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11 Greek Maritime Cluster Research Results Shipbuilding SWOT Analysis
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11 Greek Maritime Cluster Research Results Shipbuilding SWOT Analysis

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  • Clusters can be characterized as networks of production of strongly interdependent firms linked to each other in a value adding chain. Clusters of industries create sustainable competitive advantage. Identify sectors and understand their interaction in an attempt to reinforce cluster at various policy levels.
  • Clusters arise because of agglomeration economies (regional economics, economic geography) Firms cluster together because of the presence of: a large labour pool inside the cluster. The presence of such a labour pool reduces search costs. Furthermore, such a labour pool allows for the existence of specific training and education programmes, which upgrade the quality of the labour pool. suppliers and customers in a cluster. A location in the proximity of suppliers and customers offers cost advantage s because of low transport costs. Proximity also enables closer monitoring and frequent face-to-face contacts. ` knowledge spillovers’ in clusters. Knowledge spills over easier and more rapidly locally, because of frequent interaction and because developments are easy detected locally
  • Germany and Italy are traditionally the largest shipbuilding nations in Europe followed by countries such as Romania, The Netherlands, Poland, Croatia and Spain. Turkey has grown very fast and is now among the top four in Europe in terms of total order book.
  • A leading position globally in the construction of: cruise ships, ferries, mega-yachts and dredgers. A strong position in the building of submarines other naval vessels
  • http://ec.europa.eu/enterprise/sectors/maritime/files/fn97616_ecorys_final_report_on_shipbuilding_competitiveness_en.pdf
  • The global financial crisis had a substantial impact on Greek shipbuilding industry whose position in the market had been already aggravated by the intense competition it faced from countries of low labour cost. In an attempt to re-enter international markets, Greek shipyards went through a series of structural changes which mainly included privatizations, programmatic agreements with the Greek state, the move towards building vessels not easily built in low-labour-cost countries, and technological and organizational modernization. Yet, despite these changes, the expected conditions that would gradually lead the Greek shipbuilding industry to the hoped-for state of profitability have been met.
  • Business strategies Businesses in various countries are responding differently to changes in their competitive environment. Two main strategies can be distinguished: • Safeguarding the low cost production; • Specialisation and innovation strategies. The first strategy is strongly influenced by the type of ships that are produced (mass, standardized production) and whether the production process can be organised in such a way that the cost advantages can be retained. This can be done either by having low labour costs, creating highly efficient (e.g. automated) production processes, or by outsourcing (parts of) the production chain to other, low cost countries. The second strategy is dominant in Europe which increasingly focuses on high end specialised complex ships that are produced in limited numbers. Also a combination of both strategies can be found in a number of countries, which is triggered by the particularities of the ships that are produced there
  • Greece's developed shipyards are Skaramangas, Elefsina, Syros and Avlida, which is now in the process of privatisation. An important part has also been played, mainly with regard to repairs, by the Piraeus-Perama ship-repair zone, which operates on the basis of independent small and medium-sized enterprises (SME s). The activities of these SMEs, which in recent years have been in deep crisis, have at times represented more than 50% of total repairs performed in Greece. The ship-repair zone owes its share of the market to the important know-how of the shipbuilding and ship-repair teams that work there. The Skaramangas shipyard is the biggest industrial shipbuilding unit, as far as turnover and number of workers are concerned. During the past 15 years, however, turnover in Greek shipyards has been steadily decreasing, as has the number of persons employed. Up to 1985, Greek shipyards employed about 15,000 primary workers, and around 20,000-30,000 peripheral workers in small industries in Piraeus: at present, they employ no more than 4,500-5,000 workers.

11 Greek Maritime Cluster Research Results Shipbuilding SWOT Analysis 11 Greek Maritime Cluster Research Results Shipbuilding SWOT Analysis Presentation Transcript

  • KATERINA VOUTSINA & THODORIS PELAGIDIS & GEORGIOS DAFNOSThe Greek Shipbuilding Industry asa trigger of nationalcompetitiveness
  • The concept of clusteringThe concept of clustering has become a centralconcept for analyzing the competitiveness of nations,industries and firms.A cluster is defined as `a population ofgeographically concentrated and mutually relatedbusiness units, associations and public (private)organizations centered around a distinctiveeconomic specialization’.
  • Agglomeration economiesFirms cluster together because of the presence of: a large labour pool inside the cluster. The presence of such a labour poolreduces search costs. Furthermore, such a labour pool allows for theexistence of specific training and education programmes, which upgradethe quality of the labour pool. suppliers and customers in a cluster. A location in the proximity ofsuppliers and customers offers cost advantage s because of low transportcosts. Proximity also enables closer monitoring and frequent face-to-facecontacts. `knowledge spillovers’ in clusters. Knowledge spills over easier and morerapidly locally, because of frequent interaction and because developmentsare easy detected locallyThe notion of sustainable competitive advantage
  • Maritime ClustersMaritime activities, such as shipping, shipbuildingand port and maritime services, geographicallyconcentrated
  • TRENDS IN THE GREEK MARITIME CLUSTER
  • The Greek Maritime Cluster(Icana et al, 2009)
  • Greek maritime cluster competitivenessWithin the European Union, the Greek maritime cluster(which includes shipping as well as all related andsupporting industries) ranks-6th in terms of the value added that it generates in thenational economy, and-5th in terms of providing employment, despite the factthat Greece controls the largest fleet in the world.Moreover, Greece only manages to produce 3% of the totalvalue added in the region, whereas countries such as theUK, Italy, Germany and Norway produce substantiallymorePolicy Research Corporation, 2008
  • Reasons for the low value addedFirst, industries relating to and supporting theshipping cluster are small in Greece.Second, the shipping cluster itself has a small valueadded relative to its size.Greece’s productivity, while being lower overall, ismuch more concentrated in shipping, whereas thevalue added in Norway and Germany is moredispersed in seaports, marine equipment andshipbuilding.
  • The European shipbuilding industry
  • Share turnover in repair and newbuilding byEuropean countries in 2007
  • Shipbuilding industry is strongly export orientedin all regionsSouth Korea: in 1990, about 15% of its production valuewas destined for the domestic market and 85% wasexport. Since 1995, the latter has increased to more than99%.China: In 2007, the exports of newbuildings accountedfor 81 percent of total production, while the inflow of neworders was already 89 percent of foreign origin.Japan: While in 1971, domestic shipbuilding new ordersin Japan surpassed export order for the first time in tenyears, in 2004 the share of export new orders was 99%(9.75 million GT).http://ec.europa.eu/enterprise/sectors/maritime/files/fn97616_ecorys_final_report_on_shipbuilding_competitiveness_en.
  • Europe vs. Asia Europe clearly shows higher labour costs in comparison to its Asiancompetitors, although low labour cost competition is mainly focused onChina and emerging shipbuilding nations. Korea and Japan do not havesignificantly lower labour costs and have even higher labour costs thansome European countries (such as Romania). Due to its specialization in the high value added segment of the marketlabour costs are less of an issue in shipbuilding in Europe. Although R&D is important for shipbuilding in Europe which focuseson relatively complex, high value ships, expenditure on R&D in Europeand Korea shows that all countries have a R&D ratio below 1% Urgent need of specialized workforce
  • Global Shipping Industry (I)CESA Shipyards Activity (Source: CESA)
  • Global Shipping Industry (I)EU-27 Shipyards Activity (Source: CESA)
  • Global Shipping Industry (II)Chinese Shipyards Activity (Source CESA)
  • Global Shipping Industry (III)JPN Shipyards Activity (Source CESA)
  • Global Shipping Industry (III)South Korean Shipyards Activity (Source CESA)
  • Global Shipping Industry (III)World Shipyards Activity (Source CESA)
  • Shipping Capacity per Region 1991-2012Shipbuilding Facing New Challenges
  • Shipbuilding Industry in crisis
  • World Orderbook by Area
  • World Orderbook by Ship Types
  • Dry Cargo Freight Indices in Crisis 2005-2011
  • Too Many Ships Chasing Too Few Cargoes
  • Foreign Governments’ response to crisis
  • Greek shipbuilding industry in crisisthe global financial crisisintense competition it faced from countries of low labourcost.Introvert instead of extrovertattempt to re-enter international markets: Greekshipyards went through a series of structural changeswhich mainly included: privatizations, programmatic agreements with the Greek state, technological and organizational modernization.Yet, despite these changes, the expected conditions thatwould gradually lead the Greek shipbuilding industry tothe hoped-for state of profitability have been met.
  • Greek shipbuilding industry: s.w.o.t. analysisSTRENGTHS• superiority of geographicallocation• lengthy experience and highlycoherent network-comparative advantage in thebuilding of ferry boats snd cruiseboats- the big size of the GreekshippingWEAKNESSES• cost levels (wage levels)• access to skilled labour• access to finance (financial crisisand lack of confidence ofinvestors and banks regarding theshipbuilding industry)• Low productivity (organizationalrigidities,• lack of a coherent governmentalpolicy and strategy to supportshipbuildingOPPORTUNITIES• new segments- move towardsbuilding vessels not easily built inlow-labour-cost countries• many SMEs under-exploited• prospects of specialization ongreen shipbuilding• European funded programmes andactions that support innovation«LeaderSHIP 2015» ή το«Seaborne 2020»• enhanced requirements regardingshipping standardsTHREATS• Greek shipowners are not willingto change the flag under whichthey operate• price competition• financial crisis• strikes• limited national or Europeanfunds
  • Business StrategiesSafeguarding the low cost productionVs.Specialization and innovation strategies
  • Skaramagkas (Hellenic Shipyards S.A.)shipyard caseHellenic Shipyards S.A.: is the largest shipyard in Greeceand one of the largest in the area of the easternMediterranean.there has been a significant drop-off in both repairs andnew shipbuildingthe work of the shipyard is primarily based on theconstruction and renovation of ships within theframework of the equipment programme of the GreekNavy, and railway car construction under agreementsconcluded with the Hellenic RailwaysOrganisation (OSE) and the Athens-Piraeus ElectricRailway Authority (ISAP).secondary activities include ship repairs for the merchantmarine and the recent construction of three car ferries.
  • Skaramagkas (Hellenic Shipyards S.A.)shipyard caseParadox:Since its privatization, the shipyard underwent throughan extensive restructuring. Investing heavily in state-of-the-art technology and infrastructure, it aspired tostrengthen its competitive position worldwide andbecome a leader in technology and service provision.Yet, in September 2010, the Greek governmentacknowledged the total debt of 1.321 billion Euros toHellenic Shipyards S.A. and 75.1% of the Greek shipyard’shares have been transferred to Abu Dhabi MAR LLC.Paradox and Possibilities of resurgence?
  • Thank you!