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Shipbuilders of Saaremaa keep Estonian maritime industry in full sail

Even though only a third of Estonian shipbuilding companies operate in Saaremaa, that third also generates 80% of the sector’s turnover, thereby making it one of the fastest growing industries on the island.

Both shipbuilders and other companies linked with the maritime industry can test out their products in the towing tank of the Small Craft Competence Centre. The towing tank also has a wave generator that can generate waves up to 3 meters high.

The Annual Economic Survey of 2018 compiled by the Saaremaa Development Centre reveals that manufacturers of metal products and transport equipment, especially shipbuilding enterprises, are those leading the economic sector in Saare County. Shipbuilding is the main activity for 12 companies in Saaremaa and at least 10 more companies are involved in servicing shipbuilding companies.

The largest shipbuilding enterprise in the county has really taken off in the last three years as AS Baltic Workboats has increased its turnover from 27 million in 2016 to over 40 million in 2018. Like other shipbuilders in Saaremaa, the company, founded in 2000, is based entirely on Estonian capital and has grown to become one of the largest developers and manufacturers of aluminium workboats in the Baltic Sea region.

150 new jobs have been created

According to the company, the strong performance in 2018 resulted from a surge in production volumes. For example a 45-meter patrol vessel, which cost over 16 million euros, was built for the Estonian Police and Border Guard Board. Also built at the shipyard were, two more 16-meter Police and Border Guard Board patrol vessels, eleven 15-meter pilot boats that were sent to Denmark, two 24-meter patrol vessels that were sent to Romania and one 27-meter passenger vessel sent to Sweden.

The main clients of the company operating in Nasva, located 12 kilometres from Kuressaare, are primarily public authorities of European countries (incl. Estonia), such as border guard, police, customs, fish protection, pilotage and port services. The company has also started plan export to American and Asian markets. By the end of 2018, Baltic Workboats had built 178 work boats.

The largest manufacturer of recreational crafts in Saaremaa is AS Luksusjaht, which has been operating since 1995 and its annual turnover has been between 9 and 12 million euros during the last three years. Recreational crafts are also produced by OÜ Alunaut and OÜ Saare Yachts, albeit on a much smaller scale. Necessary components for shipbuilding are built by OÜ Kingli Grupp, OÜ Ionix Systems and OÜ Composite Plus.

In the past three years, 150 new jobs for highly qualified workforce have been created in the shipbuilding industry of Saaremaa.

According to the Saaremaa Development Center, more and more companies are finding their way into the shipbuilding industry – starting off by outsourcing to larger manufacturers and then moving on to exporting by themselves. In the past three years, 150 new jobs for highly qualified workforce in the shipbuilding industry have been created in Saaremaa. In recent years, the sector has always been among the top three of the county in terms of average wages, added value and export volumes.

Close cooperation with the Competence Centre

The Small Craft Competence Center (SCC) created in 2011 at the Centre for Blue Economy (formerly Kuressaare College) at the Tallinn University of Technology, which provides companies with recreational craft design, model testing and material laboratory services, is considered one of the foundations for the success of the shipbuilding sector in Saaremaa. Shipbuilding enterprises in Saaremaa and elsewhere receive other kinds of support from the centre as well.

According to Anni Hartikainen, Head of the Small Craft Competence Centre, the building, which was completed in 2014, has also been submitted to several architectural competitions due to its unique architecture. The Duck (Part) is a vessel created by students quite some time ago.

“As the university is also a member of the Association of Estonian Marine Industries, we have various joint projects where the Competence Centre has the role of a project manager,” said Anni Hartikainen (44), Head of the Competence Centre and a Member of the Board of the Association of Estonian Marine Industries. This involves, for example, attending trade fairs, as well as bringing foreign journalists who write about maritime and industrial issues to Estonia. The aforementioned is important first and foremost because 80% of the output of Estonian companies in the maritime industry is exported.

According to Hartikainen, shipbuilding companies in Saaremaa conduct close cooperation with them. Without the support and interest of Baltic Workboats, for example, the 60-meter towing tank in the centre would not have been created. SCC also cooperates closely with Alunaut, Saare Yachts and Kasse Paadid OÜ.

“The link between these [companies] lies in small and medium-sized vessels, production in small series and excellent quality,” added Hartikainen. Special projects, the initiators of which are looking for locations to implement their plans, often reach Estonia and Saaremaa. “The ratio of price and quality offered in Estonia is ideal for such projects,” explained the Head of SCC. Another benefit here is that local shipbuilding companies have the courage to undertake complex projects as well.

Although shipbuilding companies operating in Saaremaa are competitors in the labour market, they generally have different target markets. This enables companies to work together – sharing expertise, renting staff to one another, or supporting each other with materials, contacts and expertise, as needed.

Although only about a third of Estonian shipbuilding companies are located in Saaremaa, 80% of the sector’s turnover originates from there. “The biggest [shipbuilding companies] are in Saaremaa, which determines those power lines,” noted Hartikainen. Compared to Finland, shipbuilders in Estonia produce more sailboats, for example; while our northern neighbours focus more on motor boats. Icebreakers and cruise ships are also built in Finland.

Built at the Small Craft Competence Centre in Kuressaare in 2016, the 60-meter towing tank is planned to be extended by a few dozen meters. This way, services could also be provided to foreign shipbuilders.

The desire to reach foreign vessels

Although the shipbuilding sector is predominantly export-oriented, SCC currently mainly serves Estonian shipbuilders. “We do feel that it is time to look further abroad as well – it would create better opportunities for Estonia if we were better connected with the outside world,” said Hartikainen.

One obstacle we have today is the fact that although the towing tank was only recently completed taking into account the needs of local shipbuilders, it is still too small. Therefore, it is planned to extend it by 20 meters in the coming years. “Perhaps then we will be able to test the ships of the foreign clients, which we have so far had to cancel on,” explained the Head of the SCC.

Although shipbuilders sometimes perceive distance from Tallinn as a disadvantage when working on the island, Hartikainen finds Kuressaare to be the best place for the SCC. ”People may have doubts about the centre’s location and they might be curious why it could not have been in Tallinn; however, it is highly unlikely that we could maintain relations with our main target group if we were based in the capital,” she explained.

A large proportion of the 19 people working at the centre live in Saaremaa. Not all of them work full time, some teach at university while also working at the SCC. The Center also employs people from Sweden, Iran and Indonesia. “There is no school of hydrodynamics in Estonia, but we can now say that it is emerging,” explained Hartikainen.

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