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Full steam ahead

Shipbuilding is one of the industries of the future. In recent years shipbuilding has experienced a huge boom both at an international level and in Europe.

Since the decline and drastic job cuts at Europe's shipyards - particularly evident in the 1990s - shipbuilding has frequently been viewed as an aging industry. Yet the basic conditions for international shipbuilding are positive and are boosting demand for new vessels.

Photo: BVT Surface Fleet, Portsmouth Lmt.

In addition, the high volume of orders clearly indicates that from a global perspective shipbuilding is an industry with a bright future: in 2007 demand for merchant ships was stronger than ever. According to ISL/Lloyds List, the volume of orders for new vessels has more than quadrupled since 2002 - from 39.0 million gross tons to 169.4 million. Of those orders, just under 90 percent went to shipyards in South Korea, China and Japan, with South Korea attracting the largest number of orders (40.9 percent). Meanwhile, the rapid growth of China's shipbuilding industry is particularly noteworthy: with 36.4 percent of total orders it has quickly become the world's second most important shipbuilding nation. In view of this rapid development China could well reach its political goal of becoming the leading shipbuilding nation by 2015 long before that date.

High-quality specialised vessels

Even though at 3.2 percent the number of orders received by European shipyards was comparatively low, this should not be interpreted as a sign of a (new) crisis in Europe's shipbuilding industry: European shipyards are predominantly active in the more expensive market segments and produce vessels of markedly higher quality: so-called Ro-Ro cargo ships (from the English roll on and roll off) - freighters for which cargo can be rolled on board instead of being loaded by cranes - , mega-yachts, cruise ships and other vessels for special purposes. By contrast the ships built in China and South Korea are generally simpler types of vessel (container ships, bulk carriers and tankers). The order books of many European shipyards are well filled for years to come, which also means work for the next few years. As things stood in February 2008, Europe's shipyards are already booked to work at an average of 65.1 percent of their capacity in 2010 and 23.9 percent of their capacity for 2012.

Restructuring in Eastern Europe

However the economic situation of the shipbuilding industry in Europe varies greatly from nation to nation owing to considerable differences in capacity utilisation. While the order books of some countries such as Germany and the Netherlands are in a comfortable state, the shipyards of Poland and Croatia are in the midst of far-reaching restructuring processes. Outdated production facilities, low productivity and illegal financing practices are challenges that have yet to be mastered in these countries. Another major development was the Korean firm STX Shipbuilding Corp's acquisition of a controlling stake in the Norwegian shipbuilder Aker Yards, which owns shipyards in Finland, France and Romania. By purchasing over 40 percent of Aker Yard's shares STX has gained access to know-how in the area of cruise-ship building, which until now has been dominated by European shipbuilders. This is another sign of intensifying global competition, since it means the Koreans are being forced to push their way into more expensive segments because orders for simpler types of vessel are increasingly going to China.

More investment in staff and research

In view of the sustained expansion in global shipbuilding capacities and the intensified competition, Europe's shipyards face a number of challenges. The key to success lies in the continuous development of its products and production processes. Investment in research and development, stronger cooperation and a highly qualified workforce are prerequisites for such development. Intense promotion of young talent and extensive qualification measures can contribute to improving the workforce. The majority of shipyards have problems finding qualified skilled workers, engineers and naval architects. Only through the continuous optimisation of the general conditions can Europe maintain its head start in knowledge and technology and thus guarantee the continued competitiveness of its shipbuilding industry in the future. After all, around 150,000 workers are currently directly employed at European shipyards.

Jochen Tholen

Born in Wilhelmshaven in 1948, Dr. Jochen Tholen is director of research at the University of Bremen's Institute for Labour and Economy. His work focuses ...
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Thorsten Ludwig

Thorsten Ludwig was born in 1970 in Bremen. He works at the Agentur für Struktur- und Personalentwicklung GmbH. Most recent publication: Schiffbau in Europa (Düsseldorf: ...
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Florian Smets

Florian Smets was born in 1979 in Niebüll and works as a research assistant at the University of Bremen's Institute for Labour and Economy.
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