COVID-19 – European cruise shipbuilding could collapse

2020-04-03T15:05:54+00:00 April 3rd, 2020|Technology|

In the light of COVID-19, European shipbuilding and equipment industry voice, SEA Europe, has called for urgent, tailor-made sectoral support.

The organisation said that virus will particularly negatively impact those markets in which Europe’s shipyards are global leaders, notably in the ferry and cruise vessel sectors, among others.

In particular, SEA Europe forecast that many orders for newbuilding cruise ships will be cancelled, since cruise ship operators are suffering from the financial consequences of travel restrictions and health issues on board their ships.

The production of and demand for cruise ships and related maritime equipment will not reappear before shipowners’ confidence is restored concerning better market conditions and passengers become confident about better financial and sanitary circumstances.

It will take time before shipyards will be able to recover from this crisis affecting international trade, tourism and mobility patterns, the organisation warned.

As a result, SEA Europe expected that Europe’s maritime equipment industry will suffer heavily from the consequences of COVID-19, as it currently has a 50% global market share.

This maritime technology sector’s survival is crucial to maintain the competence and innovation needed for the green and digital transitions in European and international shipping in Europe, the organisation added.

COVID-19’s impact came on top of the global and competitive challenges that Europe’s maritime technology sector was already confronting. The global trading environment in which most maritime technology companies are operating, is already heavily impacted by growing trade protectionism, tensions, market imbalances and aggressive state-led competitive distortions, mainly from Asia.

For example, ‘Made in China 2025’ directly targets Europe’s global leadership in both complex shipbuilding and advanced maritime equipment manufacturing, it warned.

If the EU fails to adopt tailored-made sectoral policies and financial measures, including state aid, in support of Europe’s maritime technology sector, there is a big risk that Europe will lose the remainder of its strategic maritime technology sector to Asia.

Such loss of a critical competence would have many devastating effects for Europe, notably:

*More than 1 mill jobs in maritime technology companies would be lost.

*About €120 bill of added value, created by the maritime technology sector, would be lost.

*Europe would lose its innovation and technological global leadership in complex ship types (eg cruise ships).

*Without its own shipyards, Europe will become entirely dependent on foreign (mainly Asian) countries for the building, repair, retrofitting, maintenance and conversion of ships and on foreign ships for access to seas, transport of goods and passengers and Blue economy activities. A loss of shipyards in Europe will also lead to serious losses in Europe’s supply chain.

*Without shipyards in Europe, the area’s maritime equipment companies will become entirely dependent on foreign (mainly Asian) markets, where today they are already face more business obstacles and trade protectionism.

These risks are recognised in the European Commission’s recommendation to member states to be very vigilant and use all EU and national tools, including the application of the Foreign Direct Investment Screening Regulation, to avoid the pandemic leading to a loss of critical assets and technology.

To avoid such risk, SEA Europe urged EU – and national – decision-makers to act in support of the needs, challenges, threats and opportunities of Europe’s maritime technology sector and adopt tailor-made sectoral policies and financial support for the sector.

Highlighting the problem, SEA Europe has published a White Paper ‘Maritime Technology in Europe: A Strategic Solution Provider for Major Societal Challenges’, which was issued in October, last year.

SEA Europe represents nearly 100% of the European shipbuilding industry in 16 countries, encompassing the production, maintenance, repair and conversion of all types of ships, including the entire supply chain of the various producers of maritime systems, equipment and services.