measures against the serious gap of supply and …measures against the serious gap of supply and...

Ministry of Land, Infrastructure, Transport and Tourism

Measures against the serious gap of

supply and demand

in Shipbuilding market

Ministry of Land, Infrastructure,

Transport and Tourism (MLIT), JAPAN

1.Past Shipbuilding Recessions

2.Current Situation

3.Conclusions

Past shipbuilding recessions

Transition of the world shipbuilding industry

0

20000

40000

60000

80000

100000

120000

140000

160000

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990

Year

Orderbooks Completions New Orders

New Orders, Completions(1000GT)

Orderbooks

(1000GT)

1st

Oilshock

2nd

Oilshock

1st Curtailment

of the capacity2nd Curtailment

of the capacity


Chronological Table of Actions taken

MarketInternational

DialogueWith in Japan

1950s 50% share of the world shipbuilding market

1973

● 1st Oil Crisis - Sharp fall of tanker market - extremely glutted market - extreme price competition

19741975

1976'General Guidelines ForGovernment Policies in theShipbuilding Industry' (OECD)

19771978

19791st Curtailment of theshipbuilding facility (37%)

198019811982

1983Amendment of the GeneralGuidelines in 1976 (OECD)

19841985 Plaza Accord19861987

19882nd Curtailment of theshipbuilding facility (23%)

1989

～

extremely glutted market

The beginning of rapid development of the shipbuilding industry

Friction betweenJapan and Europe

Instruction of the export price

●'Handy Bulk boom'

● 2nd Oil Crisis ● 'Mini boom' in the dry cargo market

Operation

control

Operation

control

Recession

Recession

MarketInternational



1973


19741975


19771978


198019811982


19841985 Plaza Accord19861987


1989

～







Operation

control

Operation

control

Recession

Recession


Chronological Table of Action taken

MarketInternational



1973


19741975


19771978


198019811982


19841985 Plaza Accord19861987


1989

～







Operation

control

Operation

control

Recession

Recession


Japan had cut down its shipbuilding capacity in

the past recessions as a responsible position;

as the leader of the world shipbuilders.


MarketInternational



1973


19741975


19771978


198019811982


19841985 Plaza Accord19861987


1989

～







Operation

control

Operation

control

Recession

Recession


Chronological Table of Action taken

MarketInternational



1973


19741975


19771978


198019811982


19841985 Plaza Accord19861987


1989

～







Operation

control

Operation

control

Recession

Recession


Japan had cut down again its shipbuilding capacity

in the past recessions as a responsible position;

as the leader of the world shipbuilders.



2.Current Situation

3.Conclusions

14 13 128

17 1911

1916 13 13 14 12

1924

2013

23 25 26 23

36

27 29

46

3629

74 77

60

100

165

86

17

0

20

40

60

80

100

120

140

160

180

75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10

Million GT

Japan

KoreaEurope

Others

China

Source : Lloyds - Fairplay

Current Situation

World New Orders

Japan Shipbuilders’ Association

0

10

20

30

40

50

60

70

80

90

100

110

120

　１

９２

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９２

８

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９３

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　１

９３

２

　１

９３

４

　１

９３

６

　１

９３

８

　１

９４

０

　１

９４

２

　１

９４

４

　１

９４

６

　１

９４

８

　１

９５

０

　１

９５

２

　１

９５

４

　１

９５

６

　１

９５

８

　１

９６

０

　１

９６

２

　１

９６

４

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９６

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　１

９６

８

　１

９７

０

　１

９７

２

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９７

４

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９７

６

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９７

８

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９８

０

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９８

２

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９８

４

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９８

６

　１

９８

８

　１

９９

０

　１

９９

２

　１

９９

４

　１

９９

６

　１

９９

８

　２

００

０

　２

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４

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８

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６

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８

　２

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０

Others

China

Europe

Korea

Japan

Million GT

1926-2008 Lloyds – Fairplay

2009-2012 Clarkson

Current Situation

Completions / Orderbooks

Source : Japan Shipbuilders’ Association


2.Current Situation

3.Conclusions

Conclusions

“General Guidelines For Government Policies

in the Shipbuilding Industry ”(adopted in 1976, amended in 1983)

< Abstracts >

Each government of WP6 should:

- endeavor to ensure that a priority aim in the restructuring of its shipbuilding

industry remains the appropriate adjustment of production capacity;

- not to take any measure nor give, directly or indirectly, any aid to its shipbuilding

industry;

- watch that the practices of its industry remain, particularly with regard to

prices, in a framework of fair competition;

- refrain from taking measures which would help to create new shipbuilding

capacity and would aggravate the worldwide structural imbalance in the

shipbuilding industry;

- watch in particular that the restoring of normal and balanced conditions in the

market not be disturbed by the premature reactivation of capacities.

Conclusions

Desirable shipbuilding Policy

1.Stopping any expansion of shipbuilding

capacity

2.Eliminating direct or indirect subsidies for

shipbuilding industry and monitoring the

practices of its industry, particularly, ship’s

prices

3.Appropriate adjustment of production capacity

Conclusions

China prohibits new

expansion projects

for coming three years.

Every major shipbuilding country shall stop

not only new projects but also every ongoing

expansion projects.

< Fine action >

Current shipbuilding market is overcapacity

1.Stopping any expansion of shipbuilding capacity

Conclusions

Imbalance of supply and demand

Ship’s price war

Many Shipbuilders will be in management difficulty

If any countries start to support ailing their yards

More severe and longer recession

Other countries will start aid to their yards

2. Eliminating direct or indirect subsidies for shipbuilding

industry and monitoring the practices of its industry,

particularly, ship’s price

Conclusions

ＣｕｒｒｅｎｔＳｕｐｐｏｒｔ or Ａｉｄ

For Example…

Governmental

Instruments

Shipbuilding

Yards

Shipping

Companies

Ship

Acquisition

Fund

Private

Investor

ShipPayment

SalePaymentLease

back

Conclusions

We shall resist protectionism.

……

The measures for assisting industries must be

transparent, temporary and WTO consistent, minimizing

distortion on trade and investment.

We welcome the role of the OECD to continue to

undertake relevant analysis and to identify policy

approaches that are most effective and least distorting

for trade and investment;

…

2009 MINISTERIAL CONCLUSIONS (C/MIN(2009)5/FINAL)

(adopted at the council meeting at ministerial level

on 25 June 2009)

Paragraph 12

Need to Eliminate direct or indirect

subsidies for shipbuilding industry and

monitoring the practices of its industry,

particularly, ship’s price

Strong needs to re-open negotiation for

a shipbuilding agreement

Conclusions

World market share

Year 1979

Goal of world supply reduction

World market share

Japan：Europe ＝１：１

Common understanding of necessity for restructuring policy

～Japan～

Capacity reduction

by government initiative

～Europe～

Subsidy reduction by EU

Year 2009

Common understanding of sustainability

for the world ship building industry

How?

What?

Conclusions

Korea 39% Japan 28%

China 21% EU 8%

3. Appropriate adjustment of production capacity

Ministry of Land, Infrastructure, Transport and Tourism

Thank you for your kind attention.

measures against the serious gap of supply and …measures against the serious gap of supply and...

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