JAPAN SHIPBUILDING INDUSTRY
The world total of newly placed shipbuilding orders in 2001 decreased, reflecting the feared slowdown of the U.S. economy and the impact of the terrorist attacks on September 11. The total stood at 36,499,000 GT, down 20.8% of the year before according to the "World Shipbuilding Statistics" of Lloyd's Register. Of this total, Japan accounted for 14,551,000 GT, up 8.0% over 2000 (representing a share of 39.9%) and holding the top share for the first time in two years, Western Europe (AWES member countries), for 3,684,000 GT, down 44.1% (10.1%), and the ROK, for 11,840,000 GT, down 12.1% (32.4%).
According to the statistics of construction permits issued by the Japanese government, which cover ships of 2,500 GT and upward (excluding passenger ships), 357 ships totaling 13,897,000 GT were ordered from Japanese shipyards in 2001, up 7.9% in the number of ships or 19.9% in gross tonnage over the preceding year.
In a breakdown of the total newly ordered tonnage by the principal type of ship, dry cargo ships accounted for 7,416,000 GT (against 8,694,000 GT in 2000), tankers, 6,422,000 GT (against 2,873,000 GT), and others, 58,000 GT (against 25,000 GT).
To further analyze the dry cargo carrying tonnage, bulk carriers decreased 37.8% on a GT basis, and their share in the total newly ordered tonnage also shrank to 30.7% (against 59.1% in the year before).
Orders for crude oil tankers totaled 4,328,000 GT, up by a massive 164.5% in GT over the year before, and their share in the total newly ordered tonnage also expanded to 31.1% (against 14.1% in 2000). They included 12VLCCs of 1,902,000 GT (against eight vessels of 1,270,000 GT).
The past year saw orders for more LPG carriers and LNG carriers than in the preceding year, respectively totaling 23 of 386,000 GT (against 17 of 284,000 GT) and seven of 653,000 GT (against five of 516,000 GT). Orders for chemical carriers and product tankers also increased respectively to 37 of 369,000 GT (against 16 of 176,000 GT in 2000) and 23 of 687,000 GT (against eight of 260,000 GT).
In breaking down the overall newly ordered tonnage into domestic and export vessels, while the former totaled 379,000 GT (representing a share of 2.7% in the overall order intake, up 247.7% over the year before), the latter stood at 13,517,000 GT (a share of 97.3% and up 17.7%).
For additional reference, newbuilding orders worldwide in the January-June half of 2002 added up to 8,520,000 GT according to "World Shipbuilding Statistics" of Lloyd's Register, in which the share of Japan was 3,441,000 GT (or 40.4%), that of Western Europe (AWES member countries), 530,000 GT (or 6.2%), and that of the ROK, 3,354,000 GT (or 39.4%).
In 2001, keels were laid for 343 vessels of 12,155,000 GT (up 22.4% over the preceding year), 345 vessels of 12,378,000 GT were launched (up 6.8%), and 343 vessels of 12,002,000 GT were completed (up 0.6%). Thus, shipbuilding activities expanded in all three aspects including keel-laid, launched and completed tonnages over the year before.
The newbuilding order backlog of Japanese shipyards at the end of June 2002 stood at 391 vessels of 17,355,000 GT, up 4.1% at the end of June 2001. The total comprised 25 domestic ships of 663,000 GT and 366 export ships of l6,692,000 GT.
Repairs and Conversions
Repair and conversion work in fiscal 2001 recorded a total of \100 billion, down 9.9% from the previous year. The amount of repair and conversion work for fiscal 2001 was the lowest since fiscal 1981. This is due to the fact that the number of domestic and export ships had gradually declined.
The number of workers engaged in shipbuilding (including those employed by subcontractors) and ship machinery manufacturing was 108,000 in April 2002. The average age of workers at present is over 40 years.
Improved working environment and employment conditions are necessary for facilitating recruitment of young employees, and the industry must also provide training systems to attract competent staff.
In Japan, further modernization and automation of shipbuilding facilities are now in progress based on computer-aided engineering methods such as CAD/CAM in engineering departments, to cope with the decreased number and aging of skilled workers, while seeking increased productivity.
The final goal of such modernization is to incorporate CIM using the most advanced information processing techniques including CALS into shipbuilding. Individual shipyards have been conducting R&D on shipbuilding CIM since 1992.
The combined sales of the 18 member companies of the Shipbuilders' Association of Japan were \6,602 billion in fiscal 2001, representing a 4% decrease from the preceding year. In a classification of total sales by business sector, the shipbuilding business (comprising newbuilding, ship repair and conversion) amounted to \1,344 billion (up 2.6% over the preceding year), and all other sectors (heavy machinery, industrial plants, etc.) to \5,258 billion (down 5.8%).
The share of the shipbuilding sector in total sales was 20% in fiscal 2001. The contribution of the shipbuilding business to overall sales of the companies averaged 13% for the seven majors and 93% for the 11 medium-size shipbuilders. This indicates a very high proportion of non-marine business in the seven major companies, whereas the 11 medium-size companies are more specialized shipbuilders, relying heavily on the marine business.
Fig. 1 Japan's newbuilding
The international shipbuilding market for oceangoing vessels today is relatively strong with its production level at the highest in the last 20 years, as the great number of large ships built in the 1970s are now up for replacement. In addition, as the phase-out of single-hull tankers has been accelerated, a decent level of newbuilding demand can be expected in the short-term future. However, while the supply capacity is likely to keep on expanding with capacity increase in newly emerging shipbuilding countries and productivity rise in existing facilities, the demand is anticipated to fall from the middle of the 2000s onward. Therefore, it is feared that the supply-demand gap may widen in the future, resulting in further intensifed international competition. Furthermore, the future of the shipping market is becoming increasingly unpredictable as the U.S. economy is slowing down and the tanker market is weakening. The stability of the shipbuilding market may suffer accordingly.
Fig. 2 Shiprepair sales
Source:Data obtained from The Shipbuilders' Association of Japan
In order for major and medium-size builders of oceangoing ships to successfully survive international competition in the 2000s, the urgent challenge is to upgrade the structure of the industry to become capable of meeting diverse needs while strengthening its cost-competitiveness.
Meanwhile in the domestic market for coasting ships, smaller shipbuilders are suffering a serious depression, as the newbuilding demand for smaller vessels has plummeted reflecting a drop in cargo traffic due to recession at home, structural changes in physical distribution by coastal shipping ensuing from changes in the mode of transportation and the reorganization of shipper industries. Tightened international control on fishing activities entailing a cutback on the tuna fishing fleet is another negative factor. Therefore, these shipbuilders are urgently required to strengthen their technological and financial bases and to adjust their output so that they can remain capable of steadily supplying vessels adapted to the changing needs.
In order to enable shipbuilding to remain an attractive industry in many decades to come, it is essential that new markets for shipbuilders be developed through early commercialization of next-generation technologies including those for the Techno Superliner and the Mega-Float in addition to the construction of traditional oceangoing and coasting vessels.
Restructuring of Japanese Shipbuilding lndustry
In the context of intensifying international competition in shipbuilding, the former Ministry of Transport in 1999 convened tne meeting of a group of experts on structural problems of shipbuilding, to analyze the whole Japanese shipbuilding industry, and to find out what could be done to address such problems. The group released a report to the effect that major shipyards constituting the core of the nation's shipbuilding industry should achieve enhanced cost competitiveness and extensive business activities at the same time. The report further stated that this would require integration of business managements to realize economies of scale at all stages of shipbuilding operations including sales, design and procurement.
In the wake of this report, noticeable moves toward realignment of the industry have been under way among major shipbuilding companies since the fall of 2000, including comprehensive tie-ups in the shipbuilding sector and studies on possible spin-offs or mergers.
In June 2002, the Competitive Strategy Conference for the Shipbuilding Industry was set up with a view to help keep the Japanese shipbuilding industry competitive in the world market. The newly instituted forum began analyzing the current status and challenges as well as studying what measures can be taken and how international issues can be adequately addressed.
Measures for Smaller Shipbuilders
Smaller Japanese shipbuilders, mainly serving the market for coasting vessels and fishing boats, are suffering a serious drop in demand due to the structural change in coastal shipping reflecting the state of the national economy at large and to successive cutbacks on the fishing fleet necessitated by the changing situation of international fishing. On the other hand, both qualitative and quantitative requirements regarding coasting ships are expected to change substantially reflecting changes in the nation's economic and employment structures and the rising environmental concern. Against this background, the following measures are being implemented in an integrated way to strengthen the industrial basis of smaller shipbuilders and keep them technically and financially capable of supplying vessels adequately adapted to the changing requirements of society.
|| Consolidation of management bases: Enhancement of technological
capabilities, reconstruction of business activities, and creation of new demand
through projects to consolidate management bases under the Law for Supporting
Reforms of Small- and Medium-Scale Companies.
|| Creation of new demand: Speed up replacement of government-owned
ships among other things.
|| Maintenance and improvement of skills: Handing down of skills
from generation to generation and their further advancement.
Commercialization of Techno Superliner
The Techno Superliner (TSL) is a revolutionary ship, developed with state support, capable of carrying large volumes of cargo at twice as fast as a conventional cargoship. If and when TSLs enter commercial service and high-speed marine transport networks using them are created, the new means of transport will contribute to vitalization of regional economies, provision of an alternative transport route in the event of a major disaster, help create new industries and new job opportunities, and to exerting positive socio-economic impacts in other respects as well.
At the same time, because of its entirely new technological features, the TSL has been expected to be faced with problems of its own including higher construction, operating and maintenance costs than conventional ships. With an eye to overcoming these problems, it was decided to develop a scheme to support the commercialization of TSLs by (1) setting up a new ship holding and managing company to lease out TSLs to operators and thereby to lessen their burden of initial investment, (2) working out an integrated technical support system covering different aspects the operation of TSLs including optimal operation management, and (3) facilitating building fund procurement.
Under this scheme, establishment of the ship holding and managing company (Techno-Seaways Inc.) was realized in June 2002, with investments by shipping, shipbuilding, logistics and international trade interests together with the Development Bank of Japan. The construction of the first TSL is scheduled to start within this fiscal year, and operation is expected to begin in the spring of 2005 on the route linking the Ogasawara Islands with the mainland.
Promotion of International Cooperation
For shipbuilders worldwide who share a single international market to achieve harmonious development, it is indispensable that international cooperation, be pursued through development of a common perception of the status of newbuilding supply and demand and establishing a fair competitive discipline. As a leading shipbuilding nation, Japan has been committed to international cooperation by taking initiatives in the OECD framework and elsewhere toward addressing the challenges the industry is faced with so that it can continue its contributions to the development of international society and economy.