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  • Changing Market Shares
  • EU higher labour costs, but more specialised
  • EU higher labour costs, but more specialised
  • EU higher labour costs, but more specialised
  • ssa

    1. 1. Study on Competitiveness of the EU Shipbuilding Industry – key findings High Level Meeting – LeaderSHIP 2015 Bremerhaven, 11 September 2009
    2. 2. Contents <ul><li>Trends and developments </li></ul><ul><li>Key findings on the competitive position </li></ul>
    3. 3. Trends and developments <ul><li>In the last four decades Europe’s position as dominant shipbuilding region has gradually eroded </li></ul><ul><li>Dominance is now claimed by China and Korea </li></ul><ul><li>With new low cost entrants emerging (Vietnam, India, Phillippines) </li></ul>
    4. 4. Demand is cyclical <ul><li>Shipbuilding is a typical cyclical industry: </li></ul><ul><ul><li>Periods of high demand are followed by rapid expansion of capacity </li></ul></ul><ul><ul><li>When demand (e.g. trade) slows down overcapacity results (e.g. 70s) </li></ul></ul><ul><ul><li>Even before current crisis shipbuilding could be expected to enter a next down cycle: </li></ul></ul><ul><ul><ul><li>Huge order intake in last years (50% of current fleet to be replaced in next 3 years) + a rapid increase of production capacity </li></ul></ul></ul>
    5. 5. Competitive position Europe - SWOT
    6. 6. Increased sophistication <ul><li>Europe’s response to low cost competition has been a move to higher value (niche) ship types: </li></ul><ul><ul><li>Cruise (99%), offshore (43%), luxury yachts (65%) of world market share </li></ul></ul><ul><ul><li>World market share Europe in production value is higher (22%) than share in production volume (17%) </li></ul></ul><ul><ul><li>Niche segments are somewhat less sensitive to cycles than trade related ship types. </li></ul></ul><ul><li>A parallel business strategy more standard ships is increasing cost control (outsourcing/offshoring, production efficiency) </li></ul><ul><li>The role of marine equipment has increased in the production chain </li></ul><ul><ul><li>50-80% of the product value is subcontracted </li></ul></ul><ul><li>Europe still holds a strong position in marine equipment </li></ul><ul><ul><li>Between 30-40% of the world market </li></ul></ul>
    7. 7. Strong export orientation <ul><li>Shipbuilding is highly international (both at supply and and demand side) </li></ul><ul><ul><li>Europe is a dominant buyer location </li></ul></ul><ul><ul><li>2/3 of shipbuilding production EU is exported. Export orientation in Asia is even higher (80% or more) </li></ul></ul><ul><ul><li>EU marine equipment has an export share of 46% (Korea 10%, Japan 25%) </li></ul></ul>
    8. 8. Industry structure – few very large and many SMEs <ul><li>The world is dominated by large players: </li></ul><ul><ul><li>Top-4 yards worldwide cover 25% of market </li></ul></ul><ul><ul><li>Top-18 yards cover 50% of market </li></ul></ul><ul><ul><li>Largest European yard stands at 38th place </li></ul></ul><ul><li>Europe is characterized by a limited number of large companies and many SMEs </li></ul><ul><ul><li>The average size of EU shipbuilding companies is smaller than China, Korea and Japan </li></ul></ul><ul><ul><li>10% largest companies represent over 90% of turnover </li></ul></ul>
    9. 9. Access to resources <ul><li>Labour </li></ul><ul><ul><li>Labour costs of EU are high although also Korea and Japan are relatively high </li></ul></ul><ul><ul><li>China and new entrant show low labour costs </li></ul></ul><ul><ul><li>Labour costs are less important for high value, specialised production processes; </li></ul></ul><ul><ul><li>Shortage of labour (esp. skilled labour) is an issue in the EU aggrevated by the ageing workforce. </li></ul></ul><ul><li>Steel prices </li></ul><ul><ul><li>Steel prices in Europe are higher than Asia, although the (worldwide) decrease in demand for steel has reduced the gap </li></ul></ul><ul><li>Finance </li></ul><ul><ul><li>Access to finance is important, especially in light of the current financial crisis </li></ul></ul>
    10. 10. Business strategies and changes in competitive environment <ul><li>Market developments (demand) </li></ul><ul><ul><li>Buyer focus may change more towards Asian companies </li></ul></ul><ul><li>Competitor developments (supply) </li></ul><ul><ul><li>Increasing competition in offshore </li></ul></ul><ul><ul><li>Continous attempts to move to higher value segments </li></ul></ul><ul><ul><li>Increasing development of own (Asian) marine equipment industry </li></ul></ul><ul><ul><li>Globalisation (overseas investments, joint ventures) </li></ul></ul>
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