At the main Hyundai Heavy Industries shipyard in South Korea, there is a rocky hill where you can drive up and overlook the expanse of its shipbuilding empire. Scanning the docks stretching out on the flat basin below, visitors can usually count at least a dozen big ships in the process of construction.
The economies of scale of such yards are one thing, but many in the shipbuilding industry are also pointing to the predatory pricing practiced by Asian shipbuilders, which is knocking European rivals out of the market. No one in Europe seems able to do anything about it. World trade anti-dumping rules cannot easily be applied to ships and there is no other protection for European shipbuilders. Kvaerner could, arguably, have stuck it out longer in shipbuilding had it not got itself so heavily lumbered with debt from its Trafalgar House acquisition. But in the long term, competing with Asian yards looked like a hiding to nothing.
Kvaerner’s more profitable yards look set to find buyers, but the future for the loss-making Govan yard is unquestionably bleak. In the run-up to the Scottish elections, the Government is making relevant noises about helping to find a buyer. The industry as a whole, though, could do with a cut in capacity in Europe. What’s more, the retraction of investment in the offshore industry in the wake of oil price weakness means that reinventing the yard as a centre of heavy engineering for oil and gas is unlikely.
All this is grim news for workers on the Clyde, particularly in view of the enthusiasm with which they have embraced new flexible working practices under Kvaerner. It will now take an enterprising leap of imagination from the region’s engineering firms to find a way of tapping into this talented workforce and save them from a future working in the call centre or shopping mall.