In 2002, members of The Association of Danish Shipbuilders completed 15 merchant ships totalling 431,000 GT or 316,000 CGT, where in 2001 the Danish yards completed 13 merchant ships totalling 355,000 GT or 254,000 CGT. The contract value of ships completed amounted to 3,6 bill. DKK in 2002 down from 4.7 bill. in 2001.

　

 Direct employment with the shipyards at the end of 2002 stood at 3.360 persons of which 2.820 in shipnewbuilding. This represents a reduction compared to the situation at end 2001, where the workforce of the yards was 4,320 persons of which 3,680 in newbuilding. In addition to this, it is estimated that by the end of 2002, additional 2 - 300 + persons worked in the yards as subcontract labour in newbuilding.

　

 Following problems with delivery of factory-trawlers ordered for operation in Russia Orskov Christensen Steelshipyard Ltd. ceased newbuilding activity in spring 2003 and the repair activities was transferred to a new company, Orskov Yard Ltd.

　

 Subsidies and other trade distortions still obstruct international competition within shipbuilding. In the past, unsuccessful attempts have been made to stop such distortions through international agreements. Such an agreement, however, would appear to be a necessary element in a solution leading to a free and open market without trade distortions. It is, however, also important to ensure that an agreement is effective and respected by all participating parties. The new negotiations in the framework of the OECD aimed at establishing such agreement is therefore welcomed.

　

　

 In Denmark, 2 repair yards offer dock capacity for ships with a length of more than 200 m. Besides that, a number of other repair yards offer docks with capacity for smaller ships. The market for repair and conversion of ships is extremely competitive and especially the market for repair of small ships has been harsh with a reducing size of the market as the number of smaller ships in the area has continued to shrink.

　

 The level of activity in shiprepair and shipconversion in 2002 decreased compared with the year before. Prices remained depressed under influence of a too high capacity compared to the demand.

　

 In total the yards of The Association of Danish Shipbuilders directly employed approx. 540 persons in repair and conversion as per 31.12.2002 down by 30 persons compared to the situation one year earlier. An additional relatively large number of subcontract labour was employed as well.

　

　

　

 The economic development was unchanged in year 2002 compared with the year before. GNP increased by 0,6 % in 2002 and is predicted to grow by 1,8% in 2003. Industrial output increased by 1,3 % in 2002 and is expected to grow by 1,8 % in 2003. There are no signs visible at the moment indicating that unemployment, for a long time a rather severe problem in the Finnish economy, is going to decline during the coming year.

　

　

 There were no major changes in the actual shipbuilding activities in 2002. At the end of the year, the order books of the shipyards contained 7 large vessels, a total of 543.000 cgt. However, it became increasingly difficult in the course of the year for the shipyards to win new orders; only three new vessels, a total of 156,000 cgt. were booked in 2002. On the other hand, seven ships were delivered, totalling 358.000 cgt.

　

 The shipyards had a good 6,000 people in their direct employ at the end of the year. In addition, about 3,000 people employed by various subcontractors worked on the shipyards.

　

 For the purpose of enhancing cooperation between the shipyards, subcontractors and design offices as well as to better look after the sector's interests, a new branch organisation, the Association of Finnish Marine Industries, was founded towards the end of the year 2001. Its membership, over 40 companies at the end of the year, consists of new building yards, marine equipment suppliers, turn-key suppliers as well as the off-shore industry and design offices.

 

 Because so few new orders were obtained in 2001 and 2002, the new Association turned towards the Finnish government at the beginning of 2002, requesting for a study of any possibilities of alleviating a possible new shipyard crisis in Finland.

　

　

　

 After 3 years at very high levels, the US dollar has lost about 20% of its value against the euro, in 2002. This implied difficulties for exporting industries, particularly shipbuilding.

　

 The general economic situation in France was very sluggish in 2002/beginning of 2003 with a growth rate of about 1.5 - 2%. Unemployment rate began to rise, from 9% to close to 10%.

　

　

 Due to the near complete halt of cruise ship orders, worldwide, since the beginning of 2001, the orderbook of French yards continued to fall heavily.

　

　

 In the field of LNG carriers, Chantiers de l'Atlantique received a remarkably order for a medium sized vessel, technically very innovative, but was not able to counter the dumping of Korean yard, for big sized LNG vessels.

　

 The second French yard by size, CMN, confirmed its rise on the market of super yachts.

　

 Alstom Leroux Naval was busy with oceanographic vessels in its Lorient site, but the Saint-Malo yard was to close beginning of 2003.

　

 Other CSCN' s members (Piriou, Socarenam and Ocea) are building fishing vessels, yachts and various special vessels.

　

 State owned DCN (Navy building / repairing) is continuing its restructuring, and is due to become a commercial company in June 2003.

　

　

 The activity remained sustained in the last core of French repairers in Brest, Dunkerque and Saint-Nazaire, while Soreni in Le Havre, and CMR in Marseilles, after uncertain years, have begun to recover markets in 2002.

　

　

　

 Contrary to expectations the recovery of the world economy failed to occur in 2002. The weakness of the German economy also continued. Despite some improvements compared to the worse second half year 2001 the economic growth remained sluggish with an annual rate of 0.2 % after 0.6 % in 2001. Despite the Euro's appreciation, starting in the second quarter, impulses came mainly from foreign demand. Exports increased by 2.1 % whereas imports declined by 2.2 %. Growth was also supported by moderate acceleration of consumer spending. Investment, in contrast, declined again (by 6.5 %). Low interest and inflation rates had no stimulating influence. These developments had negative impacts on employment. The unemployment rate, already at a high level, increased again to 9.8 % putting additional weight on social security systems and increasing the budget deficit of the state. Hence, the re-elected government has no alternative as to initiate structural reforms especially in view of social security systems and the labour market in order to give new impulses to the markets.

　

　

 During 2002 the employment of the shipyards was ensured by still satisfying orderbooks. German shipyards delivered 68 ships with 1.2 mCGT worth about 3.4 m€. This exceeds the results of previous years considerably. However some newbuildings delivered in 2002 were already largely completed in 2001. As such a situation could also be observed already one year before it seems appropriate to speak about a constant average production level during the years 2000-2002 of about 60 annual completions corresponding to about 1.1 mCGT and a value of3 bn€.

　

　

 In 2002 container ships made up almost 50 % and passenger ships/ferries about 40 % of all deliveries. Other deliveries included double hull oil and LPG tankers, ro-ro vessels and a set of specialised sophisticated vessels.

　

 Due to the sharp price-competition in world shipbuilding German yards were not able to replenish their orderbook by new orders to an extent as has been worked off during the year. After the EU had stopped all contract related subsidies at the end of the year 2000 German shipbuilders could not bypass the not cost covering newbuilding prices caused by unfair competition of Korean yards. From January 2001 to September 2002 (21 months) German yards booked an order volume of 0,3 mCGT only, worth 1 bn€, corresponding to a third of a normal annual production. After the EU had decided to allow a temporary defence mechanism starting in October 2002 German yards were able to secure an order volume of about 1 bn€ during the fourth quarter. However, the orderbook melted away from 10,6 bn€ to 5,5 bn€. For two shipyards the decision came too late and they had to declare their insolvency.

　

 Hence, it was not possible to keep the number of employees, which had been stable during the last 4 years. Due to the low level of new orders in 2001/2002 employment figures began falling back during the year 2002 to about 23,300 employees of which 16,800 were engaged in merchant ship newbuilding.

　

 Including all other activities like naval shipbuilding, repairs and conversions as well as the construction of boats and yachts and inland waterway vessels the total turnover of German yards increased from 4,7 bn€ to 5,3 bn€ The export share amounted to 58 % (2001 : 64 %).

　

　

 Shiprepair and conversion carried out by German yards during 2002 kept more or less stable compared with previous years. The total turnover for shiprepair and conversion activities in 2002 amounted to 591 Mio € (2001 total: 674 Mio €). The decrease mainly derived from the rather good employment in the newbuilding sector and from the a. m. insolvency proceedings of two shipyards, which were also active in repairs and conversions. When writing this report the future of both yards was still unsettled.

　

 Due to the development of exchange rates the competition from Polish yards has weakened during the first halfyear. In the second halfyear however this tendency has changed again and the Polish as well as other East European low cost competitors became stronger especially with regard to contracts with intensive steelwork and painting. Spanish yards are strong competitors with respect to conversions and the Dutch yards with respect to the yacht market.

　

 Whereas stronger safety rules and inspections had no significant impact on the German repair business the unilateral EU decision on prohibiting the application of TBT-containing anti-fouling systems by 1. January 2003 in anticipation of the IMO rules which are not yet in force has significantly weakened the competitiveness of German repair yards with regard to shipyards outside the EU.