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Despite an overall improvement in the global shipbuilding industry, the bandages in international competition are getting tougher, with China attracting more and more orders in niche markets with prices below material costs, while, at the same time in Korea, the state-owned banks, which are now often the main owners of the yards after restructuring, are also financing loss projects, noted Germany’s Shipbuilding Association, VSM.
In addition, South Korea has revealed plans to order 200 large merchant ships, despite overcapacity. Japan has so far denied the subsidy race and recorded another year of very low orders. The Japanese government is now considering a WTO lawsuit against Korea.
In the meantime, the German and European shipbuilding industry has so far been able to break away from the global trend. Due to the healthy demand in the special markets and the weakness of the volume markets, Europe’s market share has jumped from less than 10% to more than 50%.
Incoming orders in Germany, on the other hand, as expected, by far not reached the record 2016 level. On the basis of the robust order book, however, the production of the German shipyards continues to develop positively. The specialization of the European and in particular the German shipbuilding industry and the successful focus on high-tech niche markets are paying off.
However, the extensive withdrawal from cargo shipbuilding has also made the number of ships built in Germany to decrease significantly and no longer be sufficient for the diverse domestic supply industry. Today, the value chains are much more complex, so that the industry as a whole was able to significantly increase sales and employment.
The weak world market economy combined with the increasingly interventionist policy in major shipbuilding countries call for new answers. Effective global trading rules would be helpful to all market participants, as overcapacities and exaggerated price competition are reflected throughout the value chain. In addition, there are further market distortions as a result of growing local content requirements and more difficult framework conditions in the target markets.
“So many times, a hoped-for ‘WinWin’ quickly became a ‘win-and-regret’ situation,” point out VSM President Harald Fassmer , Managing Director of Fassmer Werft GmbH at the press conference at the annual general meeting of the association. Growing protectionism, technology theft and competitive prices, such as those currently prevalent in the ferry segment, represent major threats and Germany should refocus on its maritime technology business to strengthen competitiveness. VSM Chief Executive Dr. Ing. Reinhard Lüken, explained:
The adoption of the Maritime Agenda 2025 last year was an important step and the coalition agreement also offers many good starting points. But all parties involved must be aware that updating the status quo alone will no longer be sufficient for the future. Financing issues, the development of the labor market, rising social security contributions, escalating wage agreements and increasing bureaucracy are major challenges and weaken competitiveness in Germany as a business location. We must not let up on our innovation offensive. And cooperation in Europe could well tolerate increased engagement.
Mr. Lüken concluded:
We have a good chance if all the players in the maritime industry come closer together and pull together. Market distortions increase overcapacity, which also weighs on shipping, which then lacks the money to invest in our clean and safe technology. This is why a wise location policy and courageous action, which does justice to the importance of the maritime industry and uses all available levers, is so important.
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