Interview: Dr. Anil Sharma, President and CEO, GMS

Sharma has journeyed from an unlikely start two decades ago in the world of ship recycling to the very top of the industry. Born in India, educated in the U.S. and now living in the U.A.E., he spends much of his time challenging people’s perceptions about the business.

What inspired you to start GMS?

The start would have to be the period when U.S. Navy ships were being sold via tender by the U.S. Maritime Administration (MARAD) in the early 1990s. At the time, I was in the midst of a successful professorial career in global business and marketing. Being from Bhavnagar in Gujarat, India, where much of the Indian recycling occurs, I had family and extensive ties with friends and business associates involved in the ship recycling and steel industries.

When the MARAD vessels were tendered, the Indian market was very interested. However, due to requirements that restricted international participation in such tenders, Indian recyclers struggled to bid for and secure these vessels. It was then I realized that a business opportunity existed. I decided to purchase these vessels on behalf of the Indian recyclers and then resell to them. Eventually, GMS became one of the biggest buyers of MARAD vessels in the 1990s.

You also assisted the Russian government in disposing of surplus naval tonnage.

Yes, perestroika! In 1993 we were invited by the Russian government to assist them in the safe disposal of vessels from their Northern and Far Eastern fleets. It’s an amazing fact that, from its earliest days, GMS has been involved in finding the best solutions to the most challenging recycling issues faced by governments and business alike.

Does your Indian heritage drive you to try and improve standards there?

Being from India is not what drives me. I have a genuine passion for my work and the far-reaching consequences that are a byproduct of it. I believe that we should always do the right thing and do things right. Being the largest cash buyer of vessels for recycling in the world carries with it an obligation to better an industry that is so vital not only to the shipping industry but also to the lives of those who directly and indirectly depend on it.

I do feel, though, a sort of responsibility to give back to the country I was born in because there is a lot of potential there. Recycling in India is not a new or unique concept. My grandmother used to recycle clothes, newspapers, bags, shoes, utensils and so on. Business people recycled everything from industrial equipment to office equipment and supplies. Reusing, repairing and recycling are habits I grew up with in everyday life. Consequently, I would love to see India set the standard in green recycling for the rest of the world.

Have you changed the public perception of ship recycling?

What I am trying to do, above all, is raise international awareness of the true state of the industry and show that there are good and bad yards in every country. A country should not be stigmatized by the misconceptions of a few misinformed individuals. For this reason, I have from the beginning spent a lot of time and effort in providing the market with the information required to allow informed decisions to be made. I arranged the first industry delegations to visit the yards and continue to do so regularly.

When did “ship breaking” become “ship recycling”?

I was invited to speak at one of the earliest conferences on “ship breaking,” as it was referred to at the time. I explained to the audience that what was being done in these yards was in fact clearly “recycling” and not “breaking” since almost 98 percent of a vessel was completely recycled or reused. Following my presentation, there was a vote among the audience on which was the appropriate term to be used for the process, and “recycling” was preferred by a clear majority. The organizers proceeded to change the official banners of the event.

Terminology is important. Regrettably, when it comes to the Indian subcontinent negative terms are used, whereas the same task is described with positive words in the developed world. For example, “ship breaking,” “demolition” and “scrapping” versus “ship recycling” and “beaching” versus “landing.” In fact, the beaching process is also used in Turkey, Indonesia and the U.S. However, referring to it as “landing” does not have the same negative connotations.

How are you working to improve safety at the yards?

The ship recycling industry on the Indian subcontinent has steadily matured over time, and an increasing number of yards are adopting international standards such as ISO 9001, ISO 14001, OHSAS 18000 and ISO 30000. They are being certified by accreditation bodies that confirm their operational and recycling procedures. While GMS cannot dictate the inner workings of yards in India and Bangladesh, we can influence some of them – those with whom we have forged long-lasting alliances over the years – to help ensure that certain standards are met.

Can you give us an example?

Yes, I’ll give you a good one. Via our association with Leela Ship Recycling, one of the leading yards on the subcontinent, we have ensured that it maintains all the relevant certifications and has established safe working environments. We have also mandated the use of safety equipment (cranes, winches, etc.) and safety gear (hard hats, safety suits, gloves and boots) for their workers.

This sets an example for neighboring yards. They are indirectly influenced to adopt similar practices when they witness vessels from blue-chip shipowners being delivered exclusively to Leela. The temptation and opportunity to do business with such owners are what motivates them to change. Other yards have approached us for guidance and technical assistance on upgrading their operations in a manner similar to Leela’s, and GMS has expended its own resources in assisting them, both in India and Bangladesh.

Do you believe “beaching” should be stopped?

Beaching should certainly not be stopped. Critics of beaching often cite the environmental hazards posed by the recycling procedures as the reason for its banning. However, they fail to acknowledge concrete studies performed by prestigious universities and associations, studies that found no conclusive evidence of long-term negative effects to the environment at Alang as a result of these activities. The criticism is based on misinformation and outmoded data. Furthermore, yards are taking steps, such as cementing the base of the yard to avoid any interaction of the material with the environment, to ensure that there is as little interference with nature as possible.

What would happen if the E.U. banned the use of recycling yards in India and Bangladesh?

The effects of an E.U. ban would be far worse than the alleged environmental ramifications of beaching that have been bandied about for decades. Locations outside the Indian subcontinent could not digest the volume of vessels that are recycled annually in the subcontinent. Recycling at locations outside the subcontinent will not pay as much, and this will force owners to trade their vessels longer, leading to aging of the international fleet and the consequent harmful side effects.

A ban would also displace nearly 300,000 people who make a living either directly or indirectly from the ship recycling industry in India, Bangladesh and Pakistan. It would be felt in the secondary markets that survive off the recycling industry such as those that sell used generators and spare parts. Those markets currently provide shipowners with cost-effective options for repairs.

What is unique about GMS among cash buyers?

GMS cares. We care about the business, the environment, standards, stakeholders, workers and employees. We are not here simply to make money and run. We look at this business from a strategic perspective.

What does that mean – “from a strategic perspective”?

Simply put, it means we have the strategic and long-term interests of the industry in mind when formulating our business plans. We all know floating objects (ships, rigs, platforms, etc.) have a finite lifecycle. At the end of that cycle, these assets should be disposed of in the safest and most environmentally responsible way that adds value to all stakeholders. Shipping is global, and ship recycling should also take a global view and be done in countries where a competitive advantage exists. For example, when it comes to shipbuilding, shipowners normally think of Far Eastern countries like Japan, Korea and China. Similarly, when it comes to ship recycling, shipowners realize the best value proposition today exists in India, Pakistan and Bangladesh.

Secondly, in order to encourage more owners to recycle their ships in a safe manner, we have kept the “green recycling process” simple and cost-efficient. We know more owners will recycle responsibly if they do not have to lose more than 50 percent of the value of the asset. We have a team of individuals committed specifically to the green process. This team works with owners, managers, brokers and yards to ensure commitments are met.

We have invested hundreds of thousands of dollars to raise global awareness, encourage dialogue and participate in the development of responsible ship recycling practices, including the Hong Kong Convention, which addresses the methodologies for identifying, handling, storing and effectively disposing of the hazardous materials and waste that are generated during the recycling process. GMS has also invested and assisted our partner yards in obtaining and maintaining relevant ISO and OHS certifications, a necessity for owners looking to recycle their vessels at environmentally responsible yards. – MarEx