Outcome 6 - competitiveness

Question 1

Discuss the shipbuilding costs and competiveness with regards to material costs, shipbuilding productivity
(shipyard); labour costs and currency movements. Introduction

Answer 1

Shipbuilding costs and efficiency (thus competitiveness) vary considerably from one yard to another and depends on material cost, shipbuilding productivity, labour costs, and currency movements

Question 2

Material costs:

Answer 2

• 60% of total costs
• Countries with many yards can support a full range of material suppliers and long production runs give these suppliers a competitive advantage

Question 3

Shipbuilding productivity:

Answer 3

• Facilities set the upper limit on size and volume but productivity more important
• Maximum throughput depends on size and also throughput
• High quality of organisation and management needed
• Measure shipbuilding productivity by the man hours needed to build a ship in cgt/per man-year

Question 4

Labour costs:

Answer 4

• 40-50% of total costs
• Wages have huge impact on competitiveness
• If needed yards will have to reduce man hours required to build a ship by
• Improving facilities, systems and labour productivity; improved organisation systems and automation

Question 5

Currency movements:

Answer 5

• Single most important factor in determining shipbuilding cost competitiveness
• Unit costs vary proportionately with exchange rate
• Give example

Question 6

Conclusion

Answer 6

At one end there are shipyards with low productivity but low wages so man-hours hardly matter. At another end there are high-productivity yards with high wages that go out of business. Between lies a range of yards with different combinations of wage costs and productivity. Waves of currency movements wash over the industry than can shift the competitive landscape very quickly.