Shipbuilders have to wait (too long) for Rijksrederij orders

From the magazine – Politicians and government expect a lot from making shipbuilding and shipping more sustainable. However, for now, the central government is mainly sitting with its arms crossed when it comes to investing in and ordering more climate-friendly, less CO2 emitting ships for its own government shipping company, the Rijksrederij.

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 June 2024 issue, he goes into the need for the Rijksrederij to start handing out newbuild orders to the Dutch shipbuilding industry. The opinions expressed in this article are those of the author and do not necessarily reflect those of the publisher or editors as a whole.

With a presentation at the Netherlands Maritime Technology (NMT) network meeting on Thursday 16 May at Krohne in Dordrecht, the supporters of shipbuilding advocacy group NMT know a lot more about the organisation of the Rijksrederij and especially its new director Willem de Vries, but newbuild orders he could not yet offer shipbuilders and their suppliers.

And that is a raw deal for the Dutch shipbuilding industry, because without orders for new ships, it is impossible to work on and experiment with building new more climate-friendly, CO2-neutral ships. Because for the survival of Dutch shipbuilding, the sector depends on orders. Without orders, no work and no income and eventually the shipyards can close their doors and the suppliers, like many before them, disappear to Asia where they do see the importance of preserving shipbuilding.

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Leader scheme

Yes, it is true that the central government has expressed its willingness to invest up to EUR 210 million in the Maritime Master Plan 2.0 through the National Growth Fund. Of this, EUR 100 million has now been granted definitively and EUR 110 million conditionally. In addition, EUR 85 million of funding is available for the Maritime Master Plan Leader Scheme (Koplopersregeling). That money is intended to stimulate investments in the further development and demonstration of emission-free ships running on hydrogen (EUR 40 million), methanol (EUR 25 million) or carbon capture with an LNG power train as fuel (EUR 20 million).

The application period opened on 11 June and runs until 1 October. A wide range of target groups are eligible, including SMEs and research and knowledge institutions. However, the coordinator (project leader and grant applicant) must always be a natural person or legal entity based in the Netherlands. Another important condition is that there must be cooperation between at least two (non-group affiliated) companies whether or not supported by a research or knowledge institution.

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Within six months

A further condition is that within six months of the grant award, the research and demonstration project for design, development and demonstration of a technology on a ship must be started. For a shipyard, this means that you must then know for whom you will design and build what kind of ship. When it comes to newbuilds for the Rijksrederij, this assumes that the new cabinet should already be able to indicate where its fleet is headed in the forthcoming Budget for 2025. But this is highly uncertain, as the new director of the Rijksrederij could not say anything about this on 16 May.

First we will reorganise was De Vries’ message to make staff and fleet more deployable or as the title of his presentation read: ‘Steady course towards a robust and future-proof Rijksrederij’. The renewal of the 100-strong fleet is crucial to the success of the Maritime Master Plan 2.0. Its aim is to develop, build and use reliable and modular climate-neutral ships in a cyclical innovation chain.

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National security interests

The Master Plan aims to contribute to accelerating the global energy transition, strengthening the Dutch economy and protecting national security interests. It should accelerate the energy transition by developing and demonstrating technologies for the use of renewable fuels (hydrogen, methanol, LNG with carbon capture). Private consortia and the government (Defence and Rijksrederij) should carry out the demonstrations.

For this, the sector’s planners have assumed that the government will act as a launching customer for these technologies. The focus here is on strategically important sectors for Dutch shipbuilding such as short sea shipping, offshore wind, hydraulic engineering and maritime safety and services. These are the sectors with which Dutch shipbuilding earns the most money.

Two-thirds of the Dutch shipbuilding turnover comes from exports. The development and construction of climate-neutral ships should strengthen the competitive position of the Dutch shipbuilding industry.

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Government newbuild orders

So that is why it is so important that the government shipping company also pays up with newbuild orders. The cabinet has now done so for the navy with the impetus for the construction of four new air-defence and command frigates and six amphibious transport ships. Only the order for the four new submarines unfortunately went to the French.

A new supply ship and six new Mine-Countermeasure Vessels are under construction and the contract for the construction of two new anti-submarine warfare frigates has been signed. The only pity is that those minehunters will also be built in France, but in return Damen will be allowed to build two Anti-Submarine Warfare Frigates for the Belgians.

But future-proofing the fleet of the Rijksrederij is also a critical job for the Dutch shipbuilding industry and crucial for its survival. One consolation is that with De Vries, the Rijksrederij now has a manager who is seasoned in the sector. He manages 370 employees, 290 of whom work on board the fleet, ranging from large seagoing vessels to independent RHIBs.

Serving three Ministries

The Rijksrederij is responsible for carrying out a wide range of tasks for three Ministries with four services. For Rijkswaterstaat, which falls under the Ministry of Infrastructure and Water Management (58 per cent of turnover), the Rijksrederij provides inspection and enforcement, fairway marking, incident management and traffic control and is deployed for water quality and quantity and hydrographic survey.

For the Coast Guard (28 per cent turnover) and Customs (3 per cent turnover), which falls under the same ministry, the Rijksrederij is responsible for inspection and enforcement at sea and in coastal waters. For the Ministry of Agriculture and Fisheries (11 per cent turnover), the Rijksrederij carries out fisheries research and management.

For now, the Rijksrederij’s fleet renewal programme runs until 2030. For the time being, it mainly concerns the smallest, and, therefore, least complex, vessels, such as last year’s order for the replacement of RHIBSs for Customs/Police and this year’s order for small measurement vessels that can be transported on a trailer and the replacement of the Stern, which sails mainly for the Ministry of Agriculture and Fisheries.

The purchase of an additional enforcement vessel for the Coast Guard is planned for 2025. It will take until 2030 before the replacement of the ERTVs (large emergency tugs) for the Coast Guard, the buoying vessels for Rijkswaterstaat, the inspection vessels for the Ministry of Agriculture and Fisheries, the “Eagles” for the Coast Guard and the other patrol vessels for Customs and Rijkswaterstaat are on the agenda. So the Dutch shipbuilding industry still has to wait quite a long time before it can actually start building.

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Designing instead of building

The question is whether this is too long to keep many of the Dutch shipyards afloat, as this will require short-term plans and actual ordering of ships, including by the Rijksrederij. The way Dutch politics and government said goodbye to shipbuilding in the 1980s and left it completely to the unfair practices of international competition must not be repeated.

Otherwise, Dutch shipbuilding runs the risk of becoming a design factory where the actual assembling of the ships is done abroad. Damen, for instance, has greatly expanded its design capacity in Gorinchem, but apart from the production of small working vessels by Damen Shipyards Hardinxveld, few ships are actually assembled in the Netherlands anymore. Navy ships have long been built largely in Romania before being finished in Vlissingen.

Interaction with customers

This means that work in the Dutch shipbuilding sector is increasingly shifting from actual construction to mainly design. This is what Dutch ship design firms like C-Job, DEKc, Groot Ship Design or Conoship are very good at. But that too will last until the Chinese rush into this market and, with much lower prices for a total package of design and construction in China, appropriate this market too.

Moreover, in shipbuilding, there is also interaction where shipbuilders learn from the practical experiences of their clients. The allows them to arrive at the optimal ship design for their clients time after time.

If ships can no longer be designed and built in the Netherlands, the Dutch government and politics will also have nothing more to say and demand and we will make ourselves completely dependent on Asia. They will then decide what will be built and at what price. Prices in the main shipbuilding sectors are already soaring in Asia. So the Rijksrederij simply cannot wait until 2030.

Respond to this article by sending an e-mail to Antoon Oosting, editor-in-chief and author of this article: swz.rotterdam@knvts.nl.

Cartoon by Hans de Wilde/SWZ|Maritime.

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