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FORECAST 2000 World Shipbuilding (continued) Analyses of future ship construc- tion by groups such as the Associa- tion of West German Shipbuilders and Japan's Ministry of Transport result in similar bullish outlook. The Association of West German Shipbuilders projects ship orders totaling 155 million dwt over the 1991-95 time period. Japan's Minis- try of Transport projects new orders totaling 164 million dwt during the same timespan. Placed in perspec- tive, this would be an average order rate which is about double the cur- rent world shipbuilding output. World shipbuilding will provide a growing market for shipbuilders, marine equipment manufacturers and other marine industry sup- pliers. Prices for ships and ship components will climb to more prof- itable levels as demand begins to approach industry capacity. All shipbuilding and marine equipment manufacturers should be positioning themselves to ride the coming world shipbuilding boom. IMA Associates provides assist- ance in developing market strategy and long-term business plans. The firm's clients include shipyards, equipment manufacturers and oth- er marine suppliers. IMA has per- formed assignments for more than 100 clients in 18 countries. For more information, contact: Jim McCaul at (202) 333-8501. SIZE AND AGE STRUCTURE OF VLCC/ULCC FLEET Size Groups: (Number of vessels and tons deadweight) Year Built 200/254,999 255/319,999 320.000/& over Total 1969 1 206,972 1 206,972 1970 3 700,504 1 280,420 4 980,924 1971 7 1.563.645 3 795,062 10 2,358,707 1972 14 3,322,494 7 1,824.463 21 5,146,957 1973 22 5,131,703 17 4,610,579 39 9,742,282 1974 26 6,191,366 48 13,071,005 3 1,018,270 77 20,280,641 1975 29 6,877,935 45 12,410,869 9 3,400,242 83 22,689,046 1976 16 3,777,487 40 11,017.444 17 6,624,112 73 21,419,043 1977 3 694,705 12 3,379,663 14 5,584,239 29 9,658,607 1978 2 451,469 3 796,797 7 2,774,287 12 4,022,553 1979 4 1,133,059 4 1,898,316 8 3,031,375 1980 1 275,271 1 355,020 2 630,291 1981 2 474,998 1 267,672 1 355,020 4 1,097,690 1982 1 290,084 1 290,084 1983 2 603,313 2 603,313 1984 1 234,733 1 234,733 1985 2 490,006 2 490,006 1986 9 2,150,286 1 317,353 10 2,467,639 1987 5 1,170,334 1 259,992 6 1,430,326 1988 10 2,458,104 10 2,458,104 1989 3 748,903 3 748,903 Total 155 36,645,644 187 51,333,046 56 22,009,506 398 109,988,196 Newbuilding tonnage 1989 10 2,450,000 7 1,898,000 17 4,348,000 1990 4 970,000 8 2.156,000 12 3,126,000 1991 3 726,000 6 1,656,000 9 2,382,000 Total 17 4,146,000 21 5,710,000 0 0 38 9,856,000 Source: Clarkson Research Studies Ltd. U.S. YARDS COULD COMPETE WITH EUROPE IN 1990s* If foreign shipbuilding subsidies are eliminated or substantially re- duced, U.S. shipyards have the po- tential to compete successfully with Northern European yards for con- struction of U.S.-owned commercial tonnage by the mid-1990s. This was the conclusion of a paper delivered at a meeting of the Society of Naval Architects and Marine Engineers (SNAME) held recently in San Die- go, Calif. The paper was prepared by Jay Carson, an associate of Temple, Barker & Sloane, and con- sultant Barbara Lamb. The international shipbuilding situation has changed markedly from that of the early and mid- 1980s, the authors say, resulting in an improved competitive situation for the U.S. shipbuilding industry. Appreciation in foreign currencies as compared to the U.S. dollar, cou- pled with sharp increases in ship- yard labor costs abroad, have driven shipbuilding costs up in foreign yards. In the United States, howev- er, construction costs have gone down and shipyard labor rates have remained stable. 14 Furthermore, whereas through- out much of the 1980s many foreign shipyards endeavored to bid at or below costs, ship prices internation- ally are now on the rise. In fact, they have almost doubled in the past five years and are predicted to increase even more during the 1990s. For example, a very large crude carrier (VLCC) built in the Far East and priced at $42 million in 1984 costs the shipowner about $80 million to- day. By the late 1990s, the price tag is expected to exceed $100 million. Currently, the U.S. and Northern European shipyards have similar to- tal costs for construction of a new ship. Although the European yards have overhead and productivity ad- vantages, these are offset by labor rates that are significantly higher than those of U.S. yards. Neverthe- less, the study authors warn, "with- out U.S. Government assistance to eliminate foreign subsidies, a sub- stantial price differential between the U.S. and its nearest competitors is expected to remain." While U.S. price competitiveness improved during the 1980s, the lack of commercial orders slowed the pace of product improvements in U.S. shipyards as compared to for- eign yards. Although U.S. yards have implemented advanced meth- ods (i.e.-modular construction) in building naval ships, they have not had sufficient opportunities to be- come skilled in applying advanced methods to commercial shipbuild- ing, the paper reports. Mr. Carson and Ms. Lamb see the potential market for American shipyards as U.S. owners of foreign- flag and U.S.-flag ships. Thus, the available market in the 1990s are the U.S. owners of the 10.4 million gross tons (gt) needed to replace the 300-plus, U.S.-controlled and Un- registered ships that are currently 15 years of age and older (assuming a 25-year life span). This includes the 86 ships, totaling 2.14 million gt, in domestic (Jones Act) commerce. Currently, there are 41 ships— mostly product tankers—in the Jones Act trades that are already over 25 years of age. However, to- day's charter rates are not high enough to support newbuildings to replace these aging tankers. In addition to the ships engaged in the U.S. domestic trades, there are 76 large, oceangoing barges that are at or approaching obsolescence. Although not all of these vessels may be replaced with new, similar vessels, at least some will. According to the study, replacement tankers and barges for the domestic trades represent the primary commercial opportunity for U.S. shipbuilders in the 1990s. The best long-term op- portunities for U.S. yards, however, are the more sophisticated ships en- gaged in international commerce. This presents a strategic dilemma which U.S. shipbuilders will have to resolve in order to determine the marketing focus and research and development emphasis throughout the 1990s. Another problem facing the yards will be lack of skilled shipyard workers. "Manpower constraints, rather than facilities, will limit the ability of U.S. shipbuilders to meet the possible demand for commercial (continued) iritime Reporter/Engineering News
