Small ships give UK grounds for optimism

Commercial life is never easy for a shipyard, but at least some can take a bit of comfort from their niche. Ship owners naturally go to Korea, Japan or China for the big tonnage. In Germany, many yards know they have a good chance to keep the order book alive, even full, with containership business. Italian builders know where they stand with ferries, or perhaps small tankers, and a handful of European yards are the first, even only, place to go for cruise ships. Even the Americans can cling to something ? protection may have left them isolated, but domestic shippers do order some ships and the navy is a good customer right now.

But think of British shipbuilding and what comes to mind? Beyond the recent crises at Harland & Wolff and Cammell Laird, it?s difficult to draw much of an impression at all of what was once the world?s mightiest shipbuilding industry. Indeed, for someone outside the industry to surmise that ships aren?t built in Britain anymore would be a reasonable ? though incorrect ? assumption. There is indeed a British shipbuilding industry, and it accounts for some 20 merchant ships a year. That?s not much for a country which once built near on two-thirds of world tonnage, but to the UK?s Shipbuilders and Shiprepairers Association it is a starting point, and grounds for some optimism.

Director Nick Granger points to SSA market research which points a way forward. If the world market is analysed, as it typically is, by tonnage, he says, there would appear to be little place at all for the UK. But if demand is considered in terms of numbers of ships, then the picture changes. Korea ? the market leader by tonnage ? can build about 200 ships a year at full capacity. World demand, though, looks set to hold at about 2,000 ships yearly until 2015, the limit of the SSA?s forecasting exercise.

And, if cruise ships are stripped out of the equation (“That?s an important market, but the UK isn?t in it,” he says), then the European order book is built almost exclusively of ships smaller than 5,000g. Here, says Granger, is where the UK industry must focus its attention. That translates into small ships, of 100m overall length or less. A critical SSA function, then, is to act as a central marketing department for its 40 or so members to, as Granger puts it, let ship owners and brokers know that there are UK yards which can do this. “We tell people a UK industry still exists. It?s front-line marketing,” he says.

This effort runs in parallel with a drive to improve the competitive performance of yards in the UK. Granger is particularly pleased with the SSA?s “MasterClass” initiative, to which essentially all of its membership has subscribed. The idea is to bring an experienced facilitator to a yard and, working with the team there, examine carefully their working processes, possibly following a specific job through to completion. Pre- and post-project analysis is a key component. Granger says there have been specifically-measurable ? sometimes dramatically ? results, such as reductions in man hours, improvements in floor space use or improvements in section and plate throughput.

MasterClass is also seen as a way to bring subcontractors and other suppliers into more effective relationships with shipyards, and this is a goal for a second phase of the project.

Another spin-off benefit from MasterClass should have longer-term benefits for the industry. One of the SSA?s latest initiatives is to bring the shipbuilding industry and academic researchers into a useful alliance. To do that effectively, shipbuilders have got to articulate their research and development requirements. But, as Granger notes, they are typically too bound up in running their businesses to define more abstract objectives. In MasterClass sessions, though, it can become possible to do just that. “It gives them a structure in which to think about it,” he says.

MasterClass is also likely to be a good way to transfer technology from other industries directly to shipyards. One example currently being looked at by the SSA is technology for measuring steelwork and recording that data in ways that allow all teams on a project to ensure their work fits together. This is obviously critical in shipbuilding, and Granger is hoping that ways to improve yards? performance ? effectively reducing rectification work ? can be found in the construction and civil engineering sectors.

The marketing effort is critical. One 1999 benchmarking exercise found that Korean shipyards are first-rate when it comes to promoting themselves. Some UK yards scored 4.5 out of 5, but there is a “substantial tail” of yards running down to very low scores. Thus, says Granger, the centralised marketing resource which the SSA can provide is very important for much of the UK industry. He likens the SSA concept to the marketing work done centrally on behalf of the 10 Dutch yards in the Conoship group.

Ultimately, what must come out of all this is more ships being built in the UK. The SSA?s assessment of the market is that its members could do well by focussing on small, high added value ship types for which there is a reasonable volume demand and for which the market has not been destroyed by “predatory” pricing. That would include ferries, offshore specialist vessels and small cargo ships.

The latter category offers particularly good prospects, Granger reckons, because the European Union transport policy is pushing hard to see more goods moved by short sea routes. Hence volume demand should grow, and there should be lots of mileage to be had by introducing innovative ideas and technologies. In Britain, the Department of Trade and Industry even pays so-called freight facilities grants to shippers who replace road-miles with sea-miles.

Granger is nothing if not realistic, though. None of this is going to be easy, he insists, and in any case he stresses that what some critics might regard as the glory days of UK shipbuilding are never coming back. Big ships and a large world market share are not for Britain in any foreseeable future, “and it would be insane to talk that way,” he says.

But there is a future for British shipbuilding if the SSA has anything to do about it.