For shipyard owners: launch them, then lease them
How to make shipyards more competitive? According to a research study from Croatia, the answer could be keeping ownership of the ships they produce and make money by leasing them directly to shipping companies.
Shipyards as ship-owners? Why not, says a study from Rijeka, Croatia. According to the study, medium to large size shipyards are at present so dependent on government subsidies that their very existence is often at risk. This affects their business choices particularly in a period of world recession, when orders diminish with the loss of thousands of jobs. It would be therefore a better idea to change the system of vessel ownership and lease out directly at least some of the ships built in the yard instead of selling them. By leasing instead of selling, the yards will significantly increase their assets and achieve not only a continuous, but also a less risky income. Another advantage, according to the study, could be a more standardized model of ship. By abandoning the “product-oriented” business model, which is mainly focused on the production and sale of ships on the basis of ship-owners’ often complex specifications, a more streamlined model could cost less since it would take into consideration the onshore assets of the yard (land, cranes, infrastructures, workforce) which at the moment represent only a fraction of their annual income. This would enable the yard to operate with more security particularly in a period of crisis where rising competition among shipyards for a shrinking market is putting pressure on the price of ships whilst the overall premium for running this kind of business diminishes. By remaining owners of the ships they build, argues the research, the shipyards would not need cash backup and could run instead a successful “service-oriented” business which would not require the introduction of new technologies or major changes in the organisational model or greater financial resources. The financing of the construction of new ships would continue as it is and the value of the ship would remain the same and would not need adjusting to what the market is able to pay in a period of recession. The risk factor would then be reduced and the yard itself could acquire a better creditworthiness vis-à-vis those financing its activity (be it state or private) and certainly benefit from a continuous inflow of fresh capital through the leasing of the fleets they build and own. The streamlined process of ship building, common in yards in the Far East, could then become a common feature in the sector, more adapted to the present market conditions. The expensive “made to measure” model where the ship is both prototype and the final product, is now superseded: with direct ownership and the leasing of ships, yards can start a new era to the advantage of thousands of workers in the sector. For further information check the following website: http://www.as2con.com/ PRESS4TRANSPORT is funded by the European Commission's Directorate-General for Research under the Seventh Framework Programme for Research and Technological Development (FP7)