Born again: after more than a decade of decay, fresh winds fill the sails of Argentina's shipping industry.

The Argentine shipbuilding industry has turned the corner at last. Many yards are reopening and those that weathered more than 10 years of crisis are seeing business pick up once again.

Recovery began in 2003, after economic problems closed 25 shipyards. Since then, the sector has been chugging along. According to a report published by the Federation of the Argentine Naval Industry (FINA), between 1985 and 1993 the sector lost 78% of its production capacity and 84% of its workforce. The only shipyards that stayed open were those that focused primarily on vessel repair. Today, there are 16 shipyards in Argentina posting annual sales of US$50 million.

The decay of the shipbuilding industry began with a presidential decree that allowed for temporary, untaxed imports of used ships, known as charteo. Many were used on a rental basis. In 2004, the sector got a break. A new government decree annulled the previous one that allowed for imports. It also established mechanisms that made conditions favorable for the development of the country's shipyards. In addition, the government unveiled a naval leasing program that gives shipbuilders 80% of the value of each ship it builds, although this financing plan is still under revision, according to the experts.

"At the moment, the sector is undergoing a renaissance thanks to the work orders received in several shipyards, as well as the construction contracts that have been signed and are in the execution stages," says Claudio Gonzalez, president of Tandanor, a 100-year-old shipyard and a leading repairer of vessels in South America.

As with any economic recovery, more business means employment growth, although job levels are still a far cry from where they were in the 1980s, when between 10,000 and 12,000 people had jobs in the sector. Today, shipyards employ roughly 7,000. One of the biggest problems plaguing the industry is a lack of technical personnel. When the industry went sour, skilled labor all but evaporated.

The need to end such brain drain has fueled demand for trade schools and other industry workshops, such as one owned by the shipyard Astilleros Rio Santiago (ARS). ARS is one of the largest and oldest shipyards in Argentina. Last year, the company signed an agreement with the Venezuelan government to build two new vessels that will haul fuels for Marine PDV, a logistics branch of Petroleos de Venezuela, Venezuela's state-owned oil company.

The Venezuelan oil giant also has the option to buy two more ships if it needs the capacity. Each tanker will have a cargo capacity of 300,000 barrels and cost $56 million apiece. "It's a key contract, since Venezuela is a very important oil country that, by not having a shipyard industry, needs transportation, which is what we do;' says Horacio Martinez, president of FINA. "Also, this is a big contract for Astillero Rio Santiago, one that brings stability to the market."

While some shipyards remain idle, present capacity can match current demand, Martinez says. Plus, the Argentine peso is hovering at favorable exchange rates, which keeps the sector competitive. Argentine shipyards have all the more reasons to be optimistic, Martinez says. "In five years, we would like to be where we were 20 years ago, with annual revenues of $350 million."

Old fleets. Many smaller shipyards cater to the country's commercial fishing fleets, which are in need of new equipment. Most fishing operations run on very old ships all at a time when the need for the Argentine catch is high due to the exchange rate and demand abroad. "For our business, 2005 turned out to be an incentive for us to continue working for the fishing sector" says Anibal Vanoli, president of Vanoli Shipyards in Quequen, in Buenos Aires province.

Although recovery is under way, going forward won't be easy. The shipyards themselves face tough tasks. "A sector like this cannot recover overnight, and this responsibility falls on the industry itself," says Domingo Contessi, director of Federico Contessi, one of the oldest manufacturers of fishing vessels in Mar del Plata, a coastal city near Buenos Aires. "Investments and experience are necessary, but mostly we need a labor force and qualified personnel."

JUAN PEDRO TOMAS * BUENOS AIRES