Japanese yen depreciation highlights the competitive advantage of Japan's shipbuilding industry
Release date:2015-02-26

Thanks to the depreciation of the yen, the Japanese shipbuilding industry has a certain competitive advantage in the face of Chinese shipyards and Korean shipyards. Despite the slowdown in global order volume growth in the second half of 2014, data from the Japan Ship Exporters Association (JSEA) showed that Japanese shipyards’ new ship orders still exceeded delivery. At present, Japanese shipyards hold orders totaling 27.3 million GT. Most shipyards are delivered until 2017, and some shipyards are scheduled to be delivered until 2018.

Although the Japanese shipbuilding industry has performed well, recent developments still indicate that further consolidation is coming. It is understood that Mitsubishi Heavy Industries (the location of the ship's hangar) is considering the divestiture of part of the shipbuilding business and the establishment of a new company to engage in high value-added, technologically advanced shipbuilding projects such as LNG ships.

The management of Mitsubishi Heavy Industries has previously hinted that the company will strengthen cooperation with other shipyards in Japan. Some insiders believe that the move by Mitsubishi Heavy Industries to divest some of its shipbuilding business will create opportunities for further consolidation. Mitsubishi Heavy Industries has maintained close business relationships with Imabari Shipbuilding, and the two companies have worked closely on the construction of LNG ships and ultra-large container ships (ship-type shipyards).

In terms of production, Mitsubishi Heavy Industries and Imabari Shipbuilding rank the top three in Japanese shipyards. The merger of the two shipyards will enable them to compete on the same level as Hyundai Heavy Industries (ship hangar location), Samsung Heavy Industries and Daewoo Shipbuilding, the three largest shipyards in Korea. However, the Yan family, who manages the Imabari shipbuilding industry, has long been reluctant to release large stakes.

Kawasaki Heavy Industries and Mitsui Shipbuilding had previously tried to merge, but due to corporate culture conflicts, the transaction was not realized. At present, the two shipyards have reached an agreement to merge their ship repair business from April. According to the agreement, Mitsui Shipbuilding sold its 40% stake in Yura Shipyard (Yura) to Kawasaki Heavy Industries.

Kawasaki Heavy Industries and Mitsui Shipbuilding recently announced that they will establish a joint venture ship repair facility, KHI MES Yura Dock. The new ship repair facility will serve as a ship repairing center and will provide dry dock facilities for LNG ships built by Kawasaki Heavy Industries and Mitsui Shipbuilding. Kawasaki Heavy Industries and Mitsui Shipbuilding may establish similar joint ventures to secure large LNG ship construction projects.