From the magazine – Finland is a country that is far from cheap with high costs of living. So high wages are needed and yet the Finns succeed in keeping up a respectable shipbuilding industry that is capable of building a wide range of ships, especially the high-performance ones, like cruise ships, ro-pax ferries and icebreakers.
In every issue of SWZ|Maritime, SWZ|Maritime’s editor-in-chief Antoon Oosting writes an opinion piece under the heading “Markets” about the maritime industry or a particular sector within it. In the December 2023 issue, he discusses how Finland has managed to hold on to its maritime manufacturing industry.
With the ships it produces, Finland proves that it is possible to build ships in Europe, whereas a lot of European countries already gave up on shipbuilding a long time ago when faced by competition from first Japan, then South Korea and now China.
What stands outs when travelling around the Finnish maritime industry in Finland, like the editor-in-chief of SWZ|Maritime got the opportunity to do during the first week of October thanks to an invitation of Business Finland, is the emphasis that Finns place on the development and application of state-of-the-art technology and the permanent commitment to delivering excellence. Of course, a statement often heard in Finnish shipbuilding circles such as ‘We are not the cheapest but the best’ may strike many as haughty. However, it also attests to a mentality of trying extra hard to prove that your product is worth the higher price.
Also read: No guts, no Dutch glory, but sometimes being bold is not enough
Different history
An important difference between the shipbuilding industry in the Netherlands and Finland is that the Finns have always been much more aware of the importance of maintaining their own maritime manufacturing industry. Stalin forced Finland to pay compensation for the lost war against the Russians in the form of building ships, trains and machinery in particular. But the Netherlands also developed a respectable shipbuilding industry as part of its post-World War II reconstruction.
So far so good, but by the 1970s, Dutch shipbuilders were losing out to the Japanese in international competition, especially in the three major shipbuilding markets of tankers, bulk carriers and container freighters. Before that, all major yard combinations were forced by the Dutch government to merge into the RSV group and anyone with any historical awareness knows the debacle this led to. Then the government pulled its hands off shipbuilding until the recently published Sector Agenda to declare shipbuilding a strategically important industry again.
Also read: Dutch govt and sector put EUR 60 million in innovative shipbuilding
Shipbuilding of vital importance
Unlike the Dutch, the Finns did continue to cherish their shipbuilding. It was no less than vital for Finland. Without icebreakers, the Finnish economy would come to a complete standstill during the winter months because there would be no imports or exports.
Besides icebreakers, Finland has always been an extremely important country for building ferries. These often sailed longer than strictly necessary to give passengers enough time for duty-free purchases. To that end, more and more cabins and extra leisure facilities came on board, making them increasingly luxurious and giving them the predicate of cruise ferries. And then it was a logical step to start building cruise ships.
At the same time, Finnish yards were able to continue building cargo ships and icebreakers for Russia for a very long time, which had to pay for them after the war debt was paid off. After the fall of the Soviet Union and the economic crisis caused by the collapse of the communist system, new construction for Russian clients fell sharply. But after Putin brought order and Russia’s oil and gas industry boomed, Russian clients returned to Finnish yards and engineering firms like Aker Arctic.
No naval construction
In 2011, the Russians even bought into a joint venture with Korea’s STX, which also owned the former Wärtsilä shipyard in Helsinki. As of early 2015, this yard, called Arctech Helsinki Shipyard, was fully owned by the Russians after state-owned United Shipbuilding Company (USC) acquired the remaining shares from the Koreans. However, the Finns were never very happy about this, because this Russian ownership meant that the yard could not be considered for Finnish naval ships.
The fact that the Finns have been concentrating on other types of ships for much longer and have managed to secure a crucial position in building the largest cruise ships with Meyer Turku, means that there is still quite an extensive marine industry in Finland. Large ships are still being delivered in Finland whereas in the Netherlands this has been limited to dredgers and offshore construction vessels over the past three decades.
Orders for the latter have also stopped coming in recently. Even all larger naval vessels have been built for the most part at the Damen shipyard in Galati for the past twenty years and are only completed in the Netherlands at the quay of the former Royal De Schelde shipyard.
Also read: ‘It took a war to put Dutch shipbuilding back on the agenda’
Passenger ships
Not only the Finns, but also Dutch shipyards built several fine passenger ships in the 1950s and 1960s. In 1972, however, yard De Merwede in Neder-Hardinxveld delivered the last real passenger ship built in the Netherlands for the time being, the small Prinsendam for the Holland-Amerika-Lijn.
As for larger Ro-Ro ferries, in 2003, the Pascal Paoli for French SNCM (Corse-Méditerranée) was the last big ferry built in Krimpen aan den IJssel before the yard closed. Holding company IHC Caland decided to retreat from this shipbuilding branch due to the fierce competition of at that time the South Korean yards in particular.
The outcome of the parliamentary inquiry into the RSV debacle prompted Dutch politicians to completely withdraw from shipbuilding. The industry then had to quietly reinvent itself, but a great deal of knowledge, skill and capacity was lost in the process. Shipyard De Hoop in Lobith attempted a return to building passenger/cruise ships with two smaller cruise ships for Royal Caribbean subsidiaries, but in 2021, after 130 years, shipbuilding in Lobith came to an end after the yard’s bankruptcy.
Technological development
Another determining factor in keeping shipbuilding afloat in Finland is technology. With significantly higher wages, building ships is much more expensive in Finland than in China, South Korea, or India. So there must be other considerations to opt for Finland. These are, first, top quality in technology and mastery of very complex processes as in the construction of mega cruise ships like the Icon of the Seas.
Secondly, shipbuilding experts know that when Finns promise something about delivery dates and costs, they go to great lengths to stick to them. In Asia, this is by no means guaranteed.
Finnish shipbuilding owes this in part to the investments by government and industry in the technological development of shipbuilding. The Azipod is a Finnish invention for a reason, developed with support from the Finnish government by Wärtsilä and Strömberg (now ABB). And Wärtsilä also managed to become the market leader in four-stroke engines by buying up engine builders in Sweden, the Netherlands, France and Italy. In all those countries, shipbuilding led a languishing existence in the 1970s, 1980s and 1990s, where Wärtsilä saw opportunities to keep ship engine construction alive in Europe.
Also read: ‘And now we could also lose short sea shipbuilding to Asia’
Strategic importance
And now, with the existential threat of the Russian bear on their borders, the Finns, like no other European country, know more than ever how strategically important shipbuilding and shipping are. The Helsinki Shipyard has been snatched from the hands of its Russian owners and is now owned by Canada’s Davie Shipbuilding. Rauma Marine Constructions has a nice order book of ferries and corvettes, and Meyer Turku is once again building large cruise ships in abundance.
The policy now is to secure Finnish interests in shipbuilding and shipping. This is being done firstly by sharply increasing investments in research and development (R&D), secondly by strengthening lobbying within the International Maritime Organization (IMO) where Finland was recently elected to the board at the expense of Russia, and by seeking cooperation with other shipbuilding nations, such as the Netherlands.
Ice-strengthened ships
As far as the IMO is concerned, Finland still has a major problem to solve when it comes to ice-strengthened vessels. They consume on average five per cent more fuel, and when they plough through the ice, this can go up to twenty to sixty per cent more. After all, more power is needed to overcome the ice’s resistance. So, Finland wants to avoid regulations that would only weaken the motorisation of vessels, because they would not be able to reach Finland for much of the year.
And Finland is seeking cooperation with amongst others the Netherlands. ‘There is a great window of opportunity for Finnish companies to find new partnerships and business in the Dutch market. Low-carbon technologies, digital solutions and efficient value chains play a significant role in achieving Finland’s carbon neutrality target, but it also ensures the competitiveness of the export economy. Finland is in a good position to provide solutions for the green transition and has a deep understanding of delivering smart and environmentally friendly high-tech maritime solutions. Finland sees the Netherlands as a natural and likeminded partner in zero-emission and transformation, from cruise vessels to superyachts, to name just a few,’ writes Finnish ambassador Similä Ilkka-Pekka.
Picture (top): The Helsinki Shipyard has built over half of the icebreakers in operation worldwide today, but also builds other vessel types such as expedition cruise ships, one of which can be seen in this picture (by Helsinki Shipyard).
Also read: Europe’s large shipbuilding in dire straits
