A Revival for Brazilian Shipyards

When the Verolme shipyard, south of Rio de Janeiro in 1997, closed its doors in 1997, the last lights went out on Brazil's once dominant shipbuilding industry. Years of economic crises and mismanagement had taken their toll on the government-subsidized shipyards, throwing about 40,000 people out of work. Now, little by little, the industry is coming back to life, thanks to a joint venture between Keppel Fels Ltd, a naval construction group from Singapore, and the Pem Setal Group of Brazil, which obtained a 60-year lease on the Verolme shipyard last year.

Now the venture, called Fels Setal, has hit its stride, winning a $75 million contract to convert an aging tanker into an offshore production center. The industry hopes the tanker's arrival at the shipyard sometime in February will mark the revival of Brazilian shipbuilding.The renaissance owes its start to changes in the local oil industry. In the last 10 years, Petrobras, Brazil's state-owned oil company, has begun a shift from shallow offshore fields into deeper water. Discoveries off the coast, especially in the Campos Basin, have led the company to build new drilling platforms, oil-production ships and tankers.

Industry experts say Brazil has the capacity to capture 5 percent of the global market, but the traditional shipbuilding powerhouses, Japan, South Korea and more recently China, remain formidable rivals.