Monday, September 21, 2009

Downturn Profoundly Affects Shipbuilding Worldwide

Industry Needs to Adapt to Changing Market Conditions
Shipping News Feature

WORLDWIDE – Latest figures demonstrate that the financial crisis has had a marked effect on global ship construction patterns. Firms such as Waertsilae Oyj, who supply about one third of ships engines world wide, have already moved significant parts of their operations East to take advantage of conditions more conducive to the industry.

With over half the world’s vessels now being constructed in Asia, European based companies, like the Finnish marine engineers, need to be closer to the vessel manufacturing hubs. Waertsilae say only 17% of new builds are undertaken in Europe.

Despite a strong order book for their non marine activities and for service contracts, the company may make further job cuts other than the 450 already proposed this year. Despite a fall in order volume for new ships equipment of 86% in the second quarter, the group are positive in outlook and shares have risen by nearly 40% this year.

The company’s CEO, Ole Johansson said in a statement, “Owners and shipyards alike will try to postpone the delivery of ships they have on order as they cannot see them being employed for any particular purpose right now.”

This is borne out when one considers the new shipbuilding figures. Seventy million tonnes of new dry cargo carriers were scheduled for 2009 delivery but due to financing difficulties and cancelled orders that figure is actually unlikely to rise above forty million tonnes. Additionally more than ten million tonnes of vessels surplus to requirements are due for scrapping forcing rationalisation across the sector.

 pi. Waertsilae Oyj engine in situ aboard Maersk Line Vessel