FINDING ITS NICHE
s East Asian shipbuilders have come to dominate the global shipbuilding industry—China, Japan, and South Korea account for around 80% of all merchant vessel orders—it may seem as if they have crowded out all the competition. China alone has grown its global market share from the single digits in the early 2000s to over 40% of total deadweight tons, and all three countries’ industries have benefited from considerable government support.
However, when interviewing shipbuilders on the ground in Turkey, we found a confluence of timely strategic decisions and market conditions that has carved out several niche shipbuilding sectors where Turkish companies have thrived. Instead of focusing on big vessel production, where builders would find themselves in direct competition with the Asian giants, Turkish companies have specialized in tugs, ferries, offshore vessels, commercial shipping vessels, and other high value-added vessels.
These vessels, usually built on contract for a specific buyer rather than to be sold on the market, often incorporate advanced technologies such as hybrid- or electric-powered engines and autonomous navigation systems. Many are marketed to the northern European market, where customers are conscious about quality and prefer working with Turkish builders rather than their Asian counterparts.
This Europe-focused strategy has paid off.
AWhile the Asian market segment—bulkers, oil tankers, and other big vessels—was hit hard by the global recession starting in 2008, Turkish builders saw a steady stream of orders from European customers. One builder—Cemre Shipyard—has delivered 50 vessels to a single Norwegian customer.
Turkish builders also operate within an industrial sector highly complementary to shipbuilding. Steel—a primary input for shipbuilding—is readily available in the Turkish market. While Asian builders also benefit from highly capable national steel industries, the Turkish marine equipment industry has made considerable improvements and now is able to provide a wide range of high-tech components—and a competitive advantage—to local shipbuilders.
Turkey has also increased its capabilities in naval shipbuilding, both for the Turkish military and for international customers. Ares Shipyard has taken an approach similar to the commercial niche builders—rather than chasing large-scale projects the builder has focused on offshore patrol and fast attack vessels. As a result, Ares was able to complete 11 new builds in 2018, a record for a Turkish shipbuilder.
The international nature of the Turkish shipbuilding industry has proved it is an important sector in an economy working to increase its hard-currency receivables. Its ability to find its niche in a highly competitive market has proved it is a resilient sector as well. ✖