Shipbuilders Experience Backlog

Monday, September 25, 2006
After decades where shipbuilding was a sick industry, a rush of orders for modern vessels has booked out dockyards around the world for years ahead. Operators who order ships today must expect to wait till 2009 or 2010 for delivery. European yards, able at last to earn profits again, have boosted their prices in recent years by about one third. That ensures zest at the world's biggest trade fair for suppliers to dockyards, the Shipbuilding, Machinery & Marine Technology (SMM) show, which opens in the German port city of Hamburg on Tuesday.

Nearly 5,400 ships are on order worldwide, including tankers, container ships, bulk carriers and gas transporters. The hulls on order in the dockyards are equivalent to 28 per cent of the world's current merchant shipping fleet. That growth is being driven by a sharp upsurge in world trade, a result of globalization. At SMM , the rapid expansion in Chinese shipbuilding capacity will be seen both as an opportunity for suppliers and as a source of new competition to established shipbuilders. By the year 2020, China intends to advance from the world's third biggest builder of ships to the first. Judging by China's past successes, analysts have no doubt that the story will play out China's way. The Chinese authorities have already given planning approval for 22 new shipbuilding sites and some will be so huge that they will have no parallel in Europe.

A site occupying 8 kilometres of coast on Shanghai's Changxing Island at the mouth of the Yangtze River will have an annual capacity of 8 million deadweight tons (DWT), according to China State Shipbuilding Corp (CSSC), the main developer of the project. It will have seven docks that can build 300,000-DWT vessels, and shipbuilders in other nations worry that the result will be over- capacity on the world market and a return to crisis in the industry. 'The huge growth in world shipbuilding capacity means there will probably be a return to price-cutting in a few years,' predicted Juergen Kennemann, chairman of the SMM advisory council, on Monday. Shipbuilding in Germany, the fair's host nation, is modest by comparison, with German yards currently booked to build 230 vessels worth nearly $15b dollars.

Back in 2001 when the crisis was in full swing, German yards took only 17 orders. Last year they took 157. Currently the German yards are desperately short of engineers and the yards are not quite on a roll, because the rising cost of steel and components is keeping up pressure on their profits. In Germany, the components makers, who export worldwide, are a much bigger industry than the yards themselves, outclassing the dockyards three to one in terms of employment. Some suppliers have been able to grow sales by more than 10 per cent per year. In a modern ship, the components cost more than the hull which the dockyard company itself builds.

Manufacturers of high-technology marine components say their biggest headache is copying, with Asian, especially Chinese companies often accused of product piracy. German manufacturers say more than a quarter of their exports are sold to Chinese shipyards. At the SMM show, which runs till Friday, a record 1,669 companies from 50 nations will be showing off shipbuilding and components skills. Part of the show will be devoted to products to outfit super- yachts, an area of shipbuilding where Germany leads the world. Organizers say about 40,000 trade buyers and other specialists will attend the fair and associated conferences. Source: Deutsche Presse-Agentur

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