Shipping threat from the East

Europe’s shipbuilding industry fears that Asian rivals are set to storm into the passenger and cruise ship sector, which is currently dominated by European yards. Michael Birley, director of Clarkson shipping brokerage, told a House of Lords sub-committee last week that ship yards in Asia were looking closely at this market. And he warned that […]

Europe’s shipbuilding industry fears that Asian rivals are set to storm into the passenger and cruise ship sector, which is currently dominated by European yards.

Michael Birley, director of Clarkson shipping brokerage, told a House of Lords sub-committee last week that ship yards in Asia were looking closely at this market.

And he warned that the proposed cut in the 9% EU shipbuilding subsidy from the end of this year could force job losses in the face of growing competition from the Far East.

The Government has estimated it would cost £39m to continue the subsidy until 2000.

Europe holds 85% of the world passenger and cruise shipbuilding market.

Although the UK industry has been declining, it still has turnover of £3.4bn and around 800,000 workers in shipbuilding and related industries.

Birley said Europe had also remained strong in the value-added sector, for roll on/roll off ferries and freight vessels, stainless steel chemical tankers and specialist vessels for the offshore rig industry.

Asian yards, meanwhile, account for 45% of the tanker market, but Asian shipbuilders would not always be content to provide simpler bulk carriers and tankers, he said.

‘Where we do hold a market lead, it is being eaten into the whole time,’ Birley said.

European shipbuilders with value-added expertise may be able to enter joint ventures with Asian firms in the next 5-10 years.

China had doubled its shipping output in the past five years with no new yards and has just opened a greenfield yard in Shanghai’s Pudong development zone.

A strong domestic shipbuilding market in Japan had been hit by the Asian financial crisis, forcing the Japanese to look to expand shipping export markets.

The collapse of South Korea’s currency had also improved the competitiveness of Korean shipping exports.

Birley told the sub-committee that indirect aid would help maintain local workforces and regional economies.

He said Dutch and German shipbuilders already enjoyed tax incentives.