The European Commission is threatening to appeal
to the World Trade Organisation
(WTO) over alleged subsidies given by the South Korean government
to support its shipyards. Although Korea has achieved, in recent years,
a leading position in the world shipbuilding industry, Europe is still
strong in building specialised ships such as ferries, cruise ships and
gas tankers. A number of EU thematic networks and research programmes
are aimed at speeding up ship design and production to help support these
important market segments.
The world market for shipping continues to be in crisis.
Supply outstrips demand and even with the recent rise in demand, prices
continue to fall. As South Korean yards can offer ships at prices that
do not fully cover production costs, it is almost impossible for European
shipyards to win orders. These are some of the conclusions of five Commission
on the situation in the world shipbuilding market (COM(2000) 474 final;
COM(2000) 263 final; COM(2000) 730 final; COM(2001) 219 final; COM(2002)
205 final). These reports to the European Council, presented by Commissioner
Liikanen, analyse the market situation in detail and provide evidence
that over-investment in Korean shipyards has triggered business practices
that are not in line with the generally accepted rules.
||Are the South
Koreans playing fair?
EU countries are no longer able to subsidise
their shipyards but the Commission's reports show that several of
the six major Korean yards have received substantial state support.
The Daewoo and Halla yards both had to be declared insolvent after
the 1997 Asian crisis before being given debt relief by state-owned
banks. These companies now operate under the new names of DSME and
Samho Shipyard, respectively. The Commission and European industry
organisations have held several rounds of talks with the Koreans,
which produced so-called 'Agreed Minutes' laying down principles
on financial transparency, non-subsidisation, commercial pricing
and effective consultation and monitoring. It is Korea's apparent
unwillingness to adhere to these agreed measures that has led to
the latest dispute. EU trade commissioner Pascal Lamy is considering
an application to the World Trade Organisation to protest against
the debt-for-equity swaps and loan restructuring that have enabled
the faltering Korean yards to carry on operating.
Korea builds mainly large bulk carriers, container
ships, and oil and liquefied natural gas (LNG) tankers, and its
tenders are on average 20% below what has been calculated as the
full cost-covering price in Korea. The Koreans deny any price dumping,
claiming that their lower prices are the result of increased efficiency,
lower labour costs and private as well as state financing. However,
the Commission's analyses have shown that Korean yards, while typically
accounting for their direct costs such as labour and materials,
systematically fail to make provisions for their significant financial
costs. Moreover, Korean yards operate in an inflationary environment
and labour costs are not much different from those of other OECD
||To subsidise or
There is wide agreement among EU Member States
and in the EU shipbuilding industry that subsidies do not help to
improve competitiveness. However, in the absence of a level playing
field, defensive measures may be required. With this in mind, the
Commission has proposed to the Council that direct aid of up to
6% be allowed for certain market segments where unfair Korean trading
practices have caused injury to EU shipbuilders. This defensive
mechanism will be limited in scope and duration and is designed
to support EU shipbuilders while a WTO dispute settlement is pending.
Currently, the mechanism, which was approved by the Council in June
2002, covers container ships and product and chemical tankers. Liquefied
gas carriers may be added if further investigations show that Korean
yards are using subsidies here as well, allowing them to offer ships
at prices below production costs. This defensive subsidy regime
will enter into force when the Commission officially requests a
dispute settlement at the WTO.
|Europe on Sea - some key facts
about Maritime Europe:
- Europe's coastline is enormously long
in relation to its land area;
- From the dawn of civilisation, Europeans have used the
sea for travel, trade, migration and war;
- Today, 90% of European exports are still carried by sea;
- 2 million EU citizens work in the maritime industries,
of which about 300 000 are employed in shipbuilding;
- Many European shipyards are having a difficult time, losing
orders and jobs to yards in the Far East due to unfair trading
- Europe is the world leader in building ferries, cruise
ships and specialist tonnage like dredgers and supply ships.
||Europe leads in
One European shipyard that has successfully
exploited niche markets is Flensburger
Schiffsbau-Gesellschaft (FSG), founded in 1872.
It currently has a full order book with options
until 2004, for ro-ro ferries and other specialised vessels. "Our
design for a naval supply vessel has been ordered by the UK MoD,"
says Stefan Krüger, FSG research director. "Six ships
of this design will be built at the UK shipyard, Harland
and Wolff, while we will produce the other four ships. Our
first principle is that basic numerical research underlies every
design we produce, and we never use empirical methods. For every
ship that we build, 10% of our direct costs go into research, and
this is what turns our designs into successful ships. In addition
we received funding through EU programmes and directly from the
German government. In this way even a prototype can be profitable,
and with the advanced ships that we design, every one is a prototype."
FSG joins in several of the thematic networks described below.
in the EU
of European Shipbuilders' Associations (CESA) has its own research
body, the Committee for Research and Development in the European
shipbuilding (COREDES), which aims to promote understanding of its
industry's R&D needs and priorities, and coordinates efforts
to achieve them. It has formulated maritime R&D strategy along
four main axes, aiming to make new ships:
- more competitive
- more friendly to the environment
- adapted to short sea routes in Europe
"There are four main topics within these
themes," explains Patrick Person, vice-chairman of COREDES.
"In manufacturing, we need to reduce the cost of making and
assembling hull sections for large carriers. We need better design
tools to produce new types of ships more quickly and cheaply. We
need to improve the handling of freight containers, so that a much
larger volume of goods are carried by water. Finally we need new
technology to survey and explore beneath the sea and support offshore
oil and gas platforms, and automatic monitoring." To help to
define research needs within these themes, the EU increasingly uses
Maritime research projects are defined for the
EU through a number of thematic networks. A thematic network (TN)
unites the expertise of industry and research organisations to examine
the state of the art in a given area, look for research needs and
help to formulate joint projects that can apply to FP5 for funding.
The EU helps with the cost of travel and meetings. The generic thematic
networks in the marine area are CEPS, PRODIS, Safer Euroro
. Within these generic TNs are a number of more specific ones, described
under each heading. The structure of the thematic networks is outlined
in the marine
and Production in Shipbuilding
CEPS has successfully submitted research proposals
under the Fourth
One of its achievements has been to improve
laser cutting techniques, first introduced by two relatively small
UK shipyards but since adopted by bigger yards, which use it to
streamline production and save costs. There are two thematic networks
within CEPS: MARNET-CFD
The MARNET-CFD TN aims to encourage the spread
of knowledge about, and use of, computational fluid dynamics as
a design tool in the marine industry. The network was set up in
1999 with 37 organisations - shipyards, classification societies,
naval architects, design consultancies, specialist manufacturers,
research institutes and tank testers - with many more joining as
the activity advanced. It was founded by W.S.
Atkins, UK design consultants, and Sirehna
CFD is a mathematical tool successfully used
to model aerodynamic flow in designing aeroplanes and motorcars.
Designers of ships and offshore platforms have been slower to take
up the method, and MARNET is planned to bring the benefits of CFD
to this sector. "Europe leads in this technology," explains
MARNET coordinator, Paul Gallagher of W.S. Atkins. "It was
EU support for CFD in aeronautical design that helped to make a
success of the European airbus, with its laminar wing flow and low-drag
area profiles. The average bulk carrier is just a series of boxes
welded together and CFD does not have much to offer there. It comes
into its own in supporting the design of efficient or novel ships
like fast ferries and cruise liners, where European yards have a
leading position in an expanding market. These vessels need good
sea-keeping ability and low noise and vibration, so hydrodynamic
design is very important. MARNET enables advanced hydrodynamic methods
to filter down from the universities to the shipyards."
MARNET, too, has four thematic areas, marine vehicle performance,
hydrodynamic loads and responses, propulsors and offshore engineering.
So far it has helped to set up eight research projects to develop
tools for design optimisation and others are progressing. Sirehna
are creating a database of the experimental and computational data
gathered in these areas so that it can be accessed and used by all
participants. The database has two parts, problem definition, set-up
and references, and data files in simple formats. Proposals for
phase of MARNET are being developed.
||PRODIS for marine
The PRODIS TN reflects the importance of the
shipbuilding industry in integrating different European technologies.
It was set up under the policy to make ships more environmentally
friendly, with an important aim being to shift cargo traffic from
land to water, reducing congestion and air pollution. This has to
be achieved while meeting the demand for efficiency, flexibility
and fast turnaround that modern freight transport demands.
The network aims to make better use of the funding
available by linking different national programmes and projects.
The analytical thematic areas of PRODIS are hydrodynamics, hull
structures, power plants and cargo handling and mooring. There is
also an integrating area, new ship concepts. The main contractor
is the French shipyard Chantiers de l'Atlantique.
The TN divides its technologies into two distinct
groups, one related to transport in deep seas, suitable for intercontinental
or polar shipping, and one related to coastal, inland or short sea
shipping. A supporting thematic network is MARPOWER, which deals with marine machinery that has low pollution and high
These are just some of the TNs that impact on
the transport sector and shipping in particular. The different TNs
are collaborating more and more to make their work more effective.
They holding regular joint workshops to this end, the latest being
in Crete on 18?19 October 2001. "Thematic networks are now
looking at where they want to be in 10 years time when thinking
about new research," comments Jim Grant of Plymouth University's
Centre of Expertise, Marine Science and Technology.
To compete with Korean shipyards, European yards
need more efficient ways to assemble large hull structures. Automation
offers a tool to replace expensive manual labour and keep up production
as shipyard capacity is cut back. The expertise for many 'tele-operations'
already exists within the nuclear, military and aerospace industries
but it needs to be transferred to the maritime industries in a systematic
and useful way. The ROBMAR TN was set up to help exchange information
between the industry sectors and bring high technology to ship construction.
One example of a project within this structure
2, the second phase of research into a robotic welder. The
aim is develop an effective welding machine to use inside the confined
space of hull sections, as the present ones cannot work in dry-docks
or slipways where ships are fitted out for going to sea. The result
will be a prototype robotic welding system, with the welding torch
held by a manipulator on a platform that will fit inside the ship
cell. It will also have a viewing system to survey and measure the
join to be welded and an external control console.
The system should improve welding productivity
more than threefold, with better welds that need less reworking.
It will also reduce assembly time, which is one of the main bottlenecks
in ship construction, improving throughput and hence profitability
and market share.
Many marine maintenance procedures are rough,
risky and repetitive, making them prime targets for automation.
One difficult maintenance task is cleaning the underwater parts
of ships to remove marine fouling. It has to be done in a dry dock,
which is expensive, and the marine growth is contaminating and its
disposal is strictly controlled by environmental regulations. The
project, managed by Spain's Instituto de Automatica Industrial,
is developing a low cost auxiliary hull climbing robot that will
be able to clean adhering marine growth from a ship's hull underwater.
It will also act as an inspection tool through sensors for evaluating
the condition of the hull steel.
The project goes right through from defining
the specifications such a system would need to building a prototype
and testing it in two shipyards in Greece and Spain. The system
will be divided into sub-systems that can be built and assessed
separately, and safe disposal of the cleaned material will also
be studied. AURORA has the potential to save Europe €185 million
per year of costs arising from labour, dry-docking and ship stops.
The insides of ballast tanks and cargo spaces
must also be regularly inspected to make sure that the hull is still
seaworthy. A free-floating underwater vehicle equipped to make visual
inspections and gauge the thickness of the steel hull could save
having to drain tanks and keep human operators out of a potentially
dangerous environment. The ROTIS
project aims to develop a prototype system with a self-powered vehicle,
on-board navigation and tether control, an arm to hold inspection
tools and a docking device, and a surface control unit.
is another robotic cleaning system, this time operating in the dry.
While it can also clean hulls in dry dock, it is the only system
being developed that can crawl over a ship's superstructure, cleaning
as it goes. It will provide an economical solution for vertical
and overhanging areas that are difficult for a person to clean in
Development in the cruise ship industry has been very fast and
new concepts need to be realised rapidly if Europe is to retain
its lead in this market. DISCO
is a new programme that will derive new structural solutions for
cruise ship requirements and evaluate them. Guidelines for cruise
ship design and construction will be drawn up to complement the
analysis in DISCO.
A new four-year project called VRSHIPS-ROPAX
seeks to unite the various existing simulation packages into a life-cycle
virtual ship system. It will create an independent platform to support
simulation tools and test it by modelling a new ship type, ROPAX.
Ship stability and smooth operation should be enhanced by an investigation
of pod propulsion systems OPTIPOD, which will optimise the design of such systems for any shape of
hull and ultimately generate guidelines. A cruiser, a ro-ro passenger
ship, a cargo ship and a supply vessel will be taken as the examples
in the study, which will cover operational and environmental aspects
of podded ships compared with conventionally powered vessels.
However successful a ship design, it has to be reproduced industrially
to build the ship. Current fabrication methods require a good deal
of remedial work, common in heavy industry, before a new ship can
be classified as acceptable. Currently around 28% of labour costs
are wasted in correcting unsatisfactory work. The QUALIGLOBE
project seeks to apply systematic quality control, integrated with
process planning, at each stage of the production process. It will
develop a range of software, for pre-adjusting process parameters,
real time process control and monitoring overall quality assessment.
It will use sensors to acquire data for a database on quality at
all levels from individual components to entire assemblies. The
result should be a tool for manufacturing improved steel structures
at lower cost.
EU research matters
||The purpose of these
thematic research actions and projects is to provide Europe's maritime
transport sector with the assistance it needs to maintain and improve
its competitiveness. Ensuring that ship builders and related industries
are developing the latest technology - in terms of design, engineering
and production - will allow them to match key players such as Japan
and Korea. However, industrial competitiveness is not the only aim:
key benefits from EU-funded research must also offer reductions in
energy consumption and increases in safety, reliability and availability.
To obtain these deliverables, research efforts are arranged around
the evolution of critical technologies and their use in advanced industrial
There is a broad remit for research in this field because of the
special nature of the maritime sector. Projects cover the complete
supply chain because 50-80% of shipbuilding's added value is generated
outside the yard. More information on the goals of maritime research
can be found in the Growth
Work Programme 2001-2002.
Work aimed at enhancing European maritime
competitiveness is supported under the Growth Programme's Land
transport and marine technologies key action.
CEPS - Competitive engineering
and production in shipbuilding;
PRODIS - Product development and innovation
SAFER/EURORO - Non-linear dynamics of ship capsize
in extreme seas;
TRESHIP - Technologies for reduced environmental
impact from ships;
MARNET-CFD - A thematic network in computational
fluid dynamics for the marine Industry;
ROBMAR - Robotics for the maritime industries;
MARPOWER - Concepts of advanced marine machinery
with low pollution and high efficiency;
ROWER 2 - On-board automatic welding for ship
erection - phase 2;
AURORA - Auxiliary climbing robot for underwear
ship hull cleaning of the sea adherence and surveying;
ROTIS - Remotely operated tanker inspection
DISCO - Development of innovative structural
concepts for advanced passenger vessels;
VRSHIPS-ROPAX - Life-cycle virtual reality ship
OPTIPOD - Optimal design and implementation
of azimything pods for a safe and efficient propulsion ships;
QUALIGLOBE - Product quality state based fabrication
in global production environment.