Advocating A Maritime Growth Agenda

Hamburg, 04-05-2021 – Impressive achievements in the cruise ship and megayacht segments have underpinned the growth of the German shipbuilding industry over the past decades and have contributed to the strong reputation for their exquisite capabilities. However, while catering to these two demanding shiptypes complemented by building sophisticated government and naval vessels, their ability to serve other market segments continued to deplete.

Even before the pandemic, orders in key market segments where German yards have proven expertise, such as RoRo vessels and large ferries, were mostly placed in due to massive subsidisation and distortions of competition. Protectionist practices are increasingly experienced also in the equipment supply chain.

All this affects not only the shipyards but the entire value chain: In Germany alone, roughly 2,800 companies and about 200,000 employees work in shipbuilding and ocean industries.

COVID-19 causes drop in demand, revealing dependence on cruise shipbuilding

The COVID-19 pandemic has abruptly put the spotlight on the strong dependence of Germany's civilian shipbuilding sector on the cruise segment. As the influx of new orders for cruise ships came to a halt, the enormous void in other market segments became painfully evident.

German medium-sized do not stand a chance against the massive distortions in the market, which significantly increase during the past decade of weak global demand in practically all cargo ships segments.

"We are all entrepreneurs who prefer relying on our own strengths and our ability to succeed in a fair competitive environment. Regretfully, in shipbuilding, government-defined framework conditions play a key role. As a German private-owned business you cannot stand up to the strategic measures taken e.g., by the Chinese government. Therefore, we need an active policy response in Germany and the European Union. In the existing economic environment, we risk losing essential shipbuilding capabilities irreversibly," states Harald Fassmer, VSM President, and CEO of Fr. Fassmer GmbH & Co. KG.

“We are now dealing with more than just the challenge of bridging the demand gap caused by the COVID-19 crisis. For decades, the European shipbuilding industry has been losing market share, mainly because Asian governments have been engaging in predatory practices without Europe taking any countermeasures. Therefore, we are now faced with the question whether ten years from now Germany and Europe a civil shipbuilding industry of significant size will still have,” added Bernard Meyer, CEO of Meyer Werft GmbH & Co. KG

"The world's most sophisticated ships and boats are being built by German shipyards and are equipped with German machinery and systems. German companies have outstanding know-how covering the entire shipbuilding value chain. This expertise is needed more urgently today than ever before to support the maritime energy transition. We must utilise our existing technological edge to enable rapid implementation of our climate protection goals. To achieve that, we need investment and financing instruments so we can build a modern, effective, eco-friendly and
climate-neutral fleet in and for the EU," emphasises Dr. Uwe Lauber, Chairman of the Management Board of MAN Energy Solutions.

For the time being, the situation in naval shipbuilding is significantly better. The German naval forces need upgrading their fleet, and German naval shipbuilders have an excellent reputation globally. "Nevertheless, in the medium term we expect the pandemic to have an impact on this segment, as well since increasing national indebtedness around the world in the wake of the crisis will limit the availability of investment capital and have an especially severe impact on export demand,” explains Friedrich Lürssen, the owner of Lürssen Werft GmbH & Co KG.

VSM demands a maritime growth agenda

For all these reasons, VSM has been advocating a fundamental analysis of the developments in the shipbuilding market. As a matter of fact, competing nations outside the EU have not only recognised the high strategic value and great growth potential of the maritime industry but also implemented generous support programmes, while this is lacking in the EU.

Germany still has comprehensive capabilities at its disposal to develop a successful, future-ready shipbuilding industry in Germany. However, if the competitive distortions, which have persisted for decades, can continue without a decisive response from Europe, the loss of substantial capabilities in this industry could turn out to be irreversible in the coming years.

"The European Union is the single largest maritime market in the world. The geography of our continent creates a multitude of diverse economic activities on and below the water. This is why it is up to us Europeans to utilise our entire spectrum of maritime capabilities for growth and sustainability in an optimal way. To do so, we need a fundamental overhaul of the framework conditions for the European shipbuilding industry to finally create a level playing field,” demands  VSM General Manager Dr. Reinhard Lüken.

The German Shipbuilding and Ocean Industries Association (VSM) represents the political and commercial interests of the German maritime industry and its complex value chains covering a great diversity of maritime market segments. For further information about the development of the German maritime industry please visit http://www.vsm.de.