Asia’s Largest Ship-Breaking Town Is Beached Like Never Before

Ramesh Prasad, an engine dismantler at Alang ship-breaking yard in the western Indian state of Gujarat was at work when the Indian government clamped the country in a sudden lockdown on March 24 to prevent the spread of COVID-19.

Next day, Prasad, 31, found himself without work. The 33 ships docked at Alang would remain partially dismantled or not at all as  ship-breakers faced the prospect of economic ruin.

Prasad was  among the few workers who would remain at Alang throughout the national lockdown even as others made desperate attempts to reach home. Prasad hails from the northern Indian city of Gorakhpur, around 1700 kms from Alang. 

“As the lockdown was announced, many workers were left without work and most of them wanted to return home. My family lives with me. This is why I was in two minds about returning,” Prasad told VICE News.

Alang is Asia’s largest ship-breaking yard which accounts for 35-40 percent of the global ships that are scrapped. Roughly 400 of the 1000 ships recycled every year across the globe come to this town. 

When Alang began to limp back to work, it found itself with several new ships to dismantle and a shortage of workforce.

The lockdown in the rest of the world  meant that ship-breaking contractors at Alang procured the ships cheaper, particularly car carriers. 

Alang opened up earlier than other ship-breaking sites and so ship owners decided to sell it to companies in India instead of keeping them at port as docking the ships costs money. 

“As a result, during June and July, Alang ship-breakers managed to get ships at a bargain,” Haresh Parmar, honorary secretary of the Ship Recycling Industries Association, told VICE News.

Compared to 22 ships bought during June-July in 2019, the number swelled to 32 for the same period this year. 

Ship-breakers at Alang buy ships from entities like GMS, world’s largest buyer of ships, rigs and offshore assets. They also buy it directly from shipping companies. Alang has over 200 ship-breaking companies. 

Once a ship is brought for dismantling, it is stripped of its machinery; value added materials like crockery, furniture, electrical wires are sold or reused in other ships.

The steel scraps from dismantled ships are melted and used in building new vessels or sold to other industries.

But even as ships arrived at Alang, workers did not. It worked in Prasad’s favour. When the plots opened for work, Prasad said he made Rs 700 to Rs 800 ($9.4 to $10.78) a day, compared to his usual wages, Rs 500 ($6.73) a day. 

 “I have worked in Alang for more than a decade and this was the first time I remember being without work for over a month,” he said. 

Workers like Prasad are not permanent employees. They move from one plot to another for work and are hired by ship-breakers on a need basis.

However, the gains for both workers like Prasad and ship-breakers were nullified against the losses suffered during the lockdown.

 “In February, when some of the ships had been bought the rupee was hovering at Rs 72 per dollar. By the time the payment was due, it had depreciated between Rs 76 and Rs 77 per dollar. This was a huge setback for ship-breakers as we had to shell out more,” said Parmar.

He estimates the losses for the ship-breaking industry at Rs 400 to Rs 500 crore ($53 million to $67 million) due to the lockdown.

“While we had no earnings, we ensured that workers were paid.We also gave ration kits to those who stayed back. It added to our expenses,” said Parmar.

Alang has 132 working plots for dismantling ships and each plot employs around 200 to 300 workers. 

Rakesh Kumar, a gas cutter at the yard, left for his home in the northern Indian district of Maharajganj during the lockdown.  He  returned to the yard after four months with a mounting debt. 

Kumar was among thousands of migrant labourers who began a perilous journey home in the  midst of the lockdown in India. Some walked hundreds of kilometers while others hitched rides on buses and trains run by the government. 

On an average, Kumar, 25, earns anywhere between Rs10,000 to Rs 15,000 ($134 to $202) a month. He  had to borrow money to help his family of eight survive back in Maharajganj  and also to return to Alang.

“With no earnings, I decided to return home. I couldn’t stay with them for longer as we would have run out of money. I returned to the yard,” Kumar told VICE News.

While Parmar said the workforce has returned in full strength, Usman Adam, an administrator with Alang Info Services,  a company that provides information on vessels as well as does research on the industry, said shortage of workforce remains the biggest challenge.

“Most workers who come here support their families back home with money, and that took a hit,” Adam told VICE News.

He said the industry is facing a tough time with volatile scrap and steel plates prices, unfavourable forex rates and restriction on beaching of vessels, leading to increase in procurement cost.

But not everyone is pessimistic.

Parmar is confident that the industry can bounce back provided the Gujarat Maritime Board, the state-run regulator that has control over the administration of the shipyard, provides at least a year of relief on yard lease.

“Every industry has been offered some relief. If our sector is given at least one  year of relief from payment of lease and no new tax burdens are put on us, we can very well tide over the rough phase,” said Parmar.

His confidence stems from the fact that 90 percent of the Alang ship-breaking yard now complies with the Hong Kong Convention which adheres to global standards of safe and environmentally sound recycling of ships.

Parmar believes that Alang, which already had a substantial share of the global ship-breaking industry, can now attract business from countries that insist on green dismantling (environmentally sound recycling). 

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