The first few years of the twenty-first century have been indelibly marked by the terrorist attacks on the United States of America and, more recently, by signs of a global economic slowdown. The events of September 11th caused an instant transformation in the nature of international relations, resulting in the tense conditions that we still bear witness to today. Whether from a political or economic perspective, it is difficult to be optimistic.

　The latest round of WTO Ministerial Conference took place in November 2001. Aside from the shadow cast by international terrorism, the Doha round was significant in that China gained full membership of the Organization. For the remainder, delegates continued their efforts in negotiating policies designed to make international trade freer and fairer. Accordingly we can expect a global economy in which competition is not only inevitable but also more intense than ever before.

　Nonetheless, in the last couple of years shipbuilders have managed to maintain a satisfactory number of orders. The industry has been helped by new stimulus in several areas, including replacement demand for vessels reaching the end of their useful lifetimes, and demand for LNG tankers and other vessels that use cleaner energy sources and utilize the latest developments in green technology. And demand has also materialized for even larger container ships as a rapidly globalizing economy produces an equally rapid rise in the volume of manufactured goods being transported across the world's seas.

　However, the existence of new demand has not prevented ship prices from flattening out at relatively low levels, and many in the industry are pointing to the expansion of production facilities in new shipbuilding nations, especially China, as one factor responsible for a significant gap emerging between worldwide supply capacity and worldwide levels of demand. It seems safe to assume that the industry will experience even tougher competition in the coming years.

　Steps are being taken within the Japanese shipbuilding industry to respond to the needs and challenges brought about by a rapidly changing world, and to ensure the industry continues to remain competitive. Major industry players are improving their business efficiency either through consolidation or through breaking down into smaller units. The government is implementing policies necessary to develop the industry, and encourage the establishment of fair competitive market globally. It is also actively supporting a wide range of research and development programs (especially those related to environmental technologies) as a means of opening new areas of demand.

　This report describes the current status and the future direction of shipbuilding in Japan. I sincerely hope that this publication will open your eyes to shipbuilding in Japan and elsewhere, and contribute to your understanding of the issues facing the industry.