Germany faces shipbuilding crisis

German shipbuilders are facing difficult years due to cancellations and a lack of orders, the country’s shipbuilding association VSM warned yesterday at its annual meeting. “The majority of shipyards will not be fully utilised from mid-year on,” VSM chairman Werner Lüken said.

German yards suffered 19 cancellations in the first quarter of this year, while in 2008, 29 orders were scrapped. As of 31 March, the combined orderbook of German yards stood at 139 vessels, with a total value of ?11.5bn ($15.6bn). This would mean that every German shipyard had an average utilisation of two years, Lüken said. But he added that a large number of the existing orders were placed with very few yards, which would result in most shipbuilders getting into trouble much earlier.

This year, German yards received just one newbuilding order. Sietas signed a contract with German Wyker Dampfschiffs-Reederei for a ferry with a value of almost ?20m which is due for delivery in April 2010. The effects of the order dearth would be short-time working, as already announced by several yards, and redundancies, said Lüken, who is also managing director of Bremerhaven-based yard Lloyd Werft.

According to VSM’s managing director Werner Lundt, German yards have suffered more than their competitors from cancellations because owners had to pay smaller down-payments compared to shipbuilders in Korea or China. “For a long time this has been an advantage in the acquisition of new orders – now it has the opposite effect,” he said. Usually in German shipbuilding, 80% of the purchase price is paid as final payment, with the other 20% as a down-payment and in instalments during building.

Lundt underlined that Korea was supporting the country’s shipyards with a rescue package of $7bn. He added that the situation was similar in China and said German yards must look to building other ship types as well as containerships or bulkers. Shipbuilders have already started to adapt to this, but needed time to focus on more advanced ship types.

“If we are not successful in securing the remaining orderbook and giving yards breathing space, we will see facilities closing down,” he said. The shipbuilding industry wants the government to step in if one of the remaining orders is at risk.