Traditional industry leader expected to stay ahead in next century but shake-up

PUBLISHED : Monday, 20 December, 1999, 12:00am
UPDATED : Monday, 20 December, 1999, 12:00am

South Korea, despite mounting a strong challenge, will find it difficult to overtake Japan's shipbuilding volume in the 21st century, an analyst says.

Seiji Nagatsuka, senior analyst at the Japan Maritime Research Institute, said Japan, Korea and the mainland would share about 80 per cent of the world's shipbuilding output early in the new century.

Japan's shipbuilding industry had been the leader over the past 45 years, but it needed to take a new role in the next 50 years.

Its management would have to place more emphasis on international co-operation, Mr Nagatsuka said.

Meanwhile, gaps between large- and medium-sized shipbuilders were narrowing due to factors such as sideline business versus specialised business, technology improvements, output and productivity.

Excess shipbuilding capacity at big yards needed to be adjusted through modernisation, consolidation and business tie-ups.

Japan was looking at modernisation of equipment and facilities, a reduction in the number of large shipbuilders through natural selection and consolidation of the nine medium and 10 small shipbuilders, Mr Nagatsuka said.

It also was rationalising through offshore purchase of materials and cost reduction.

Japan's shipbuilding output would stay at the same level, but as it entered the new century, it might become necessary for the industry to make self-imposed adjustments in regard to restrictive market shares between big and small yards.

Mr Nagatsuka said that Japan's international competitiveness had been hurt by the fall of the Korean currency, the won, against the yen, high shipbuilding costs, terms of payment and funding power.

While Japan still had 'non-price' competitiveness, South Korea was catching up with it through improved productivity.

As the number of workers in Japan's shipbuilding industry shrank, it was being forced to strengthen its technological capabilities.

The shipbuilders were beefing up their efforts in this field, Mr Nagatsuka said.