Maritime Trade and Transport - HWWI

Europe’s shipbuilding opportunities
Europe’s shipbuilding industry will be shrinking and specializing even more in certain niches.
This necessity arises from the increasing intensity of competition in the high-technology
segment. South Korea and Japan are focusing on high-technology ships, to compensate for losses
in other segments. Also included is the construction of cruisers, still firmly under European
control. At the same time, shipbuilders will more intensively look for ways of automating
labor-intensive tasks. Due to the necessary investments, greater automation will impact
smaller companies particularly, so that concentration in this sector is likely to increase.
Europe’s chances for survival lie in the tailor-made production of special ships, building
highly technological prototypes, and supplying engineering services and equipment for ships
(without actual production). Many shipyards will not survive the next recession phase on the
meager profits generated by building small tonnages. To support European shipyards, the EU
has created the “Leadership 2015” program. Its objective is to bolster its leading position in the
markets for technologically sophisticated shipbuilding. In addition to fostering investments in
research, development and innovation for products and processes, effective measures are to be
taken to prevent the drain of expertise, to ensure competitive financing, and to emphasize security,
safety and environmental issues. 48
5.2.6 The components industry – Opportunities for technology leaders
The maritime components industry produces a broad spectrum of items for shipbuilding. They
range from the engine to navigation equipment, deck machinery, and electronic equipment,
to cranes, pumps and valves. The share of components in a ship’s added value has been consistently
increasing and today, depending on the type of vessel, amounts to 60%-85%. Of the
global market volume of approximately €61 bn annually, the 400 German companies account
for a share of 15% (€9.3 bn) and rank second, behind Japan (20%). 49 Germany plays a
leading role in high-tech systems. Since this sector reacts to swings in the shipbuilding market,
the high growth in profits noted in recent years is likely to weaken in the medium term. By
2010, we calculate a decline to an average annual growth rate of 2.5%.
Networking between shipyards and components companies will become more closely meshed
and increasingly important as a competitive factor. Developing the component supplies
sector close to the shipbuilders will permit optimal warehousing and short delivery times for
the shipyards. Component suppliers profit from better marketing of their products. The geographical
distance is thus an important competitive factor for both sectors. A shift of shipbuilding
to Asia offers advantages to companies located there. To succeed competitively, European
suppliers will increasingly establish subsidiaries in Asia and transfer production to that region.
Since the majority of maritime component suppliers in Europe are not able to operate global-
48 See EU Commission (2003b). There is also an initiative organized by the industry,
called “Waterborne2020,” which has similar emphases. See Lloyd’s List (2006).
49 See VDMA (2006a), VDMA (2006b), IHK Emden (2006), BMBF (2000).
Berenberg Bank · HWWI: Strategy 2030 · No. 4
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