Kvaerner move is sign of dangers facing shipyards

by Alan Dickey

Norwegian group Kvaerner’s decision to withdraw from shipbuilding is merely a symptom of a wider threat to the industry’s survival, EU shipbuilders have warned.

The Committee of European Union Shipbuilders’ Associations claims that the `momentary, unsatisfying profitability’ which caused Kvaerner to quit shipbuilding – with profoundly depressing implications for one of Britain’s oldest engineering sectors on the Clyde – was the direct result of the low prices offered by South Korean yards, supported by their government.

Korean prices are estimated to be around 30% lower than average European levels. `Korea has clearly defined shipbuilding as a strategic industry and does and will support it accordingly,’ the association declared. `The enormous productivity gains accomplished by European yards in recent years, making them highly competitive, cannot equal the effects of this industrial policy.’

It said Kvaerner’s decision should make it clear that European shipbuilders’ complaints about unfair competition were not just an attempt to secure subsidies, but a response to `very real dangers’.

The association said Europe had to decide whether shipbuilding was an important industry that deserved to be protected from unfair competition.

It warned: `Europe has to face the reality that shipbuilding, with all its technological know-how, its strategic value and an important employment factor, especially in peripheral areas, will cease to exist if it lacks a clear political will in its favour and if it lacks fast action.’

This gloomy prognosis coincided with a similar warning from Fincantieri, Italy’s largest shipbuilder. Corrado Antonini, its chairman and chief executive, said South Korea’s commercial aggression was `putting into grave difficulty the most prestigious European shipyards’.

Profitability in the shipbuilding sector dived in 1998 and the problems are not restricted to Scandinavia, Scotland and Italy. In the Netherlands there’s a widespread belief that dumping by Korean shipyards has pressurised price levels, and the future of the Dutch industry will be dire without further government subisidies.