Page 25: of Maritime Reporter Magazine (September 1994)
State Of The German Shipbuilding Industry
Verband Fur Schiffbau und Meerestechnik E.V. (VSM)
Observers of international economical developments note with surprise that German industry is in bet-ter shape than most of them had expected a year ago.
As in 1992 the full impact of world- wide recession reached Germany, it was with some two years' delay, since in the wake of the reunifica- tion of the country, national de- mands concealed the declining growth in the world economy and compensated for reduced exports.
When in 1993 German industry re- alized its deficits in international competitiveness — due to an overall low productivity, degraded stan- dards of R&D, expenditures and fading innovation — international competitors had already, for two years, been working on their eco- nomic recovery. The public debate in Germany was determined by con- cerns that with lingering political support, high environmental impo- sitions, increasing public rates, the high level of labor costs and complex tariff regulations, it would take more than just better market conditions for German industry to regain in- ternational competitiveness.
This view, however, seems to have been too pessimistic. Indications are that world economy is recover- ing, and rising export orders have created a more optimistic view throughout German industry and put an abrupt end to the weary discussion of the Federal Republic as a generally uncompetitive loca- tion for industrial production.
In major industrial branches first data on their expected 1994 perfor- mance have been released, announc- ing remarkable reductions of costs and an increase of productivity that brings in range the standard of their
Far East competitors. In other branches (i.e. the aerospace and the chemical industry or important seg- ments of the machine building in- dustry) leading companies have ac- commodated their corporate struc- tures and policies to the market conditions and have announced that their orderbooks are filled better than ever expected.
The German shipbuilding indus- try may also take an optimistic view into the future. Its starting posi- tion, however, seems to have been
Ulrike Nieter better than the prospects of other industrial branches. The German shipbuilding industry has operated for more than two decades under market conditions which were in particular influenced by industrial targeting policies of Japan and South
Korea. While strained conditions of a free market caused former ship- building nations to disappear from the merchant shipbuilding market,
German shipbuilders managed to rank number One in Europe and number three in the world.
The major German shipbuilding companies stayed in shape, keeping a leading position in important seg- ments of the shipbuilding market, primarily in segments of a highly technological nature.
Facing steadily expanding world trade and the fact that the ships of the world fleets are over-aged to a large extent, the shipbuilding mar- ket is expecting a distinct phase of growing demand for new ships.
There is another dimension, how- ever, to the important role that Ger- man shipbuilding industry will have to accept in the future.
As the maritime environment of- fers mankind a large number of solutions in the fields of interna- tional security, foreign trade, trans- portation, environmental problems and the exploration of resources, shipbuilding as the core industry of all maritime economy is to become a branch of significant political im- portance and extraordinary eco- nomical chances for future tasks and developments.
For this reason, and with the manifold and intertwined areas of activity of the maritime industry and other political and economical fields in mind, the German ship- building and ocean industries have suggested that a coordinator for maritime matters within the Ger- man Ministry of Economics be ap- pointed and a similar field of re- sponsibility within the commission of the EU in Brussels be installed.
The overall bright picture into the future, however, is overshad- owed by the building up of exces- sive, superfluous shipbuilding ca- pacities. Especially in South Ko- rea, the second largest shipbuilding nation in the world after Japan and before Germany, newbuilding ca- pacities are built up on a large scale.
Within the frames of South
Korea's "new industrial policy" (socio-economic development plan 1993-1997), shipbuilding, along with the aeronautics/space and automo- bile industries, is one of the 15 tar- get industries which in part are supported with direct subsidies from the South Korean government. The expansion of the Korean shipbuild- ing capacities is directly aimed at the Japanese and West European shipbuilding industries in order to gain an even larger market share, and may well be the start to a new round of ruinous competition.
Furthermore, today's shipbuild- ing capacities are enhanced by the conversion of naval shipbuilding yards into newbuilding facilities and, last but not least, by increased productivity in the existing ship- yards.
Before this background it can be expected that the assumed increase of the demand for new ships will not necessarily ease global competition.
The German shipyards, therefore, will continue their attempts to re- duce costs by further rationaliza- tion. Besides this, the industry is taking pains to improve the inter- nal structure of the companies, in- crease efforts in the fields of R&D, strengthen innovation, integrate in- expensive external capacities in the manufacturing process and find new forms of cooperation among the ship- yards.
ON PAGE 25: Pictured on the special German Industry inside cover are, from top to bottom: the Contship Singapore, a containership built by Schichau Seebeckwerft; the chemical and oil tanker Travestern type COT 20 from MTW Schiffswerft
GmbH; and Blohm + Voss' conversion of the Sea-Land Value and the Sea-Land Pride.
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September, 1994 27