"If you can't use it any longer, we'll break it up and use it." That's the destructive-constructive slogan of Taiwan's Cinderella industry of shipbreaking, which has risen from nothing to first place in the world since the mid-1960s. Ships from all over the world make their last Journey, under steam or in tow, to the southwest port of Kaohsiung, there to be swarmed over by the embalmers and undertakers of the maritime world.
Two hundred and twenty vessels with total displacement of 1.6 million tons were broken up last year. This was an increase of more than 100,000 tons over 1971 and nearly 500,000 tons over 1970. Skilled labor at low cost has enabled the shipbreakers of Taiwan to outbid those of Spain, the United States, Italy and Yugoslavia for old hulks, derelicts and vessels which although sound enough, were too expensive to maintain in high seas service.
Asian ship scrapping used to be centered in Japan and Hongkong. The move to Taiwan resulted from lower labor costs. Breakers think the industry will continue to grow at about 10 per cent annually for the next five years. After that labor costs may rise to a point where a less developed country will take over.
Taiwan's construction and machinery industries can use all of the scrap that the shipbreakers produce. About 70 per cent of construction iron and steel comes from the old ships. The machinery industry has been growing by leaps and bounds and is challenging Japan in the production of less sophisticated machines. Output of the iron and steel industry was 1.3 million tons in 1972. This will be doubled by 1976, when ·he US$320 million integrated steel mill at Kaohsiung begins operations.
As of early 1973, ships totaling some 400,000 tons were waiting to be scrapped. The government decided that they could not be turned into steel fast enough to fill all industrial requirements. The China Trade Development Corporation was authorized to buy 250,000 tons of steel abroad with proceeds from a low-interest loan.
Steel prices in Taiwan have soared in response to sharp international increases. The scrap iron price rose from US$42 to US$87 a ton from January of 1972 to January of 1973. In the same period, the Taiwan price of steel bars rose from US$109.15 to US$201 per ton. The cost of ships for scrapping went from US$62 to US$82 per lightweight ton in the same period.
Kaohsiung scrappers buy "dead" ships as well as live ones. The industry uses the term "dead" for those vessels which sank and were refloated and for burned-out hulks. Such ships cannot make the voyage under their own power and must be towed. The risk of losing a ship en route to its last destination is 2 per cent. This is covered by insurance. In the event of calamity, the buyer gets his money back.
Breaking starts at the top and proceeds to the bottom. Big pieces are trucked away for further cutting.(File photo)
Taiwan breakers do most of their buying through brokers stationed in London. These representatives provide essential information to prospective buyers, who are interested in price, tonnage, appurtenance, flag, owner, age and home port. Vessels for scrapping may be sold at auction or through negotiation of the price. The down payment is 10 per cent. A letter of credit for the balance is issued two or three weeks later.
Vessels headed for the scrap pile average about 20 years old. Tonnage runs from 5,000 to 20,000 with most under 10,000 tons. Warships are included as well as old merchantmen. To break up a 5,000-tonner takes from 25 to 30 days. Guns and communications equipment are removed from warships before they head for Kaohsiung. In 1971, a Russian-built destroyer was scrapped. She had been turned over to Indonesia as part of Soviet military aid in the Sukarno period. Canada sent a 20,000-ton aircraft carrier to Taiwan for breaking.
Import duty of 17 per cent of the purchase price must be paid by shipbreakers upon arrival of the vessels at Kaohsiung. Port authorities inspect the ships before berthing. Communications equipment is registered. Remaining fuel is pumped out. Customs officials check for smuggled goods.
Ships await their turn to go into one of the 24 breaking berths. Nineteen of these are private and five are public. Most ship scrappers rent land from the Kaohsiung Port Authority and build their own berths and facilities. Maximum land area allowed a breaker is 18,000 square feet with a 300-foot berth. Rent for the land is NT$7 (US$0.175) per month per square foot. Clay mixed with sand is spread on the approaches to the berth and steel plates are installed to support the weight of trucks and heavy equipment. Breakers have their own cranes. A 200-meter road leading to the shipbreaking yard was built by the breakers as a joint enterprise. Permanent structures have not been built because the Port Authority can evict breakers if berths are needed for cargo ships. Breakers describe themselves as nomads. Some are seeking other sites where their operations will have greater permanence. Kaohsiung is Taiwan's biggest port and cargo volume is growing fast. Cargo handled last year exceeded 24 million tons, compared with 19 million in 1971.
The Shipbreaking Association was established in 1971 to avoid cutthroat competition for old vessels. There were 65 members at the end of 1972. Members must scrap at least one ship every two years. Only 40 members engaged in breaking last year.
Fourteen breaking yards of 18,000 square feet each are located a short distance from the berths. The yards break up bigger chunks of the ship into scrap that the iron and steel industry can handle. Two contractors are usually involved in breaking up a ship. One handles dismantling at the berth and the other continues the breaking at a yard. Some contractors break up more than one ship at a time. One breaker had crews at work on five ships simultaneously.
Scrap provides iron and steel for Taiwan’s booming construction industry. Some ship machinery is salvaged.(File photo)
Except for blow torch and crane operators, all breakers are day laborers. Torch operators working on the ship get NT$180 (US$4.50) a day; their counterparts at the yard receive NT$140 (US$3.50) a day. A crane operator is paid NT$120,160 (US$3 to 4), a truck driver NT$100-140 (US$2.50 to 3.50) and a laborer NT$40-80 (US$1 to $2) per day. Labor turnover is high.
Torch operators cut the ship into pieces which can be lifted by crane and loaded onto trucks for transport to the breaking yard. Metal buyers take delivery from the yard. As many as 6,000 workers may be employed on the ships and at the yards.
A visit to the shipbreakers of Kaohsiung is an interesting experience. The drive from city to the breaking area takes about 30 minutes. The road runs through part of the container shipping harbor and so to the farthest section of the inner harbor area. Berths are enclosed by barbed wire. Each company hangs out its sign when it takes over a berth and starts dismantling a ship.
Gates face the road. Bicycles of the workers are sheltered under a shed. Piles of steel and iron plates and other metals are stacked along the fence. The only building is likely to be a hut for the night watchman.
Huge cranes make up the unique skyline of the shipbreaking berths. Two are required for a 4,000-ton ship, three for a 6,000-ton ship and four for an 8,000-ton ship. Workers cut the deck plates into pieces measuring from 12 to 15 square meters. Dismantling starts with removal of machinery, equipment and fittings. The torch is used to cut up the deck and hull. The superstructure is broken up at the same time. Work proceeds from the side next to the berth and moves across the ship and downward at the same time. This keeps the ship in balance. The stern is raised above water as pieces of the deck and hull are removed.
The ship is then divided into three equal parts by two lines drawn from the stern to the bow. Dismantling proceeds from the deck and surface down to the middle of the bulwarks. While the stern is above water, dismantling must be carefully coordinated to prevent the ship from breaking in half. Skilled workers know how to keep the balance. Working without blueprints, torch cutters carve out pieces of exactly the size specified by the contractor.
The hardest ships to scrap are reefers because of the extra equipment and networks of tubing. Danger abounds on ships of all types. Any remaining fuel may explode. Tanks are supposed to be pumped out and cleaned with steam. All possible precautions are taken but accidents still happen. In January, a spark caused an explosion in a fuel tank and several workers lost their lives. The Port Authority enforces safety regulations but workers are sometimes careless.
Ship scrappers sponsor feasts on the 2nd and 16th of each month. Rites are held and the blessings of the breakers' patron saint invited with incense, candles and other offerings. The dinners are morale boosters. Keeping experienced workers is not easy. The employers work on a ship-by-ship basis. When there is no ship to scrap, workers return to building construction jobs. Most breakers stay in the industry only about a year. The longest is three years. Thirty guards using two patrol boats guard against theft of scrap by night. Another team polices the area and sops up any leaking oil that could pollute the harbor. Guards and clean-up men are mostly retired members of the armed forces. They receive NT$3,000 (US$75) a month plus board and lodging. The Shipbreaking Association pays the cost.
Students work on the ships as apprentices for NT$40 (US$1) a day. The learning period is about three months. There is opportunity for a young man to learn how ship equipment is mounted. Scrappers dismantle motors, machinery and other equipment only as these are reached in the process of breaking. Some of these items are still usable and may be sold separately from the scrap. A number are exported.
Most of the steel mills using scrap from the broken ships are located in the Kaohsiung area. So the breaking berths are conveniently located. This may not last much longer, however, in view of the demand for Kaohsiung port expansion to handle cargo. Several new breaking localities have been considered. Small fishing ports would welcome the additional job opportunities. So far the obstacle of land cost has been insurmountable. As soon as rumors of a breaking industry set in, land adjacent to the harbor area soars in price. Inflation spurred by international monetary changes may further complicate cost and pricing problems of the Taiwan ship breakers. Their success depends on a supply of old ships at reasonable cost and the maintenance of low wage rates. Competition for hulks is becoming keener. Countries with steel industries want to keep the cast-offs of their merchant marine at home and augment the scrap heap.