Challenges

Inflation added $2.5 m to yards’ costs

Lack of infrastructure

Lack of Yard managers

Increasing labor cost

Higher interest rates

No subsidies

Delayed supply of materials (3 - 5 months; 1 m RMB loss)

Lower Yards’ productivity (improving)

Building prices fell by max. 40% (1980-85); rose in 1988

Exchange rate: 1$ = 8 RMB; yards lost $12.5 m due to devaluation (1986)

Taxes: +$1.5 m (1988)

Power supply: 1/2 of what required; loss of 5 m RMB p.a.

Delayed main engines delivery

Stock control: required; reduction of material wastage required

Ship equipment: covering up to ½ of ship’s cost had to be reduced

Delayed delivery of ship equipment-imported from Japan & had to be D.O.T. approved

Longer construction time: Japan & S Korea delivered ships from 5 to 6 months earlier than China