"The situation in all major shipbuilding regions is seen as problematic," said the report, "as newbuilding prices decline further and profits are very difficult to achieve ... Therefore the bottom line for many yards is to stay in business and minimize losses as far as possible."
An OECD report last year found that the present world shipbuilding capacity is more than 30% higher than the future shipbuilding demand, even taking into account the latest MARPOL requirements for accelerated phasing out of single hulled tankers. An evaluation by AWES, the Association of West European Shipbuilders suggests that the average yearly level of production in the period 2001/2010 will likely be at a lower level than that of the level of tonnage completed which was reached in 2000 and in 2001.
Realistically, we look set to see a further reduction in European shipbuilding capacity. Who will survive?

Two types of European yards seem to have the best chance: super efficient shipbuilding boutiques offering specialist vessels to a discriminating clientele and big yards that can bully their governments into giving them various forms of hidden, and sometimes not-so-hidden, support. Something that's sometimes forgotten by analysts, is the desire by at least some European governments to maintain a naval shipbuilding capability for reasons of national security. The arguments here will be all too familiar to American readers. But they are by no means unknown in Europe.

WHERE DOES THIS LEAVE THE SUPPLIER BASE?
The performance of the EU marine supplies industry is one key to the competitiveness of European shipbuilding. In March 2000, the European Commission published the results of a study by Germany's BALance Technology Consulting. Though some of the numbers may now be a little dated, they nonetheless give a reasonable picture of the size of the European supplier industry.

The study identified the annual global market for marine supplies at about Euros 61 billion, of which the European Union member states take a share of about Euros 19 billion (some 31%). This volume represent the total market including marine supplies for newbuilding of merchant ships, boats, offshore vessels and platforms, ship repair, maintenance and navy. A forecast for supplies to the newbuilding market alone covering the 2000-2005 period years suggests a market of about Euros 22 billion.

Bulk carriers, cruise ships, tankers and containerships account for more than 50% of the ship supplies market in the newbuilding sector.

The demand, including values for subcontracts, is split into 27% steel and pipes, 22% propulsion and power generation, 12% auxiliary engines, 11% accommodation, 11% electrical plants, electronics and automation, 10% ship operation and painting and 7% cargo handling.

The same report indicates that the marine equipment industry in the EU employs about 240,000 persons in about 9,000 companies. Germany and the United Kingdom representing some 50% of the EU production value and both export about 60% of production value (including exports to other EU countries). The Netherlands, Italy and France representing in total another 28% of the EU industry export about 40% of their production value.. A EU trade surplus with the rest of the world has been identified in the range of Euro 4.5 billion Euro (about 25% of the annual production value), highlighting the international position of the industry.