Harder competition brings harder times

Two years ago, the Spanish orderbook looked very healthy, but the situation is a lot less rosey today.

In early 1998 Spanish shipbuilders were boasting a collective orderbook at a 15-year high, with 147 vessels on order, totalling 1,209,948cgt.

Excluding 51 fishing vessels, always the mainstay of the Spanish orderbook, other prominent vesel types among this tonnage total were eight double hull crude oil tankers, 24 product/chemical tankers, 11 roro vessels, eight ferries, and nine general cargo ships.

Two years on, and it is a very different picture. Most of the vessels on the 1998 orderbook have been, or are about to be delivered. Apart from tugs, and the seemingly continuous orders for fishing vessels, there are only around 37 larger vessels of other types on order with the main Spanish yards, either in the private or public sector. Of these,18 orders are spread between the five remaining state-owned AESA yards, including the recently placed contract for the three 138,000m3 LNG carriers.

Ramon Lopez, deputy managing director of UNINAV (the association representing Spanish shipbuilders) explains that if the orderbook for Spanish yards is split into small, medium, and large vessels, the small vessel market (mainly fishing boats) is healthy, and small yards are keeping their heads above water on a steady supply of orders for these.

In the medium-size vessel market, he says, the demand for chemical tankers had been strong, and a lot of these vessels had featured on the country?s orderbook, but now these are approaching delivery, and the chemical market is not as buoyant as it was a couple of years ago. Spanish yards are experiencing strong competition from the Far East, mainly China, for handysize vessels especially, says Senor Lopez.

In the big ship sector, competition from the Far East, especially Korea makes it hard for Spanish yards to win orders for these vessels. In this light, the recent announcement of the order for three 138,000m3 LNG carriers for Repsol for two of the large AESA yards is welcome, says Senor Lopez. It is the medium-sized yards which are finding it hardest to fill the order gap, he says.

He welcomes the fact that the recent general election in Spain will not affect the government?s commitment to the shipbuilding industry. It has demonstrated in the last European Commission discussion that it wants a stronger position to be taken on what is sees as unfair competition from Korea, he says.

Yards are trying to help themselves through this bad patch by always moving towards greater competitiveness, and are constantly investing in this direction, says Senor Lopez. However, they cannot control the international market, and if ship prices are dropping, improved competitiveness is not always enough to win orders in this situation, he adds.