Shipbuilding suppliers recover visibly after great effort

11 June 2021

Pandemic triggered slump in sales and incoming orders in 2020 – significant hike now expected - China gains importance as customer and rival

Germany's shipbuilding suppliers were dissatisfied with the 2020 fiscal year, but are optimistic about business prospects this year despite ongoing uncertainty. "Due to the short-term slump in orders, we did not achieve our sales targets last year. However, the current market development with a significant increase in incoming orders is making the industry optimistic, and positive about the future," said Martin Johannsmann, Chairman of the Board of VDMA Marine Equipment and Systems. "Even if there is capacities area not being used fully in parts of the industry now, the increasing number of orders for new ships give more hope for 2021 and 2022," Hafen Hamburg Marketing quoted Johannsmann as saying.

Travel restrictions hampering service and sales

Production in the shipbuilding sector has continued despite three corona waves so far, and orders have been processed. "Employees and management have gone to great efforts for over a year now. New shift models, partially ineffective remote working and related organisational measures have sent costs soaring," said Dr Bernd Sitte, Member of the Board at VDMA Marine Equipment and Systems. The international quarantine restrictions have caused problems for service and sales staff and have delayed commissioning and new contracts. "Politicians must come up with international solutions e.g., ab digital vaccination passport as quickly as possible. Our export industry needs this flexibility and speed," Sitte stressed. Digital solutions are being developed and expanded in shipbuilding operations simultaneously.

4.9 per cent drop in turnover

The German shipbuilding and offshore supply industry employs 63,000 or 2.5 per cent less than in 2020. Turnover decreased 4.9 per cent to EUR 10.5 billion while orders fell by 10.9 per cent amid the pandemic. After bridging the order lull in manufacturing, the outlook for 2022 is very positive with increasing orders in 2021.

Turnover in shipbuilding and offshore supply industry

China both customer and rival

The German shipbuilding and offshore supply industry exported 14 per cent of its production to Chinese shipbuilding last year and is likely to increase significantly in 2021, experts said. China has overtaken the United States as the top export market in mechanical and plant engineering. More than 500 Chinese companies are located in Hamburg, which is considered China's gateway to the European market. Conversely, Hamburg is considered an ideal bridgehead for the Chinese market. More than 700 Hamburg companies do business there.

kk/pb