WEST GERMAN SHIPBUILDING
The Situation Improves Greatly For German Shipbuilders As the Federal Republic of Germany's fiscal year drew to a close on September 30 last year, the country's shipbuilding industry was facing some of the most serious problems in its long and distinguished history.
Since then, however, government aid, new orders and other factors have created a much brighter picture. Despite ranking third behind only Japan and Korea during 1983, the orderbook was thin, amounting to 601,930 gross tons, worth some DM 3.4 billion. Of this, only 20 percent was for export. Indicative of the seriousness of the situation was the fact that 593,765 gross tons had been delivered in the first nine months of the year, an amount almost equal to the total orderbook, while new orders in the same period amounted to only 244,342 gross tons. There were strong demands from within the industry for Government intervention in the form of direct subsidies to the shipyards.
Bremer Vulkan, Hapag Lloyd, and AG Weser (Bremen), the three major Bremen yards drew up proposals for a merger. This was seen as being the one feasible way of insuring there would be a longterm future for shipbuilding in that area.
The merger plan was frustrated by the Bonn Government's refusal to provide the financial assistance necessary to support the proposal. As a result, the Weser yard in Bremen was closed.
Hapag Lloyd and Bremer Vulkan subsequently came to their own arrangement, which became effective in April this year. Under its terms, newbuilding continues at Bremer Vulkan while Hapag Lloyd will concentrate solely on repair and conversion work. It is planned that the latter yard will in due course change its name to Lloyd Werft.
Government Aid Spurs Activity As the situation for the West German shipbuilders showed little improvement, help appeared in the form of aid from the country's four coastal states—Bremen, Hamburg, Lower Saxony, and Schleswig-Holstein. Recognizing the unique and vital position held by shipbuilding in the economic and social infrastructure of the region, the governments of the four states stepped in to offer a direct subsidy of 6 percent to the yards, dropping to 4 percent in 1985. Grateful though the yards were for this help, new orders were necessary to turn the corner. In January this year it was announced that the West German Government had secured a contract from China Ocean Shipping Company (COSCO) of the People's Republic for the construction of three 1,200- TEU containerships. A short time later, the Chinese order was increased to nine ships, three each to be built at Flensburg Shiffbau, Howaldswerke-Deutsche Werft (Kiel), and AG Weser (Seebeck). This welcome contract was the result of generous financing on the part of the Bonn Government; the Chinese have some 15 years in which to pay for the vessels, the financing costs are only 3.5 percent.
As if to confirm this helpful change in attitude, Bonn shortly afterward announced that an extra DM 80 million would be available in repayable tax-free credits to German owners ordering new tonnage in domestic yards. This aid was in addition to the 12.5 percent subsidy scheme that already existed.
A Greatly Improved Situation Since then the overall situation has improved greatly for the German shipbuilders. Competition is strong, however, and a glance around some of the major yards reveals that some are inevitably faring better than others.
Bremer Vulkan The reshaped Bremer Vulkan, for example, has reported a re- markable turnaround in fortunes since the merger with Hapag Lloyd. Its 1982 losses of DM 33 million were followed by a profit of DM 1.7 million in 1983, and the yard now has a full orderbook valued at some DM 680 million—enough contracts to keep the work force occupied until 1986.
A symptom of the success of the new venture is the DM 80-million capital investment program that is scheduled to take place during the next two years. Some DM 15 of this will be spent on a floating drydock for Hapag Lloyd, which will have a capacity of 100,000 dwt.
For further information on Bremer Vulkan, Nobiskrug Werft Another yard with a full orderbook is Nobiskrug Werf in Rendsburg. This facility employs about 1,350 workers, and is currently engaged in building a 13,700-dwt containership and a 4,750-dwt container-RO/RO vessel. In addition, the yard has received recent orders for four container vessels of 7,250 dwt, each for a different German owner.
It is a mark of the success of the German Government's tax-free credits for German owners that all of Nobiskrug's current orders are for German account.
For more information on Nobiskrug Werft, Harmstorf Group With its three newbuilding yards, the Harmstorf Group is currently in a healthy position. It reported profits of DM 5.4 million in 1983, and has recently completed a DM 57-million modernization program geared toward making its facilities still more competitive in the future. Largest of the Harmstorf yards is Flensburger Schiffbau in Flensburg, which employs some 1,100 people. As part of the Group's modernization program, it acquired a 886-foot-long, fully covered building berth, fitted with two 120-ton cranes. Current orders, which include three of the nine COSCO containerships, will provide work until near the end of 1985.
Busumer Werft in Buesum and Schlichting Werft in Travemuende, the Group's other yards, both have sufficient work to last until mid-85. Despite being something of a RO/RO specialist, Schlichting Werft recently secured a prestigious order from the German Government for an oceanographic research vessel that will replace the 20-year-old research ship Meteor 1, due to be phased out by 1986. The new vessel will feature an impressive amount of advanced technology, and the order is thought to be worth about DM 100 million.
For further information on Harmstorf Group, AG Weser The AG Weser concern, owned by the German industrial giant Krupp, as mentioned previously, closed its Bremen yard. However, the company's other yard at Seebeck is faring very well. It has 10 vessels on the current orderbook, including the three containerships that are its share of the Government's Chinese contract, and two recently gained orders for 13,100- dwt multipurpose vessels, with some container capacity, for the Burma Five Star Corporation. At the end of this year, the Seebeck yard is due to deliver a second rail ferry to the Railship consortium (H.M. Gehrckens GmbH).
This new vessel will operate on the trans-Baltic route, joining Railship 1, a rail ferry built by Rickmers Verft in 1975.
For further information on AG Weser, Rickmers Werft Rickmers Werft celebrated its 150th anniversary this year with a move to a new location at Fischereihafen, in Bremerhaven. This company has developed something of a specialty in the construction of fishing vessels, in particular medium-sized stern trawlers and highly sophisticated fish factory ships. However, as demand for these types of vessels has decreased, other work has been found.
Currently on order are four vessels— one multipurpose ship with container capacity, and three cellular containerships, for all German owners.
For further information on Rickmers Werft, Howaldtswerke The State-owned shipbuilder Howaldtswerke-Deutsche Werft (HDW) has undergone major restructuring in recent years. Despite a loss of DM 210 million during 1983, HDW now appears to be on course to meet the targets identified in its corporate plan.
Last year HDW ceased newbuilding work at its Hamburg yard, concentrating activities in this field at its Kiel facility. The company's work force had been cut from a 1982 level of 12,000 to about 10,250 at the end of 1983.
The Kiel yard's future is seen to lie with naval construction, a fact reflected in the current orderbook that consists of six merchant vessels valued at DM 400 million, and naval vessels valued at some DM 2.1 billion.
For further information on Howaldtswerke, Meyer Werft Possibly the best order won so far this year by a German yard has been the contract for a 35,000- grt cruise liner, to be built by Jos. L. Meyer Werft of Papenburg for Home Lines of Panama. This ves- sel is scheduled for delivery in April 1986.
The Meyer shipyard has traditionally enjoyed an excellent relationship with the Indonesian Government, for which it has completed a large number of vessels. Towards the end of last year this relationship was continued with the delivery of the Kerinci, first in a series of four inter-island ferries for Indonesia. She entered service along with several other Meyerbuilt ships, including five that are still in operation 20 years after delivery.
The building of liquefied gas tankers is also a Meyer specialty, and the yard's most recent delivery, the Sultan Mahmud Badarudin (once again for the Indonesian Government) was the 35th vessel of this type that the Papenburg yard had delivered.
For further information on Meyer Werft, Blohm + Voss The Hamburg shipbuilder Blohm + Voss was another to record a profit for 1983, of some DM 6.6 million. However, the current work force of about 5,000 is 500 fewer than the 1982 level, and further reductions are planned. It is expected that these will be 300 redundancies, as well as 450 personnel electing to leave voluntarily.
For further information on Blohm + Voss, Flender Werft The Flender Werft yard at Lubeck recently delivered two highly advanced reefer ships to Flensburg shipowner Ernst Jacob. These ships, named Blumenthal and Bremerhaven, incorporate a number of the design concepts that were developed as part of the West German "Ship of the Future" research program.
These concepts have been geared toward improving operating economy, cargo-handling efficiency, and safety. They include an interesting bridge arrangement in which separate areas are set aside for navigational planning, cargo handling and safety, and manual steering. The vessel's most visually striking feature is the sternmounted, free-fall lifeboat developed by Nobiskrug Werft.
However, Flender Werft's losses rose to DM 2 million last year, compared with DM 0.8 million in 1982. The orderbook at the moment consists of a 17,000-dwt container vessel for domestic owner Peter Doehle. However, a second order for a vessel of this type is likely to be placed in the near future.
For further information on Flender Werft, Other German Yards Of the other West German shipyards, a number have benefitted from the recent trend among German shipowners of building multipurpose tonnage, with container capacity.
Typical of this type of vessel is the 9,180-dwt geared diesel vessel John M, delivered recently by Paul Lindenau Werft of Kiel to owner Carsten Rehder. With container capacity of 540 TEUs and grain capacity of 12,169 cubic meters, the vessel has been time-chartered to Norway's A/S Kristian Jebsens Rederi, for whom she will serve on the North Atlantic route.
One interesting feature of the John M is the patented Lindenau bulbous bow, which is said to give considerable benefits in terms of efficiency, when compared with other designs. It is typical of the fuel-saving and performanceboosting technological advances for which German shipbuilders have become renowned. Other examples include Professor Grim's vane wheel propeller and the assymetrical stern, both of which are to be incorporated on the four multipurpose/ container vessels that are being built by Bremer Vulkan for Jeyo Janssen.
The vane wheel propeller is freeturning, and coaxial with the vessel's driven propeller; it produces a turboprop effect. The stream from the driven propeller acts on the inner part of the vane wheel's blades, and is then converted into thrust at the tips.
A seven percent improvement in propulsive efficiency is claimed for the vane propeller's application on the first three Janssen ships, while even greater savings are expected for the fourth, which will also feature the assymetric stern.
Technical expertise of this nature, coupled with the high standard of work that has always been a feature of West German shipbuilding, will be key elements in the industry's recovery from the current recession.
Competition between the yards is strong and for many shipbuilders, acquiring an order simply means being able to maintain jobs at current levels. For some, however, the first steps have been made on the road back to profitability, and it remains to be seen whether further slimming down will be necessary before the remainder of the yards are able to join them.