Page 28: of Maritime Reporter Magazine (September 1994)

The German

Maritime Industry

Although the overall market share is small (four percent based on gt; seven percent based on cgt worldwide), the German shipbuilding industry is number one in Europe and num- ber three in the world. German ship- yards are specialists in building high-tech container vessels and pas- senger-carrying ships. Their designs are circulating around the world and influence market needs world- wide, as they have done with con- tainer vessels.

German shipowner Hapag Lloyd, for example, was the first who asked for ships in the Panamax-breadth of 105.6 ft. (32.2 m), to carry 11 con- tainers side by side in the holds instead of 10. The carrying capacity of vessels of nearly the same shape was increased by about one third only by optimizing designs. But unfortunately German yards were too expensive to build these ships, and Hapag Lloyd ordered the ships at Korean yards. This one case em- bodies the challenges of German shipbuilding today: the Germans can deliver highly sophisticated de- signs, but these designs are not al- ways price competitive to build. To receive orders they need some capi- tal aids from the government, which are delivered in various forms.

Thus, the question often asked is: what would happen if these subsi- dies were canceled?

It was always claimed that Ger- man yards need governmental capi- tal aid to reach the same price level as competitors in, mainly, the Far

East. But it was also said that

German yards could live without subsidies, if all others would do the same. As of late this spring, Dr.

Heinz Ache, chairman of VSM, was not so sure that the industry would be able to survive without subsidies: "It comes a little bit too early for us.

We are just now in the middle of a new restructuring round of getting better productivity."

But in the middle of July it hap- pened in Paris. Negotiators from the European Union, the U.S., Ja- pan, South Korea, Finland, Norway and Sweden agreed on an interna- tional treaty to eliminate shipbuild- ing subsidies.

Although the signing ceremony of the treaty is due to take place this

October, if the draft text passes safely through the armies of law- yers from the individual govern- ments and the legal department of the Organization for Economic Co- operation and Development (OECD), it can be assured that a new era of building and financing shipbuilding contracts is coming.

Once the treaty has been ratified and signed, it is due to take effect from January 1, 1996. From that date, signatories of the treaty should be removing all direct and indirect subsidies to shipyards.

The OECD members covered by the agreement accounted for 75 to 80 percent of the world's shipbuild- ing production capacity, but are they all really willing to follow the treaty?

In Europe opposition came mainly from France. The accommodation of the Jones Act into the agreement has provoked a strong French re- sponse, reportedly directed by

French President Francois

Mitterand, and which theoretically may have the power to kill the Eu- ropean Union's ratification by the use of its veto.

Basically, German shipbuilding officials are not against this OECD treaty, but they are warning that the treaty is not clear enough, that shipyard expansion plans in South

Korea were not discussed, and that some of the main low-price ship- building nations are not covered by this deal. There are some shipyard chief executives who believe that the Germans should strongly op- pose these OECD ideas.

GERMAN SHIPYARDS:

A STATUS REPORT

Although the orderbooks of Ger- man shipyards showed a small in- crease compared to the end of 1992, the employment of capacities varies substantially from shipyard to ship- yard. Whereas some shipyards are fully booked, small and medium- sized yards especially are suffering from a lack of orders. The ordering behavior of German owners — who again placed a large part of their orders at foreign shipyards, espe- cially in East Europe and the Far

East — contributed to worsening the situation.

Privatization of East German yards has been finalized. Now, in order to build competitive compa- nies, the restructuring process is under way. This is taking place in accordance with the directives of the

EU Commission concerning the level of maximum subsidies allowed, as well as capacity reductions. As all of these regulations were fixed and made public, the whole restructur- ing process for East Germany is more transparent in comparison to other cases. But internationally some Eu- ropean shipbuilding nations, es- pecially Denmark, and nationally some small West German yards, are opposing these restructuring plans.

The chief complaint is that the East

German yards are building new fa- cilities with governmental subsidies (subsidies not available to all) and the result will be stiffer competition from these modernized yards.

Because of the restructuring and capacity reductions, the workforce of East German shipyards has been reduced from 14,500 to 11,100 em- ployees. In 1995, this number should

Meyer Werft: The New Old Yard

Praised by colleagues in the Ger- man shipbuilding industry for its efficient, quality operation, Meyer

Werft has been in business since 1795 — but has since 1975 been building a completely new shipyard, and most of the plants on-hand to- day were installed only in the last decade.

The yard has a varied product history known for its production of highly sophisticated ships, particu- larly luxury car and passenger fer- ries, passenger vessels, and RoRo ships.

Currently Meyer Werft is build- ing three 70,000-gt cruise vessels for Celebrity Cruises, for delivery in 1995,1996 and 1997; the 67,000- grt cruise vessel Oriana for P&O for delivery in Spring 1995; and a 6,000-grt passenger ship for the

Republic of Indonesia for delivery in 1995.

Its current orderbook will supply full employment for the yard's ap- proximately 1,800-person workforce until the spring of 1997.

Meyer Werft offers what is re- portedly the world's largest covered building dock, which allows the building process to be undisturbed by weather.

Known for productivity, Meyer

Werft touts the following as helping it keep up with international com- petitors: CIM/CAD; short distances throughout the shipyard; invento- ries management systems with con- tainer depot (computerized); just- in-time deliveries; close cooperation between subcontractors and ship- yard; underwater plasma cutting; and prompt decision making.

To help gain and maintain a tech- nological lead over competing coun- tries, Meyer Werft plans the devel- opment of productivity-enhancing methods, such as new welding tech- niques and process-oriented produc- tion.

Also planned are further techni- cal developments of products, such as environmentally friendly propul- sion systems with optimized fuel consumption rates, and environ- mental technologies/waste disposal (Green Ship).

For more information on Meyer Werft

Circle 59 on Reader Service Card The Oriana under construction in the covered building facility 50B Maritime Reporter/Engineering News