Study on Competitiveness of the EU Shipbuilding Industry – key findings
High Level Meeting – LeaderSHIP 2015Bremerhaven, 11 September 2009
Contents
• Trends and developments• Key findings on the competitive position
Trends and developments
• In the last four decades Europe’s position as dominant shipbuilding region has gradually eroded
• Dominance is now claimed by China and Korea• With new low cost entrants emerging (Vietnam,
India, Phillippines)
0%
10%
20%
30%
40%
50%
60%
70%
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
De
liv
eri
es
ma
rke
t s
ha
re (
CG
T)
Japan Europe South Korea P.R.China
Demand is cyclical
• Shipbuilding is a typical cyclical industry:– Periods of high demand are followed by rapid expansion of
capacity– When demand (e.g. trade) slows down overcapacity results (e.g.
70s)– Even before current crisis shipbuilding could be expected to enter
a next down cycle:• Huge order intake in last years (50% of current fleet to be replaced
in next 3 years) + a rapid increase of production capacity
Competitive position Europe - SWOT
Weaknesses
Opportunities Threats
Strengths
• Level of innovation• Innovative SMEs and strong position of
marine equipment industry• Strong linkages yards & marine equipment: • Efficiency• Specialisation in niche markets• Spillovers between defence and commercial
segments
• Cost levels (wage levels and steel prices )• Access to skilled labour• Access to finance• Potential difficulties in knowledge
protection• Fragmented government responses
• New segments, continuous innovation• Greening of shipbuilding industry• Existing transport policies (greening of
transport, increased transport quality)• Enhanced requirements regarding
shipping standards
• Demand shift from Europe to Asia• Strengthening of maritime cluster in Asia• Development of marine equipment
industry in Asia• Competitors moving up the ladder• SMEs not surviving the crisis• Competitor’s governments response to
support their industry • Access to skilled workforce • Price competition & economic crisis
Increased sophistication
• Europe’s response to low cost competition has been a move to higher value (niche) ship types:
– Cruise (99%), offshore (43%), luxury yachts (65%) of world market share– World market share Europe in production value is higher (22%) than
share in production volume (17%)– Niche segments are somewhat less sensitive to cycles than trade related
ship types.
• A parallel business strategy more standard ships is increasing cost control (outsourcing/offshoring, production efficiency)
• The role of marine equipment has increased in the production chain
– 50-80% of the product value is subcontracted
• Europe still holds a strong position in marine equipment – Between 30-40% of the world market
Strong export orientation
• Shipbuilding is highly international (both at supply and and demand side)– Europe is a dominant buyer location– 2/3 of shipbuilding production EU is exported. Export orientation
in Asia is even higher (80% or more)
– EU marine equipment has an export share of 46% (Korea 10%, Japan 25%)
Industry structure – few very large and many SMEs
• The world is dominated by large players:– Top-4 yards worldwide cover 25% of market– Top-18 yards cover 50% of market– Largest European yard stands at 38th place
• Europe is characterized by a limited number of large companies and many SMEs– The average size of EU shipbuilding companies is smaller than
China, Korea and Japan– 10% largest companies represent over 90% of turnover
Access to resources
• Labour– Labour costs of EU are high although also Korea and Japan are relatively
high– China and new entrant show low labour costs– Labour costs are less important for high value, specialised production
processes;– Shortage of labour (esp. skilled labour) is an issue in the EU aggrevated
by the ageing workforce.
• Steel prices– Steel prices in Europe are higher than Asia, although the (worldwide)
decrease in demand for steel has reduced the gap
• Finance– Access to finance is important, especially in light of the current financial
crisis
Business strategies and changes in competitive environment
• Market developments (demand)– Buyer focus may change more towards Asian companies
• Competitor developments (supply)– Increasing competition in offshore– Continous attempts to move to higher value segments– Increasing development of own (Asian) marine equipment
industry– Globalisation (overseas investments, joint ventures)
Top Related