a case in Mexico.
The ENARSA Case

To halt the corrupt system formerly in force, in 2016 the Ministries of

Transport and Energy put out a tender for the tugboat service of the LNG
vessels for the state-owned ENARSA energy company. But the successful
bidder was a group with no available vessels so that it partnered with the
world’s largest tug company, Svitzer, which itself had no ships available in
the country, as the bid would have required. Finally, the government
approved the import of twelve second-hand tugboats, generating a perfect
storm, for all sectors denounced multiple irregularities and the flagrant
inconvenience for the country. National shipyards build these boats at
international prices, and Svitzer is used to building new ships for new
projects such as this one.
The River Patrol Boats Case

In January 2017, it was announced that the Ministry of Security contracted in

Israel, for 49 MM dollars, four gunships to use in river patrolling. This was
done directly and secretly, failing to consider much better offers from the
national industry. The sectors concerned charged that Argentina was paying
twice as much as Nigeria for the same vessels from the same yard in Israel;
that the number of boats were insufficient to cover the huge area; that they
were designed for the sea rather than for river use (and therefore, the coasts
would be damaged by their large wake); and that their excessive armament
posed a great peril to coastline populations. More and better river patrol
boats, designed and built in Argentina, could have been bought with the same
investment, generating jobs and local tax revenue, while saving foreign
currency, importing only the required parts and pieces of equipment.
The OPV Case

For more than twenty years, the Argentine Navy has intended to purchase an
Offshore Patrol Vessel (OPV) fleet for maritime patrolling and to fight
against massive illegal fishing.
In 2016, the Navy moved to directly purchase four ships from DCNS, a
French state owned shipyard, denying the Argentine shipbuilding industry
any chance to compete. The foreign shipyard favored, a partner of
Odebrecht’s, is part of Brazil’s Lava Jato scandal, and has been charged in
several countries with the payment of undue commissions.
The whole process was so inconvenient that, in mid-2017, President Macri
ordered it canceled and put the matter to international public tender.
One the authors acted as consultant for President Macri team on this decision,
strongly recommending to avoid the import of the vessels and to reorient the
purchase to the local industry.
The report included a research that demonstrated that almost all (92%) OPVS
for latinamerican nations with shipbuilding capacity have been built locally.
In order to answer the argentine presidential question regarding the
competitiveness of the french offer of 110 MMusd/unit, the author researched
a large number of OPV orders for a 20 years period and found that the french
offer was very overpriced (70%)
GOVERNMENT POLICY IMPACT

Impact of sectorial policies on employment, tax collection and foreign

currency reserves is summarized in a table for each of the naval cases
presented: Fishing, Waterways, INIDEP, ENARSA, River Patrol Boats, and
OPVs.
In turn, this analysis is divided by accountability level between the “Menem
+ Kirchner” administrations, responsible for 22 of the 25 years of the 1991-
2015 period, and the Macri administration, since late 2015.
Because they are periods of different length, for comparative purposes, a
homogeneous parameter of “annual loss impact” value is also applied.
The table provides an itemized analysis of each of the researched parameters:
Employment, Tax Revenue and Foreign Reserves.
The colors represent the different naval cases, and the Green/Yellow show
subtotals for each adminstration.
The “Menem + Kirchner” Administrations

Fishing and the Waterways are the two markets pertaining to the national
shipbuilding industry that were worst affected by the negative sectorial
policies of the ¨Menem and Kirchner¨ administrations.
Even though the (previous) Alfonsín administration had already started to
increase the import of second-hand fishing ships, it was Menem who boosted
that policy to unsuspected levels, and both Kirchner administrations endorsed
its continuation.

The massive import of second-hand ships for the Waterways was one of the
most destructive masterpieces of Menem’s team, upheld virtually without
changes under the Kirchner administrations.
The above administrations left behind the following sectorial losses: 83,000
jobs, 800 MM dollars in tax collection, and 1,350 MM dollars in foreign
reserves, just due to the policies in Fishing and Waterways. These levels of
accumulated losses are specified in each case as information about
“irreversible historical damage.”
The 83,000 lost jobs cannot be recovered. This means that for 25 consecutive
years, 3,300 families were deprived of a proper job only to excessively
benefit a bunch of brokers, officials, and businessmen engaged in fishing and
river transportation.
This affected every Argentine, not just those involved in the shipyards,
because all lost resources could have been available to build hospitals,
schools, sewers and roads.
The Macri Administration

This administration inherited and, through these two initial years, has
continued the bad former policies regarding the role of the shipyards in
Fishing and the Waterways, undermining the credibility, in this industrial
sector, of the new government’s promise of “change” since the end of 2015.

What is worst about this new administration is the negative effect of its own
policies, meaning the massive negotiations of the “shipowner state” oriented,
most inconveniently, abroad.
If these policies are maintained, the losses attributed to this administration
would end up being of 24,000 jobs, 234 MM dollars in tax revenue, and 541
MM dollars in foreign reserves.
On average, if the Macri administration pursues this bad course, it might
result in 4,000 additional jobs lost annually, 39 MM dollars/year in
uncollected tax resources, and 90 MM dollars of foreign currency reserves
wasted each year.
This would be from 21 to 67 percent worse than in the appalling previous era.
But Macri still has time to change such harmful policies, different from the
“Menem+Kirchner” case which is beyond remedy.
Losses in the Macri Administration
Unfortunately, losses due to the INIDEP and Enarsa cases are no longer
recoverable. The evil is done, as is also the case with part of the losses
suffered in the Fishing and Waterway cases because of ships entering the
system during 2015-2016, since the continuation of the former policy
prevented them from being built by Argentine hands.
However, significant loss could still be avoided.
The simplest are related to the purchases for the Navy and Coast Guard, in
the OPV and River Patrol Boats cases. No doubt, these two cases must be
solved in local shipyards, involving foreign industrial marine groups to
provide any necessary imported equipment and technology, in exchange for
full financing.
The Fishing case is the next “easily avoided” loss. With simple incentive
measures via distinct fishing quotas for the ships built in the country, and
adequate financial schemes, this sector would swiftly turn to the local
industry.
Thirdly, there is the Waterways sector, slightly more complex, for it also
requires the involvement of the Ministry of Foreign Relations – because it
affects international river traffic. There is also the national merchant marine
and its competitiveness issues due to tax reasons and to the very high crewing
costs.
Losses due to Macri Administration bad policies are shown in next columns
graph, representanig Jobs, Taxes and Foreign Reserves lost.
FUTURE

In a spirit of realistic optimism, this section presents conceptual and concrete

proposals, developing scenarios and possible projected results on their basis
for the next twenty years, rounding out one century as the temporal scope of
the book.
A novel concept named CINAR 2.0 is developed and specifically proposed
for the largest naval industrial project in national history, about to be
launched: “OPV @ CINAR2.0”.
In “Netherlands, March, 2017”, is presented a sectorial accord between
Argentina and the Holland shipbuilding industry, and a revealing dialogue
between one of the authors, signatory to the binational agreement, and
President Macri on his visit to the port of Rotterdam.
Finally, the chapter “2036 Projection” develops the defined scenarios.
Matters to be solved
Demand, Financing, and Role of the State
Demand from the Argentine shipyards has been blocked for years due to the
excessively generous terms offered for the import of second-hand vessels,
thus rendering fair competition impossible, because yards cannot build
second-hand ships.
This is particularly serious in the case of the fishing, port activities, and river
transportation markets which, in the rest of the world, are normally supplied
by the shipyards of the country concerned.
Normalizing the situation in the fishing and ports naval industrial activity is
very simple and has a significant immediate impact; doing so with river
transportation is only slightly more complex.
The export markets also pose a great opportunity to recover the country’s
past presence in them, and the volume of governmental demand may
immediately become very substantial if it is reoriented towards the national
industry, as it should.

Marine Financing for Argentina’s commercial shipbuilding is one of the

world’s simplest cases to solve, because it mainly refers to standard vessels
of relatively low unit value.
The ship mortgage instrument, leasing, collateral systems, and the
participation of overseas supplier groups are highly helpful elements which
may combine with the essential governmental involvement.
Upon solving the irregular situation of the import of second-hand vessels,
financing becomes the primary instrument of industrial recovery.
For defense, coasy guard, research and dredging use, the solution is also
simple, by means of the Multilateral Credit Agencies (IDB, WB and others),
Country to Country loans, or the financing schemes of countries supplying
imported equipment required to build the vessels.

The Role of the State, in turn, has three distinct aspects:

The “Regulator State” still has to write proper legislative rules for the
development of the shipbuilding industry and the merchant marine. The new
laws (2017) are very when not negative. Still, through its role as
administrator, the state may cause a genuine shift towards positive state
policies.
The “Shipowning State,” although lessened from what it used to be up to the
1980s, has a great potential to generate work in the Argentine industry.
The central administration must instruct the Navy, Coast Guard, the INIDEP
and SSPyVN (Ports) that they must exhaust every participative instance of
the national industry before considering imports, which are far less
convenient for the country; this is particularly important today, when there
are plans to improve the state fleets – which have reached alarming
obsolescence levels.
The “Shipyard State” must reconsider its main capacities so that these no
longer create deficits (200 MM dollars annually) and add genuine social
value.
The most complicated case is that of the Río Santiago shipyard, due to the
heavy structural deficit caused by its numerous staff members not related to
production.
Tandanor should easily attain financial balance if it focuses on ship repair, for
which it has top competitive advantages.
The Storni (formerly Domecq Garcia) shipyard, adjacent to Tandanor, has the
most modern and spectacular facilities for ship construction, but with an
extremely low exploitation level. Its reorientation may be one of the
cornerstones to buttress national industrial offerings under a modern concept
of “maritime cluster” combining public and private strengths, as in the
Australian Maritime Complex (AMC) case.
CINAR 2.0

This is a new version of the Argentine Naval and Industrial Complex, which
intends to redefine it as “second-tier shipyard” in order to provide it with a
new “operational system” based on a steady and sound complementary
relationship with private activity. Significant structural changes are proposed,
with positive impact on its profitability and the potential to turn it into a
driver of development for the local shipbuilding industry.
Created in 2010, CINAR combines two key entities (Tandanor and Storni).
When comparing their strength and weaknesses with those of private industry
clear opportunities for a complementary relationship are found.

It is necessary to expose and highlight the significance of certain key aspects,

such as Governance, Joint Ventures (UTE, in Spanish), and Importing
Packages + Local Financing Schemes (PIFLO, in Spanish).

Governance: The proposal is that CINAR, despite being part of the Ministry
of Defense, also become functionally related to the Ministry of Production,
which has the closest affinity with industrial development matters, productive
investments, project financing and export promotion of capital goods.

Joint Venture Systems: In the quest for complementarity, a joint venture

between CINAR and private shipyards is proposed. Taking one example of
the financial system, the idea is that CINAR become a “second-tier
shipyard,” on a “project basis” association with private shipyards, which
must be the primary effective managing parties of the operations, hiring staff
and running the entrepreneurial risk.
CINAR would contribute the use of partial facilities during the agreed term,
as well as providing support in handlings with governmental state agencies.
Its staffing must not increase, and could be reoriented to infrastructure
improvement, maintenance or operational tasks, or to administrative support
for joint ventures, or to specific productive tasks required by the ventures.
Eventually, the joint venture may also admit the involvement of other
national or foreign groups.

PIFLO – Imported Packages + Financing: This system is ideal for large

projects, where equipment imports are a substantial component, as has been
the case in many past private shipbuilding projects. In March 2017, an
international agreement was signed in the Netherlands in this respect.

As an example, three joint venture scenarios are brought up for consid-

eration: U1 is made up of “CINAR + Shipyard 1 + Foreign Consortium,” in
the PIFLO scheme for a sale, V1, of ships to the government; U2 is made up
of “CINAR + Shipyard 2,” and sale V2 would be an export; U3 is made up
of “CINAR + Shipyard 3”, and sale V3 is to a national private ship-owner.
The state plays itself a significant role in super-vising CINAR, as well as in
causing the following actions : controls over ship imports (P1), promotion
schemes for domestic private demand (P2) and the Buy National system (P3),
PIFLO systems support (P4), and financing and export systems (P5).
The trajectory of CINAR’s predecessors is shown in the Strategic Matrix,
having lost value from 1978 to the present. A value recovery path is projected
for the CINAR 2.0 model.
OPV @ CINAR 2.0

The international tender conditions for the Navy’s most significant project in
forty years are vital, for they define a state policy. The tender conditions will
be the most concrete expression of the development model for Defense
Production upheld by this government regarding the national shipbuilding
sector.
Does it make any difference for Argentina to buy ships abroad or to build
them here? Assuming, as is indeed the case, that quality, price, terms and
collateral are equivalent, no one should doubt that the national option is much
better. If so, why not propose this “preferred model” as cornerstone of the
tender conditions?

We might, for instance, put the matter out to international public bid,
stipulating as a condition that the ships be built in Argentina. Nobody
prevents us from doing so. There is no international treaty nor is there any
national law forcing us to refrain from doing what is best for us.

Fortunately, we have this alternative at hand, unlike other countries which are
relatively poor or underdeveloped in industrial terms and have no other
choice than to import the ships they need. Argentina must thoroughly
examine the pros and cons of both options, bearing in mind that other
countries similar to ours have recently done the same.

For the sake of comparison, considering all expenses, spare parts and
additional requirements raised by the Navy, the final value is assumed to be
of 400 MM dollars for all four ships; in the national building alternative, the
local content is 46 percent, with a 30 percent total labor incidence and a mean
labor hour value of 15 dollars (2017).

The national alternative generates 4,000 jobs over four years. Besides, there
is an additional tax revenue of 55 MM dollars, and foreign currency savings
of around 184 MM dollars.

Considering the impact on tax revenue, it might be concluded that a 16

percent higher value of the national alternative would mean economic
equivalence.

In fact, this percentage will be much higher still, because the chart does not
consider the positive effect of employment generation, foreign currency
savings and general technological development resulting from the fact that a
whole industrial sector highly capable of revitalizing the economy rises again
A system is proposed based on CINAR 2.0 so that building OPVs
domestically, in addition to being a success in itself, may lay the foundations
for a replicable and sustainable model for the future development of the
Argentine shipbuilding industry.
THE NETHERLANDS, MARCH, 2017

A success case is presented, in which a business organization reaches an

international agreement providing national private and public shipyards and
shipowners with a device with high development potential.
It is the Agreement between Royal IHC of the Netherlands and FINA for the
former to provide 100% of the financing for projects to be fully executed in
Argentine shipyards, using imported technologies and equipment (with no
Argentine production) provided by IHC.
A typical win-win situation, in which each one provides “its” share without
detriment to the other’s development capacities – instead enhancing them
even more.

The Memorandum of Understanding (MOU) was signed within the

framework of the Presidential Mission to the Netherlands, after which a small
group of Dutch and Argentine businessmen cruised Rotterdam harbor with
President Macri and their Majesties the King and Queen of the Netherlands.
During the visit, the signers of the Agreements, including one of the book’s
authors, held a meeting with the president Macri to acquaint him with their
details and scopes.
During the presentation, the president was much surprised by the exis-tence
of a non-subsidized competitive private ship-building industry in Argentina,
with which top-rank foreign ship-yards wished to associate by financing
100% of the ships to be fully built in Argentina.

They only asked for the removal of the market barriers raised by the state’s
unusual preference (against Argentine labor) for ship imports – in particular,
of second-hand ships.

“Therefore,” - said Macri- “you could guarantee the domestic construction of

the Offshore Patrol Vessels (OPVs) for the Navy under international
conditions, supported by foreign investment?” And, looking at the Dutch
entrepreneurs, he added, “Are you willing to partner with private Argentine
yards, providing the required technology and full financing?”

Upon receiving the enthusiastic, unanimous confirmation from the Dutch

delegation, the president undertook to consider this new scenario, and
requested investment proposals which would also help use the idle capacities
of state shipyards.

A few months later, the direct import form France of four OPVs for the Navy
was suspended, the presidential decision being taken to put the matter out to
international tender.
2036 PROJECTION

In this chapter, the authors discuss a future scenario for the Argentine
shipbuilding industry, feasible only insofar as the already discussed
institutional hindrances are removed.
Before the projections it is important to realize that the national shipbuilding
industry would become very strong again with a minimal share of the naval
demand worldmap area.
Naval Demand WordMap

The world’s current shipping market is mapped, with unit values of up to

3,000 MM dollars for highly sophisticated warships and with lengths up to
400 m for Very Large Crude Carriers (VLCC).
The dotted black line (240 m and 240 MM dollars) shows the ships that
Argentine shipbuilding industry has already delivered in the past, while the
dotted red line – with coordinates of 130 m and 130 MM dollars – marks out
the current national most competitive area.

The total ship market area covered is of 1,200,000 m-MM dollars, and the
(red) local target area (130 m x 130 MM dollars) amounts barely to 17,000
m-MM dollars, representing only 1.4 percent of the total.

If Argentina should meet the local needs of this minimum percentage, we

would have a flourishing national shipbuilding industry and a modern fleet
that would render us more efficient in fishing, transportation, ports, defense,
security, dredging, etc.
On expanding this red area it becomes even clearer that the type of vessels to
be built by Argentine yards are the simplest ones and inferior to those built in
the past. A green dotted arch splits the waters between private and
government projects.
ECONOMIC PROJECTION

To make this analysis, it is considered the local market demand as whole and
the five market sorces separately.
In each case, the volume of global demand is projected up to the year 2036,
allocating it to the different periods of this total timespan.

It follows the estimate of impact in Tax Revenue, Foreign Exchange and

Employment, comparing History and Projection.

At the end of the chapter there is a consideration with respect to the Marine
Financial Scheme the Government chould put in place to make this happen.
Tax Revenue

The current local content (63%) is projected to increase to 82% on account of

higher demand for local ship parts suppliers. By applying a mean tax rate of
30 percent on the net value of national production, this results in a total tax
collection of 1,715 MM dollars, meaning a mean resource generation of 86
MM dollars annually, which on average is 22 percent of total produced value.
Foreign Exchange

Because of the replacement of ship imports by others to be built nationally,

and of higher exports, a trade surplus would be reached by 2036.
Employment

For the employment projection, the applied parameters are those previously
analyzed of 14.5 direct production jobs for each million dollars in sales; 2.8
times the direct employment figure is taken to obtain the total employment in
shipyards; and 2.5 is taken as multiplier to consider, also, concurring indus-
tries.
Thus, in 2036, total shipbuilding industry employment would reach the level
of 60,000 jobs, similar to its historical maximum in 1978.
In this case, unlike forty years ago, this level would be attained with low
dependence on government, without subsidy schemes, and with a higher
work distribution among middle-sized terminals, because it would be attained
without taking into account the large shipyards of the past.
High employment growth indexes are the product of today’s very low activity
level, and are modest when compared with those recently attained in Brazil.
In that case, in only fourteen years, employment has leaped from 2,000 to
80,000 jobs in shipyards, with a growth factor of forty times, while in
Argentina, the projected growth factor is set at eight times, that is, five times
lower.
Marine Financing

A ship financing scheme is proposed for the private sector that encourages
the quick generation of contracts, since the paying-back period starts at
twenty years and is reduced to ten years in 2027, while the coverage
percentage diminishes from 90 to 60 percent in the same time-span, with
collateral and interest suitable to a promotional system. The annual limit of
75MM dollars for 15 years is considered enough for the first period but larger
funding would be required in the future.
Final Analysis

In general, an initial period is projected with very significant growth,

followed by a period of moderate but steady development.
The main driver of the fast initial recovery are state purchases (primarily,
the OPVs), followed by the fishing market and that of ships for port services.
In the second phase, state purchases start to lose prevalence, because the
state’s most urgent initial needs have already been met, thus ending up at 19
percent.
This second period should also witness the positive effects of the increase in
the river-traffic market demand, expected to be the slowest to react.
Penetrating the export market should also start to yield increasing results.
The combination of both effects is projected to compensate by far for the
reduction in the governmental market.
AFTERWORD
A CENTURY IN PERSPECTIVE

In conclusion, the proposal is to see the century as a whole, the eighty years
of history and the twenty years projected ahead, from the point of view of
produced Value and generated Employment. Because, at the end of the day, it
all comes to this: adding value that generates decent work, and viceversa.

Added to the examined historical stages (Preparation, Growth, Collapse

and Underdevelopment), two future stages are proposed: Recovery and
Consolidation. This is a way of distinguishing the first coming years, possibly
marked by significant development, from the years further into the future,
when industry will have already reached a more stable position.

In the graphic that shows the Value (area) as a whole, the projection might
seem too optimistic compared even to the best years of the historical period.
But the Consolidation period reaches merely 0.07 percent of the GDP versus
the historical maximum of 0.28 percent, fourfold higher.

Furthermore, for instance, the projected growth indexes are five times lower
than the ones yielded by the Brazilian shipyards over the last decade.
Employment (measured along the right vertical axis) might reach the same
historical maximum as 1978 (60,000 jobs).
NEW OPPORTUNITIES

Considering that shipyards will have new business opportunities, it is

expected that foreign groups will become interested, contributing technology
and financing, which would result in interesting associations with current
domestic shipyards and in new productive investments at existing or new
facilities, either public or private.

New technologies will have an impact on construction designs and processes.

But in order to keep pace, Argentina must invest in ongoing education and
technological updating.

The environmental aspects shall have an increasing impact, generating ship

replacements and transformation opportunities (e.g., double hulls, clean
propulsion) to adjust them to the new requirements.

New and existing inland waterways and port systems shall require increasing
efficiency, and local engineering and industry should provide it.

Rivers and seas will be increasingly valuable to exploit their fishing and
mineral resources, or for clean power, such as tidal or wind power – like the
huge offshore windmill fields that already exist in the northern seas. This
poses new demands to our marine industry and confers greater significance
on the recent extension of the Argentine Sea, which shall require more ocean
patrol vessels.

In the (near) future, the demand for ships and Antarctic logistic services will
be increasingly important.
And Argentina must seize the opportunity provided by its geographic
position. The industrial experience gained with the refurbishing of the
icebreaker ARA Almirante Irízar and, soon, with the polar ship construction,
should be a valid background if we are to develop in that specialty niche: the
Polar Shipbuilding industry.

But the best opportunities will arrive with the most expected change which is
the one involving the government’s sectorial policies.
These should help us take that share of the workload and the wealth that
belongs to us, as defined a century ago by Almirante Storni at the “Argentine
Maritime Interests” conferences.
AUTHOR´S CLOSING WORDS

With the same enthusiasm with which we started out, we arrive today, after
almost two years of research, debating, memories, analysis and, above all,
hard work, at the close of this book which is now in your hands.

We were able to write it with certainty and in clear conscience because we

weren’t motivated by any corporative, business, union, political, or any other
kind of interest, those being spaces which we know well through having
shared with all of them this “naval century” that we add up to.

We apologize in advance for the errors that may have slipped in. We
welcome honest voices in dissidence with regard to any of the subjects, and
encourage them to let us know their opinions. We hope that these pages will
trigger debates that will take its topic to center stage. Only thus, by bringing
it into the light, will an enhancing way out for it be found.
This period of writing coincided with the start of a new national aministration
that arrived with promises of change but, up to now, far from noticing better
directions in this sector, what is perceived is the continuation of the bad
inherited policies and the generation of new very serious situations.
Nevertheless, we trust that the mistakes will gradually be corrected to the
extent that the concepts expressed in these pages penetrate deeply among our
political leaders.

Let this be our contribution to building a greater and more inclusive nation. A
contribution made from the small space which fell to our lot and which we
have, together, passionately, attempted to turn into a giant.

Thank you very much.

Raúl R. Podetti
Raúl E. Podetti
Buenos Aires, december 30, 2017
ABOUT THIS FIRST EDITION

This first edition closed on December 30, 2017, and at that time many issues
of great importance to the book’s subject matter remained pending.

Among them, mention may be made of the following:

The recent adoption of the laws on the Merchant Marine and Shipbuilding
Industry, and the subsequent immediate veto of the key sections of the second
of these, generated a reaction among the affected sectors to ask that the
presidency review those decisions and to search for palliatives to the new
damage done. Developments are expected in 2018.

The tragic disappearance of the submarine ARA San Juan checked the initial
momentum with regard to the tender for the construction of the OPVs, which
was again providing hope of participation to Argentine shipbuilding
companies, excluded in the negotiation for an outright purchase from France.
It is hoped that the encouraging path, as stated by the Defense Minister to the
author in October 2017, will be taken up again soon.

The superlative high-value fishing seasons, which has already been

experienced for a couple of years on the Argentine Sea, has generated a high
demand for fishing vessels which are ideal for domestic construction.
The government needs to alter its current policy in order to benefit Argentine
work as against the importation of second-hand vessels, by means of
preferential fishing permits for locally-built ships and of credit support.
NOTICES RECEIVED

Between November and December 2017, the authors received a series of

notices in response to the drafts of this first edition, caused to circulate
among outstanding leaders of the maritime industry sector, covering a broad
spectrum of opinion. Summarized below are main concepts received:

Real dimension of the activity.

A great challenge in which the authors exhibit their vision as main actors in
the history and the future of the maritime industry.
Juan Antonio Torresin
President – Argentine Naval Industry Federation - FINA

Clear vision of our sector.

A history of commitment by the Podettis, alongside whom we have defended
the sector, establishing common positions with regard to political power,
sharing frustrations and pain in the face of incomprehension.
An extremely valuable contribution to creating awareness regarding an
industry that should be the pride of the entire people of Argentina.
Juan Speroni
 Secretary-General – Argentine Union of Shipbuilding Workers - SAON

Compulsory reading. A welcome to this magnificent work!

An essential instrument for understanding the incomprehensible
governmental policies that condemn the maritime industry to marginality.
It abounds in very valuable information, and presents it in a very intelligent
manner, which makes its reading fruitful as well as entertaining.
The Podettis offer us the proposal of an interesting future, with sustained
work and possibilities for consolidation.
Carlos M. Brañas
President – Argentine Naval Engineering Association – AAIN

Basis for reflection regarding the future of this industry.

The cause-and-effect relationships of the policies applied for decades are
clearly shown. The book helps to understand how the development of the
maritime industry is strongly linked to the adding of value and the generation
of quality employment.
The authors’ proposals in the last chapter would constitute an excellent basis
for debate on the future of this industry.
José Ignacio de Mendiguren
 President – Committee on Industry – National Chamber of Representatives

This sector’s opportunity to learn!

This book, simply and entertainingly written, serves to clearly understand
what happened to a sector which around the world operates with strong
governmental/private articulation.
The authors, to whose passion for the maritime industry I stand witness,
propose which is the possible and competitive shipbuilding industry that
Argentina might have.
Martín Berardi
Executive Vice-President – Ternium
ANNEX

ARGENTINE SHIP CONSTRUCTIONS LIST

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IMAGES´ CREDITS
Carte du Paraguay, du Chili, du Detroit de Magellan Autor: L'Isle, Guillaume de Publisher:
Covens, Jean & Corneille Mortier Date: 17-22
Rastreador Clase Parker, Histarmar
Fragata ARA Lbertad- Dibujo - Simon Kopper
Astillero Rio Santiago, Kulichevsky
ARA Bahía Paraiso, lazer_one, shipbucket
ARA Canal Beagle, LaForest, shipbucket
ARA Almirante Irizar, lazer_one, shipbucket
Jack up en construccion, gentileza Astilelro Corrientes
Canal de Experiencias de Arquitectura Naval - Facultad de Ingeniería Universidad de Buenos Aires
Fragata ARA Libertad, Zeglarz
Smit Anambas, Pablo Balloni, Histarmar
Draga MOP 256 , Martin Erikson, Histarmar
Remolcador de tiro, Histarmar
Marlinda, Raul Amaro, histarmar/ shipnostalgia
Petrolero ing Silveyra, Gonzalo Alvarez Vincent, Histarmar
ARA Santisima Trinidad, Histarmar/ Armada Argentina
Tandanor - Storni, Claudio Elias,
ARA San Juan, Juan Kulichevsky
Astillero Rio Santiago, Albasmalko
Astillero Rio Santiago, Histarmar
Astillero Rio Santiago, Histarmar
Astillero Rio Santiago, Histarmar
Isla Gran Malvina, Histarmar
Buque Mihanovich, Histramar
ARA Puerto Deseado, Martin Otero
Frigorífico Glaciar Viedma, Histramar / Shipspotting
Petrolero Eva Peron, Juan Kulichevsky
Petrolero ing Huergo, flotaypf.com
SBM01, Titus Eapen
Phil Harris, Frankytwofingers
Les Eclaireurs Lighthouse, Ricardo Martins
Botadura al Mar de embarcación Cabo Odger, Gob Chile ARA Uruguay, Jose María Perez Nuñez
ARA Sarmiento, Claudio Elias
ARA Espora, Carlos Mey, Histarmar
GC68, Histarmar/PNA
Barco en seco, Tandanor, Wikimedia
French Navy OPV, Firestorm250, WikiCommons, 18-5-2013
4Fragata ARA Libertad. Autor Fotógrafo: Eduardo Grünberg
Dique del SIMA, Elelch
ARPS, SPI Y TPA : Fernando Sanchez Checa
Congreso, Hidrovía, Pesca, Global, Casa Rosada, Enarsa, Patrulleras Fluviales, Inidep. OPV :
SHUTTERSTOCK

DRAWINGS :
11 ARA Libertad, Simmon Koppers - P-20 Murature, Laforest - 18 y 34 Argentina Herules Class,
Mconnards, Mihoshik, - 20 B-3 Canal Beagle, Laforest - 21 Espora Class, Mconnards - 22 R-2
Querandi Class, Laforest - 23 B-1 ARA Bahía Paraiso, Lazer_one - 31 Q-4 ARA General San
Martin, Laforest - 35 Q-5 Almirante Irizar, Lazer_one - 39 P-31 ARA Drummond, Mconnards –
Laforest - 42 GC 24 Doctor Manuel Amntilla, Laforest
 When, on its ambassadorial mission, ARA
“Libertad” visits the world and arouses the
same admiration as its predecessor – ARA
“Sarmiento” – it will be able to add, to those
reasons, the fact that it was designed and built
by Argentines

Capitán Enrique Carranza

President of AFNE
Launching Ceremony
School Tall Ship ARA ¨Libertad¨
(1963)
foto : Eduardo Grümberg