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Back to SSG 6
 Most yards are small and located in rural areas, like Kvina Verft near Flekkefjord, about to complete the Normand Ferking. Photo: Dag Bakka Jr
Shipbuilding in Norway at an all-time high
This year there will be on the average two delivery ceremonies every week, if the 108 vessels contracted for 2008 completion are keeping their schedules.
The frantic activity at the shipyards is a reflection of the very large order book – some NOK 76 billion (EUR 9.6 billion) at the beginning the year. This is the highest order value ever recorded, and also production value has been reaching new heights. It is indeed an energy-driven boom, as 90 per cent of the order value is for offshore vessels.
Last year 85 vessels were delivered from 30 shipyards, ranging from 17-meter pilot vessels to a 42,500 DWT juice tanker. The total production value amounted to NOK 15.2 billion; well above the recent average of 9 billion. The corresponding value for 2004, however, was just NOK 4.4 billion, which is a testimony to the flexibility of the industry.
Of the traditional markets, the offshore segment made out 74 per cent of the production value, passenger vessels 13 per cent, cargo vessels 7 and fishing vessels 4.6 per cent. The higher production value comes largely from the more complex and expensive vessels for specialized use, such as subsea construction, inspection, maintenance and repair, seismic research, etc. An offshore vessel of 100 meters length with a tonnage of 7,000 gt may well have a building cost of USD 100 million, roughly the same as two panamax bulk carriers of 75,000 DWT.
 Contracting
New orders during 2007 totalled NOK 32.1 billion (EUR 4.1 billion), with a very high share of offshore-related ships. The trend has been for fewer but more sophisticated vessels. The export share is still as high as 30 per cent, reflecting the somewhat late entry of foreign owners into the offshore business, notably German, Greek and Japanese.
The yards have enjoyed a bonanza almost without precedence. On one hand they have been at liberty to increase prices, as seen from standard UT755 medium-sized platform supply vessels rising from NOK 130 million to 180 million in a couple of years. On the other hand, equipment manufacturers are also charging higher prices, as do subcontractors who are eagerly sought after.
Most yards are fully booked through 2009, and the demand for machinery and vital components will virtually prevent any sooner completions. Aker Yards have managed to sell out capacity well into 2011 for the Brevik and Langsten yards.
Flexibility and projects
The reason why Norway has been able to maintain a large number of smaller shipyards is, of course, the part they play in a wider maritime cluster. The cluster comprises a diverse home market with close customer relations and supported by a technology industry, but above all the flexible organization of limited employee groups and a large number of specialist sub-contractors.
This makes for adaptability and resilience to shifting markets, particularly when steel work and complete hulls have been sub-contracted to lower-cost East European builders. The increase in production value over the last couple of years is also due to the hiring of Polish and other migrant workers on time-limited contracts.
Project management has become vital to competitive tendering, – the right timing of sections, components and manpower. Most yards have had to accept delays in their building programmes, and delays may easily lead to problems and losses. Some yards have suffered badly from collapsing production schedules, and virtually all have had hiccups in their production schedule.
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The Bibby Topaz was built by Fosen Mek Verksteder for Volstad Subsea, Ålesund. Photo: Alf J Kristiansen |
STX buys into Aker Yards
It caused headlines and local concern when Aker-RGI, headed by entrepreneur Kjell Inge Røkke, sold its controlling 40 per cent holding in Aker Yards in March 2007. Røkke had been the owner of the Langsten and Aukra yards since 1991 and had been instrumental in making Aker Yards the largest shipbuilding group in Europe.
Since 2004 the five yards (Brattvaag, Søviknes, Langsten, Aukra and Florø) in north-western Norway and their subsidiaries in Romania (Tulcea) and Brazil (Promar) were brought under a common management, comprising 800 employees in Norway and 3,200 abroad. A new practice for selling shipyard capacity with a common yard numbering system from 2006 had also opened for a more efficient use of production capacity. The Aker Brevik yard has also been integrated in the coordination.
The entry of the Korean STX shipbuilding group as new main owner with 39.5 per cent in Aker Yards has so far had little consequence. Lately also Havyard, another shipbuilding group, has acquired ten per cent of the Aker Yards stock.
As steelwork and hulls have long been sourced out, most of the Norwegian yards have sought to establish alliances with yards in Poland, the Baltic countries, Russia, Ukraine, Romania and even Turkey. However, only Aker Yards has diversified into ownership of steel production facilities, namely the Tulcea and Braila yards in Romania.
Technology based
The ability to deliver complex and advanced vessels, and the resulting order book amount to a success story. The shipbuilding, sub-contracting and equipment industries are all based in a maritime technology cluster which has been able to capitalize on the energy boom, for all it is worth.
The present order book is, in fact, a testimony to the entire technology cluster, as a very large share of the order value is for specialized equipment such as navigation, subsea, ROV-handling, seismic, cargo handling and other segments.
The share of offshore vessels has been picking up from 48 per cent in 2002 to 90 per cent today. Industry observers, however, know that the market has never been balanced. The demand for ferries, fishing and offshore vessels has always been dissimilar and cyclical. No doubt, there will be a considerable challenge when the present order boom runs out. But then, shipbuilding has always been a battle to survive shifts and changes.
Latest update 27-03-2008 17:22 |
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