The shape of shipping06/09/17Government
Christophe Tytgat of the European Shipyards’ and Maritime Equipment Association discusses technology in shipping.
The European maritime technology industry consists of European shipyards as well as European maritime equipment manufacturers and suppliers, which are both active in civil and/or naval activities. Despite some difficult times after the financial and economic crisis in 2008, European shipyards are doing relatively well, in particular with the orders for new-built cruise ships or naval ships, as well as with the retrofitting of existing ships to make them more environmentally friendly. This success is not a result of any state aid policy or any other financial support measures. It is on the contrary a result of business decisions to focus European industrial activities on the new-building of advanced, complex ship types and to continuously invest in research, development and innovation as a means to stay ahead of global competitors.
European maritime equipment manufacturers and suppliers are also doing well and represent nearly 50% of global supply. However, in an era of growing trade protectionism, this side of the industry is expected to face more competition from global competitors, both on markets inside and outside Europe.
Despite the rather good shape of the European maritime technology sector, there is no room for the sector to be complacent. Firstly, Asian countries will continue to massively support their local shipyards, especially in the light of the current overcapacity of traditional merchant ship types, following massive orders for new-buildings from shipowners over the past five to ten years. South Korea is pumping billions of dollars to keep its local shipyards in difficulty alive, whilst China will provide state aid to its shipyards as part of the country’s ambitious policy to become a global leader in advanced, complex ship types, including cruise ships, by 2025.
These Asian state aid policies will – regrettably – continue the existing unfair competitive practices, and adversely impacting European shipyards, unless the European decision makers start realising that European shipbuilding is a strategic sector for Europe and therefore needs to be protected.
European maritime equipment manufacturers and suppliers will need to be vigilant since third countries, especially in Asia, are expected to start (financially) supporting their local maritime manufacturers to the detriment of European companies, certainly on the local markets but likely also on foreign markets, including European markets, as a means to counter the negative effects of the current overcapacity of new-buildings.
The biggest challenge for the European sector will definitely be China, which has clearly highlighted its ambition to target the current successful European market segments of advanced and complex ship types, in particular cruise vessels, and sophisticated technologies and maritime equipment. These sectors are of strategic importance to China and for this reason the country has developed a dedicated policy, including state aid and other financial incentives, to ensure that it becomes a global leader in these sectors by 2025. This ambition is expressed in recent policy documents, such as ‘Made in China 2025’ and ‘China Manufacturing 2025’.
The European maritime technology sector will thus need to be ready to respond to fierce – and regrettably also unfair – competition from third country enterprises, which are fully backed by their authorities. SEA Europe will continue to ensure that European policy makers, whilst recognising the economic benefits of an open economy, are aware of the risks for the European maritime technology industry, and that they are conscious that Europe will need to be vigilant to avoid European strategic sectors, such as shipbuilding and maritime equipment, getting lost – or ensuring that the knowledge and expertise of these sectors isn’t transferred to third country enterprises.
Europe needs a strong industrial policy
SEA Europe strongly believes in free trade and therefore supports free trade agreements such as CETA or TTIP. At the same time, SEA Europe advocates for a global level playing field, i.e. a framework where all market players play with the same cards and respect the same rules and principles. Unfortunately, this has not been the case so far and the lack of a global level playing field hampers or impacts negatively the European industries, including the European maritime technology sector.
In a context of growing protectionism, for instance in the US or in Asia, the European decision makers cannot afford a policy of ‘wait and see’. Instead, they need to adopt actions to support the position of European industries as well as the jobs these industries create or the economic wealth and added value they generate. Such necessary actions should be taken rapidly.
In a recent manifesto, more than 100 European manufacturing industries – including SEA Europe on behalf of the European maritime technology sector – have underlined the need for European decision makers to acknowledge the importance of the manufacturing industries in Europe. In doing so, these industries have conveyed a very strong political signal to the European decision makers that they need to adopt an adequate industrial policy that fully supports the manufacturing industries as generators of wealth, growth and employment.
The environmental agenda
European shipyards and maritime equipment manufacturers contribute to Europe’s environmental agenda and produce the technological solutions that will help the shipping industry meet its environmental targets, including in terms of alternative fuels, such as liquefied natural gas (LNG), or increased energy efficiency. These environmental contributions, inter alia through innovative equipment and technologies, have been enabled thanks to strategic research, development and innovation agendas, shared with other maritime stakeholders and (financially) supported by the European Commission.
However, even more challenging tasks are ahead, at least for the next 20 years. These challenges include the decarbonisation of shipping, digital-ready maritime logistics or Industry 4.0. Further untapping the economic potential of the oceans and the seas will remain very high on the agenda of the European maritime technology sector.
To meet the environmental challenges, current technologies will have to undergo major modifications and new innovative solutions will have to be established. In this respect there are some promising solutions, such as the use of fuel cells or other carbon-free, non-fossil fuels, as well as the use of batteries for commercial ship applications (e.g. electric ships for small regional ferry routes or possibly also longer route). These challenges will also need to be addressed in ever-growing offshore activities. Specialised ships and high-tech maritime equipment for sea-based industries, such as fishing, offshore and deepsea mining, will have to ‘plug and play’ within a growingly integrated and interconnected global environment. Together with its membership, SEA Europe is working very hard on meeting these challenges, on enabling the European maritime technology sector to be a frontrunner for Europe, and to enable the European industry to remain innovative and competitive globally.
In order to succeed, the European industry will need legal certainty, i.e. once legislation has been adopted, there is a need for the industry to adapt to it as well as to put it in reality. In this respect, the most recent decision of the International Maritime Organization (IMO) in London, UK, to postpone – once again – the implementation of the Ballast Water Management Convention by another two years has been heavily criticised by SEA Europe as an example of bad practice.
The Ballast Water Management Convention was adopted to solve the serious problem with invasive species, which disturbs the fragile marine environment. Maritime equipment manufacturers, including in Europe, were invited to develop the appropriate technology, which they did over recent years, bearing in mind the tight timeline that had been adopted by the convention. However, whilst all stakeholders were fully aware of the requirements of the convention, the IMO decided to delay the implementation until 2024. This decision cannot be read otherwise than to mean that those who have done nothing to reach the goals of the convention have been given more influence than those who have lived up to its objectives, or than those who have invested in the equipment and technologies to put its requirements in place.
Skills and knowledge
To meet the European maritime technology industry’s future challenges, Europe needs to make sure that it has the correctly educated and trained workforce, able to cope with digital systems, robotisation, or energy management, and to quickly adapt to fast-changing technologies, production and working environments.
SEA Europe closely co-operates with its trade union counterpart IndustriALL and with the European Commission in the context of the Sectoral Social Dialogue for Shipbuilding. In this context, SEA Europe and IndustriALL – as social partners for the shipbuilding industry – carried out a study on the European Skills’ Council in March 2016, which mapped the current and future skills’ gaps and needs of the European maritime technology industry. The work carried out in the context of this study has paved the way for the European Commission to launch so-called ‘Sectoral Blueprint Platforms’, which will allow certain industries, including the European maritime technology sector, not only to map its skills’ gaps and needs, but to develop adequate education and training programmes.
This article will appear in Pan European Networks: Government 23, which will be published in October.