Shipbuilding: Changing Shipyard Dynamics in Japan

Continuous design refinement and incremental productivity gains — reflecting the Japanese concept of kaizen — alongside unremitting attention to contractual performance and product quality have seen the country’s shipbuilders maintain a high profile in certain sectors of the commercial vessel market.

The industry’s scale, reach and financial returns, though, have suffered from the onslaught of competition from its Asian counterparts, most notably China and South Korea, both of whom the Japanese contend benefit from both overt and covert state financial intervention.

By the measure of output, Japan’s position as a global shipbuilding force has been eroded over the past 30 years under the weight of the inexorable rise of China and the contest with ever-determined Korean players. The Japanese grip on commercial newbuild volume has slid from about 40% in the 1990s to no more than 10% today. China is now reckoned to command close to 70% of the market in terms of orders by deadweight, with Korean yards’ share at approximately 20%.

Active capacity in Japan has reduced through withdrawals from newbuild business and also as a consequence of integration. At the same time, shipbuilders have to an extent hollowed-out domestic capability through investments abroad, in new shipyard ventures