1. KATERINA VOUTSINA & THODORIS PELAGIDIS & GEORGIOS DAFNOS
The Greek Shipbuilding Industry as
a trigger of national
competitiveness

2. The concept of clustering
The concept of clustering has become a central
concept for analyzing the competitiveness of nations,
industries and firms.
A cluster is defined as `a population of
geographically concentrated and mutually related
business units, associations and public (private)
organizations centered around a distinctive
economic specialization’.

3. Agglomeration economies
Firms cluster together because of the presence of:
 a large labour pool inside the cluster. The presence of such a labour pool
reduces search costs. Furthermore, such a labour pool allows for the
existence of specific training and education programmes, which upgrade
the quality of the labour pool.
 suppliers and customers in a cluster. A location in the proximity of
suppliers and customers offers cost advantage s because of low transport
costs. Proximity also enables closer monitoring and frequent face-to-face
contacts.
 `knowledge spillovers’ in clusters. Knowledge spills over easier and more
rapidly locally, because of frequent interaction and because developments
are easy detected locally
The notion of sustainable competitive advantage

4. Maritime Clusters
Maritime activities, such as shipping, shipbuilding
and port and maritime services, geographically
concentrated

5. TRENDS IN THE GREEK MARITIME CLUSTER

6. The Greek Maritime Cluster
(Icana et al, 2009)

7. Greek maritime cluster competitiveness
Within the European Union, the Greek maritime cluster
(which includes shipping as well as all related and
supporting industries) ranks
-6th in terms of the value added that it generates in the
national economy, and
-5th in terms of providing employment, despite the fact
that Greece controls the largest fleet in the world.
Moreover, Greece only manages to produce 3% of the total
value added in the region, whereas countries such as the
UK, Italy, Germany and Norway produce substantially
more
Policy Research Corporation, 2008

8. Reasons for the low value added
First, industries relating to and supporting the
shipping cluster are small in Greece.
Second, the shipping cluster itself has a small value
added relative to its size.
Greece’s productivity, while being lower overall, is
much more concentrated in shipping, whereas the
value added in Norway and Germany is more
dispersed in seaports, marine equipment and
shipbuilding.

9. The European shipbuilding industry

10. Share turnover in repair and newbuilding by
European countries in 2007

11. Shipbuilding industry is strongly export oriented
in all regions
South Korea: in 1990, about 15% of its production value
was destined for the domestic market and 85% was
export. Since 1995, the latter has increased to more than
99%.
China: In 2007, the exports of newbuildings accounted
for 81 percent of total production, while the inflow of new
orders was already 89 percent of foreign origin.
Japan: While in 1971, domestic shipbuilding new orders
in Japan surpassed export order for the first time in ten
years, in 2004 the share of export new orders was 99%
(9.75 million GT).
http://ec.europa.eu/enterprise/sectors/maritime/files/fn97616_ecorys_final_report_on_shipbuilding_competitiveness_en.

12. Europe vs. Asia
 Europe clearly shows higher labour costs in comparison to its Asian
competitors, although low labour cost competition is mainly focused on
China and emerging shipbuilding nations. Korea and Japan do not have
significantly lower labour costs and have even higher labour costs than
some European countries (such as Romania).
 Due to its specialization in the high value added segment of the market
labour costs are less of an issue in shipbuilding in Europe.
 Although R&D is important for shipbuilding in Europe which focuses
on relatively complex, high value ships, expenditure on R&D in Europe
and Korea shows that all countries have a R&D ratio below 1%
 Urgent need of specialized workforce

13. Global Shipping Industry (I)
CESA Shipyards Activity (Source: CESA)

14. Global Shipping Industry (I)
EU-27 Shipyards Activity (Source: CESA)

15. Global Shipping Industry (II)
Chinese Shipyards Activity (Source CESA)

16. Global Shipping Industry (III)
JPN Shipyards Activity (Source CESA)

17. Global Shipping Industry (III)
South Korean Shipyards Activity (Source CESA)

18. Global Shipping Industry (III)
World Shipyards Activity (Source CESA)

19. Shipping Capacity per Region 1991-2012
Shipbuilding Facing New Challenges

20. Shipbuilding Industry in crisis

21. World Orderbook by Area

22. World Orderbook by Ship Types

23. Dry Cargo Freight Indices in Crisis 2005-2011

24. Too Many Ships Chasing Too Few Cargoes

25. Foreign Governments’ response to crisis

26. Greek shipbuilding industry in crisis
the global financial crisis
intense competition it faced from countries of low labour
cost.
Introvert instead of extrovert
attempt to re-enter international markets: Greek
shipyards went through a series of structural changes
which mainly included:
 privatizations,
 programmatic agreements with the Greek state,
 technological and organizational modernization.
Yet, despite these changes, the expected conditions that
would gradually lead the Greek shipbuilding industry to
the hoped-for state of profitability have been met.

27. Greek shipbuilding industry: s.w.o.t. analysis
STRENGTHS
• superiority of geographical
location
• lengthy experience and highly
coherent network
-comparative advantage in the
building of ferry boats snd cruise
boats
- the big size of the Greek
shipping
WEAKNESSES
• cost levels (wage levels)
• access to skilled labour
• access to finance (financial crisis
and lack of confidence of
investors and banks regarding the
shipbuilding industry)
• Low productivity (organizational
rigidities,
• lack of a coherent governmental
policy and strategy to support
shipbuilding
OPPORTUNITIES
• new segments- move towards
building vessels not easily built in
low-labour-cost countries
• many SMEs under-exploited
• prospects of specialization on
green shipbuilding
• European funded programmes and
actions that support innovation
«LeaderSHIP 2015» ή το
«Seaborne 2020»
• enhanced requirements regarding
shipping standards
THREATS
• Greek shipowners are not willing
to change the flag under which
they operate
• price competition
• financial crisis
• strikes
• limited national or European
funds

28. Business Strategies
Safeguarding the low cost production
Vs.
Specialization and innovation strategies

29. Skaramagkas (Hellenic Shipyards S.A.)shipyard case
Hellenic Shipyards S.A.: is the largest shipyard in Greece
and one of the largest in the area of the eastern
Mediterranean.
there has been a significant drop-off in both repairs and
new shipbuilding
the work of the shipyard is primarily based on the
construction and renovation of ships within the
framework of the equipment programme of the Greek
Navy, and railway car construction under agreements
concluded with the Hellenic Railways
Organisation (OSE) and the Athens-Piraeus Electric
Railway Authority (ISAP).
secondary activities include ship repairs for the merchant
marine and the recent construction of three car ferries.

30. Skaramagkas (Hellenic Shipyards S.A.)shipyard case
Paradox:
Since its privatization, the shipyard underwent through
an extensive restructuring. Investing heavily in state-of-
the-art technology and infrastructure, it aspired to
strengthen its competitive position worldwide and
become a leader in technology and service provision.
Yet, in September 2010, the Greek government
acknowledged the total debt of 1.321 billion Euros to
Hellenic Shipyards S.A. and 75.1% of the Greek shipyard’
shares have been transferred to Abu Dhabi MAR LLC.
Paradox and Possibilities of resurgence?

31. Thank you!