The Economic Times – Alang Ship Recycling Yard turns into an unlikely shopping destination for bargain hunters and collectors

(Written by Mitul Thakkar)

1 December 2012 - The 50-km drive from the district centre of Bhavnagar to the maritime graveyard at the AlangSosiya Ship Recycling Yard is bumpy and unpleasant. But for a few years now, this road has witnessed a growing stream of bargain hunters from all over India on an unlikely shopping expedition.

When a ship dies, it doesn’t receive a dignified burial. It is taken apart to the every last valuable ounce of metal, and recycled. The process entails consequences to the environment.

But along the long road that leads to Alang, a cottage industry has sprung up, selling every reusable part found in a ship, ranging from furniture to crockery, carpets, consumer goods such as television sets and refrigerators and all kinds of knick-knacks. These represent a bargain for their low cost and typical high quality- ship makers generally use top-notch equipment to minimise repairs during the product’s lifecycle.

Because of the bargains to be unearthed, and because goods that are not commonly found elsewhere can be bought here, the place attracts hoteliers, factory owners, art collectors (see box), home makers and others who come looking for the remains of a vessel.

“Ship builders and owners do not take chance with quality of products they use and install on board. Anything that comes on ship has to be capable of performing in any marine conditions and also meet some of the global regulatory provisions,” says Vimal Vaja, whose Harsh Traders sells kitchen appliances.

Kitchen equipment makers use much better grade of steel to cater to the marine business, Vaja says. Utensils, refrigerators, coffee makers, sandwich grillers, platforms, hotplates, dish washers, steam cattle, vegetable cutting machines, soda makers, dough makers and ice cube makers used in ships all have very robust build and are sought after by the hospitality sector.

Nearly a thousand shops dotting the main road sell used goods. There is no guarantee, but there is a bargain to be driven at every store. Many goods-especially electronics and home appliances-can be of very high quality, and feature designs not commonly seen in India. This is true also for furniture, carpets and other such household items. Boats, gym equipment, video games, navigation equipment, machine parts, tools and heavy machinery are also found in abundance.

This has turned Alang into a hot destination for small businesses. Factory owners from industrial centres such as Jalandhar, Noida, Chennai, Hyderabad and Coimbatore come here looking for used diesel generator sets, motors, welding equipment, turbo chargers, oil purifier, heat exchangers, cooling towers, navigational safety equipment and other such industrial products.

Toothpicks to TV Sets

Traders dealing in different products visit the vessel once the ship breaker is through with clearances from customs, the pollution control board and the maritime board. Traders negotiate with ship breakers for the entire cache of goods in their category.

Payments are made within a month of delivery that comes in phases once workers start dismantling the ship. Over the years, traders have become highly specialised and many boast a loyal clientele that come from afar to buy from them. Girish Dave of Bhagwati Traders is among the earliest entrants in the trade and owns a shop close to the yard. “I used to deal only in furniture when my shop was in the beginning of the market outside of ship breaking yard.

Now the market has expanded towards Bhavanagar and people don’t come till the yard for shopping. Hence, I have started dealing with ropes and fishing nets.” He bids for old and unused ropes found on the ships. “I sell ropes that are made to use in extreme weather conditions to handle heavy loads on ships. They have longer life and available cheaper here.”

The Alang Scrap Merchant Association, headed by Nitin Modi, has 600 traders as its members. Modi sells some 800 categories of products ranging from toothpicks to suits for waiters. “We buy from ship breakers whatever makes business sense to us. It may be ice box, umbrellas, candles, knives, trays, jugs, stationery, binoculars, clocks, ladders, emergency lights, shower systems, silver foils, tennis tables, carom boards and even pianos,” says Modi. When he started the business, there were farms on both sides of the road to Alang.

Now, farmers have leased their land to the burgeoning trade in recycled goods. Traders pay Rs5,000-7,000 in monthly rent for a 500-1,000 sq. yards plot.

A rise in the number of ships coming to Alang to be broken down has meant more business. But also, a glut of some goods. As the reputation of the Alang yard’s goods have spread, some have started passing off Chinese and Malaysian furniture as “ship furniture”.

The glut and pricing pressure in wood and furniture, and the slack demand from the real estate and hospitality sector has started to pinch some of the traders, who have to sell one lot of goods before they can buy the next. Some traders have started opening outlets in other parts of Gujarat.

RA Patel is part of a group of nine teachers who have come from Lunawada in western Gujarat to shop at Alang. He has been coming every year for ten years now. “We come here every year during Diwali vacation for shopping,” he said. This year, the group’s budget is Rs2.5 lakh.

“Like every year, we picked up furniture, mattresses, glassware, sports goods and much more. We cannot get such deal elsewhere,” says Patel.

Lalit Bhansal is a Ludhiana-based businessman who has come to study the Alang market. “My family supplies scrap to rolling mills in Punjab. I have been hearing a lot about Alang so decided to check out this place personally,” says Bansal. He now plans to start trading in wood products from the ships in his home state. “People in Punjab would love such heavy stuff and I can earn a premium,” he said.

Steel Frame

The controversial business of ship breaking is really about steel. The ship breakers prefer the heavy tankers and bulk carriers as more steel can be extracted from them and they are easier to break. Passenger ships with their fancy fittings and hundreds of little rooms take much longer to dismantle.

Between 1983 and 2011, the Alang yard produced 3,68,70,973 tonnes of steel by dismantling 5,508 ships. In 2011-2012, Alang produced 38,56,071 tonnes of steel—that is about 2% of the annual demand for steel.

Batuk Patel of Shree Ram group of companies says: “You must appreciate our contribution to nation building. We are in the business of recycling that delivers steel at a cheaper cost without consuming precious energy resources.”

The ship breakers of Alang are keen to live down the issues of environmental damage and fatal accidents that has given the place a notorious image. Many say that practices have improved, and point to the thriving mango plantations in nearby villages as some kind of a proof that theirs is a clean industry.

A familiar refrain here is that the environmental hazards are exaggerated by a campaign against them mounted by vested interests threatened by the cheap steel sourced from the yard.

But the hazards of the yard can be very real for workers. Only last month, five workers perished in a fire that broke out while a tanker was being dismantled. Unless the industry becomes more organised and use trained personnel, some of this will persist.

But the economics of the yard, which competes with similar facilities in Pakistan, China, Taiwan and Bangladesh, is complex and operators with thin margins are reluctant to invest more in their trade.

But the ship breakers bemoan the fact that despite being such big contributors to the exchequer, they enjoy poor infrastructure.

“Alang does not have sophisticated emergency services, proper roads and even basic cleanliness. We provide direct employment to 15,000-20,000 labourers and generate indirect employment of more than a lakh in transport, trading and allied units,” says a second-generation ship breaker.

The adverse currency movement has given a tough time to the ship breakers. Alang emerged as a ship breaking hub on account of ideal tide variation and draft that allows ship breakers to pull vessel till the shore easily.

“We are in process of improving the infrastructure here by augmenting roads, providing better parking place to truckers and getting dedicated ambulances equipped to handle any emergency. We are also enhancing the scope of training centre for workers,” said captain Sudhir Chadha, port officer of the Gujarat Maritime Board at Alang.

The business from Alang has given the Bhavnagar district greater industrial heft. Today, close to 120 steel rolling mills, 40 furnace plants and 60 oxygen gas plants operate in the district. The road connecting Bhavnagar and Alang remain broken and bumpy, just like the prospects of Gujarat’s ship breakers.