>Overcapacity continues

The shipbuilding market will continue to suffer from overcapacity and subsidies will remain in one form or another, concludes a Norwegian report,

The Future of North European Shipbuilding

. The report argues that low entry barriers and high exit costs lead to overcapacity. It also believes that the shipbuilding industry is an easy target for lobbying making the continuation of subsidies inevitable.

In two years world shipbuilding capacity will reach 30 million cgt — 30 to 40 per cent above demand says the study. It predicts that yard strategies based on R&D will not pay off and the higher prices paid for niche markets will disappear after a short period.

The only response> an individual yard can have is to increase productivity, it says. While it highlights the differences in labour costs, the report finds these are more than outweighed by variations in productivity.