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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

Transcript

  • 1. Study on Competitiveness of the EU Shipbuilding Industry – key findings High Level Meeting – LeaderSHIP 2015 Bremerhaven, 11 September 2009
  • 2. Contents
    • Trends and developments
    • Key findings on the competitive position
  • 3. 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)
  • 4. 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
  • 5. Competitive position Europe - SWOT
  • 6. 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
  • 7. 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%)
  • 8. 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
  • 9. 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
  • 10. 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)