In light of the corona crisis, SEA Europe calls for urgent support of Europe’s maritime technology industry. ‘If the EU fails to adopt tailor-made sectoral policies and financial support beyond its horizontal industrial policies, Europe risks to lose its strategic maritime technology sector to Asia,’ says the organisation in a statement.
SEA Europe represents close to one hundred per cent of the European shipbuilding industry in sixteen nations. Kjersti Kleven, SEA Europe’s chairwoman, stresses ‘the European shipyards and maritime equipment manufacturers are key for the European Green Deal, for Europe’s Blue Economy and mobility, for Europe’s defence, security and autonomy and for Europe’s access to seas and trade of goods and passengers.’
Although it is still hard to predict the full consequences of the COVID-19 outbreak, the maritime sector will also be hit hard. ‘Production has been reduced or stopped, supply chain activities are disrupted, workforce is in temporary unemployment, and many companies face serious liquidity problems or are in need of bank credit, which is a very serious problem for an industry that is – by nature – highly capital-intensive,’ says SEA Europe.
In addition, orders for newbuilt ships or ship repair and retrofitting are postponed, declared force majeure or cancelled, because all shipowners, including cruise and ferry operators, are in serious difficulties. These economic consequences come on top of existing severe competitive distortions from Asia.
Sectoral policies and financial support
SEA Europe welcomes the recent horizontal initiatives from the European Commission in response to the COVID-19 outbreak, as they try to minimise the impact of this crisis for all European industries. However, SEA Europe urges the European Commission to complement these initiatives with sectoral policies and financial support – tailored to the specific needs and challenges of Europe’s shipyards and maritime equipment industry.
Such sectoral policies and financial support should not only enable the sector to cope with the severe consequences of the COVID-19 outbreak but also aim at safeguarding the survival of this strategic sector for Europe.
Unlike other industries, Europe’s maritime technology sector will feel the real negative consequences from the COVID-19 outbreak more acutely in the medium and long-term. This is because shipbuilding and maritime equipment manufacturing are export-oriented businesses and very much depend on global macro-economic trends, trade volumes, and market sentiments. Moreover, shipbuilding is characterised by very long lead production times, with a two-three years’ time laps between the ship’s contracting and delivery on average.
Complex ship types
SEA Europe expects that COVID-19 will particularly negatively impact those markets in which Europe’s shipyards currently are global leaders, notably the markets of complex ship types, such as ferries and cruise vessels, dredgers, advanced fishing vessels and vessels for offshore operations. In concrete, the sector expects that many orders for newbuilt cruise ships will be cancelled since cruise operators are heavily suffering from the financial consequences of travel restrictions and health issues onboard such ships.
Another example is Europe’s offshore building sector, particularly of offshore oil and gas platforms and related ships. This sector will suffer heavily from a drop in oil prices, whilst in fact it has not yet fully recovered from the previous oil crisis. For both segments, however, experts forecast a considerable slowdown in growth of global trade for goods and raw materials as well as for demand for cruise ships and ferries. Hence, it will take time before shipyards will be able to recover from this sanitary crisis on international trade, tourism and mobility patterns.
Last but not least, naval shipyards are also experiencing issues in performing and respecting the delivery for their ongoing projects. In this respect, SEA Europe urges the EU to regard the naval defence industry as critical for the EU’s future security and defence needs and continue – and where possible even reinforce – the implementation of scheduled projects and programs (such as the EDF) as means to ensure that the EU’s industrial capabilities are kept intact.
Equipment industry
SEA Europe also expects that Europe’s maritime equipment industry will suffer heavily from the consequences of COVID-19, with their fifty per cent global market share. The survival of this part of the maritime technology sector is crucial to maintain the competence and innovation needed for the green and digital transitions in European and international shipping in Europe.