Shipbuilding is a long-established industry in Norway, and an important branch of Norwegian maritime activity. In the 1980s and 1990s the Norwegian shipbuilding industry managed to survive increasing international competition and loss of market share by readjusting production towards the national offshore industry.

Today approximately 80 per cent of the output from Norwegian yards is for the offshore segment. The production of offshore- and oil-related ships and equipment has thus been vital for the industry’s survival, and as such it still relies heavily on a relatively large domestic market.
On the other hand, since the early 1980s almost three-quarters of all domestic production of ships (rather than offshore-related ships and equipment) have been commissioned by foreign parties. At the same time, and in the broad view, the industry’s international market share has steadily dropped the last half century.

From left Mrs. Stephanie Gorman (Sponsor), Mr. Stig Remøy (Shipowner), Mr. Karsten Sævik (MD Ulstein Verft) and Mr Lidvar Lillerovde (Project Man.).

PSVs and AHTS’
The shipbuilding industry in Norway consists of a few medium and many small companies, and between them there is a large degree of domestic competition. For the large majority of shipyards, specialization has been the most important factor in survival. Few yards – if any – are building hulls anymore. Hulls are imported from cheaper low cost countries, i. e. Poland, Romania and China, and outfitted at Norwegian yards. The majority of ships are Platform Supply Vessels (PSV), Anchorhandling Tug Supply (AHTS) vessels and other offshore subsea construction vessels, but the production of chemical tankers is also one area in which specialization has brought success to some Norwegian shipyards.
Specialization has taken place in other areas as well, such as in the production of research ships and for a period of time high-speed aluminum ferries (catamarans). In addition, the production of fishing vessels has also been important to Norwegian shipbuilding.
The Norwegian shipbuilding industry is marked by relatively high wage rates and costly production, which many commentators have regarded as an impediment to growth and to the industry’s international competitiveness. On the other hand, there is a close relationship between Norwegian maritime research and development institutions, ship-owners and shipbuilding companies, in a deliberate attempt to be at the forefront with regard to new developments and innovation. As such, technological innovation and professionalism have been seen as the Norwegian shipbuilding industry’s main competitive advantage, and the main reason why it has been so adaptable and willing to readjust production in the face of increasing international competition.

Judging from the number of deliveries and type of ships built during the year, 2008 is more or less a repeat of the year before. But what is new, is the general business environment, which changed dramatically during the last 4-5 months of the year.
A year ago everything looked nice and promising, the yards were flooded with orders,  and could pick and choose, – and set their price. As 2008 comes to a close, a lot of uncertainties have crept into the picture, and new orders are not that easily available any more.
A 2008-feature within the Norwegian shipbuilding industry is the sale of Aker Yards to STX where the latest reported order from the shipbuilding group, is in fact the sale of design for four supply ships to be built in the Far East. Whether this is an one off order or a sign of what is to come, remains to be seen. Admittedly the order has a sweetener since it includes sales of ship equipment to the newbuildings, but what happens next time if the same Owners decide to build this type of ship in the Far East?

Deliveries
NMI 2008 features 133 newbuildings delivered from Norwegian yards, which is actually exactly the same number as in 2007. The biggest sector is of course again the offshore industry with 36 offshore service vessels, 7 seismic vessels and 8 units, which can be described as special offshore ships (well intervention, construction etc.). So altogether 51 vessels were built in this category which is 8 more than in 2007. As a comparison 38 such ships were built in 2006 and 27 in 2005.
All the hulls are being built abroad, a factor which has caused quite a few delays during the year, and thereby has been costly for the yards. The delay scenario is one of the features of 2008, and as such one with negative consequences. Imagine the seriousness of the situation if the offshore market had taken a dive à là the dry cargo market, with cancellations of orders etc.
An important sector for some of the yards is the building of ferries, including fast catamaran ferries. In 2008 there were delivered only 3 ferries versus 8 in 2007, and 6 catamaran ferries (8 in 2007). It is worth adding that the biggest builder of conventional ferries sits with a large order book.
The work boat sector is still enjoying busy times, and SKIPSREVYEN has covered 25 deliveries in 2008, down from 29 in 2007, but the same number as in 2006.

Fishing
We have presented 7 fishing vessels in 2008 which is two more than the year before. In addition comes one live fish carrier
The category Coastal Fishing Vessels showed 22 new ships delivered in 2008, five more than in 2007, which confirms the popularity of these boats. It is worthwhile noting that Norwegian Owners have started buying Icelandic built vessels with some 10 boats delivered from one yard destined for Norwegian Owners.

New thinking
When it comes to the cargo ship sector, there is no change from last year. Six ships (or maybe one should say 5.5 units) in total have been built in Norway, 3 tankers, one reefer/container vessel, one cargo/container vessel and one which can alternatively be put in the offshore category, namely a Ro/Ro ROV/Construction vessel.
It will be very interesting to watch whether the Ulstein X-Bow design manages to get an entrance into the competitive cargo ship market. Perhaps it is just as well to start the process at times like these in order to be present when things pick up again.
SKIPSREVYEN has covered the concept of the Ulstein Speedloader for the short sea market (a market which is overdue for a renewal as far as Norwegian coastal trade is concerned) developed in conjunction with the Hagland Group, and also other types, for instance a container version, a box-hold version, Ro-Ro vessel and a chemical tanker.

Dependent on Norwegian Owners
As much as 83 per cent of the newbuildings were delivered to Norwegian Owners. It is interesting though that all three tankers were built for foreign accounts. There should be a big question mark as to why only 12 offshore service ships were built for delivery abroad considering the fact that Norway is the hub for building such vessels. And the picture is actually even greyer since four of the 12 were resales from the Norwegian contracting Owner. Three of the seven fishing vessels were built for Scottish account.
The shipbuilding industry is very competitive, and delays in deliveries are the worst thing that can happen when times are flourishing. In this respect it is worth noticing that Cyprus registered Deep Sea Supply seems to be very satisfied with the performance of an Indian yard for building a series of eight Supply Vessels. “All vessels have been delivered with the highest quality, at the agreed price and on time.”

So long, super-cycle
“In strength, length and scope, it has been the boom of a century”.
These quotes from a Financial Times Analysis of the commodity market could just as well have covered the dry cargo shipping market. And the article goes on “ .. The Reuters-Jefferies CRB index, which includes oil and a range of commodities from copper to cotton, is plumbing its lowest level in six years after October brought the largest monthly drop since it started life in 1956..”
For operators in the shipping field it is a well-known fact that the commodity and shipping markets often goes hand in hand, often with a certain time lag, so for that matter the latest development should be no surprise.
And the question raised, viz. “if this is just a temporary blip within an upward trend” is also relevant to the shipping market. Many believed that the dry cargo freight markets’ downturn during June, July and August was only a pause for breath. It was only when the decline in freights accelerated in September, that a sense of depression started to set in. And with the October development in the same fashion, the panic button was pressed. Suddenly we were back to levels last seen during the Asian crisis in 1998, and before that again, in the ugly 1980’s.
So what relevance, some might ask, has the freight market for dry cargo to Norwegian shipbuilding activity. The answer is that the day-to-day development in the course of just a couple of months has shown how intertwined the global commercial world has become. No single sector seems to be immune.
And, it is a fact that the freight market is perhaps the most important contributor to the development of the second-hand market. This in combination with a credit squeeze brought ramifications also to the newbuilding market – for all types of vessels – and despite the healthy order books for the shipyards worldwide.
And ethics have been thrown out the window in the process; the important thing is to save yourselves. The business world has come to a point where nobody is ashamed to withdraw from contracts entered into when everything looked rosy, and from several sources comes the prediction that as much as 30% or 40% of the orderbook for bulk carriers may never be delivered – in any case not to the contracting Owner. At the same time several secondhand deals done a few months ago have been/are being renegotiated or cancelled.
Ship owners who played careful tactics and resold newbuildings with delivery in 2009 and 2010 at fantastic prices, will in many cases never be able to enjoy the envisaged profit. They in turn approach the shipyards with the aim to get out of the contracts. The snowball has started rolling ..

Isolated from the downturn?
We have from time to time been critical about the fact that Norwegian yards have developed almost solely into beings offshore yards. But as the situation is in the middle of December, it appears that this has put the shipbuilding industry in Norway in a rather fortunate position. For the offshore freight market has been “booming away” all through the autumn and into the start of the winter season (the tanker market has also been fairly well shielded from the calamities).
Despite of this, however, the prices for both new contracts and secondhand sales have come under pressure. Nobody will in the long run be isolated from the effects of the worldwide avalanche. Part of the optimism has evaporated even in the offshore industry, and this leads to a much more cautious approach when it comes to new ventures. Newbuilding contracts today are to a much larger degree based on long-term employment.
The development of the oil price is naturally also a contributing factor, since a going argument has been that with high oil- and gas prices, new fields will be developed creating requirements for the offshore service vessels. Now some oil companies are descaling their activities and revaluing new projects. At the time of writing Opec has just decided to reduce the oil production by a further 2.2 million barrels a day, which means a total reduction since September of 15%. This might be a kicker for the oil price, but is negative news for the tanker Owners.
In the meantime it is fortunate that both the Norwegian and the international shipbuilding industry sit comfortably with very high orderbooks. However if today’s situation continues for another 6/9 months, an increasingly nervous atmosphere will appear in the shipbuilding industry, which in turn will have an effect on the prices for new ships.

When the clock stopped
When 2008 started many expected a year of consolidation for global shipbuilding, but the first seven months was nothing but that. During July the number of ships on order passed the 10,000 mark for the first time. Both tankers and bulk carriers increased by impressive numbers. There were no clouds on the horizon. On the container side it was the largest one, 8,000 teu plus, which kept up the pace from 2007.
Combined for all ship types July was the year’s most active month for the shipyards internationally. An in line with this the newbuilding prices continued on the upward trend, especially for tankers. As a consequence the yards were filled up with orders and felt very comfortable. The peak was finally reached with a total orderbook of over 200 million CGT/600 million dwt – naturally an all time high.
Then followed four months with falling order books (total for all ship types), but despite this the volume of ships on order remains large in historical terms. In fact as per 1st of December the bulk carrier order book had continued to increase by 23 million dwt during a period of four months to over 298 million dwt (versus an existing fleet of 415 million dwt). As recent as two years ago that order book showed 102.8 million dwt, which actually was an increase of nearly 50% from the preceding year. A classic example of shipping’s nature of long-term decisions being made on short-term emotions.
Another reflection is that it is not more than 6/9 months ago that sales of tankers for conversion to bulkers were still going on. Quite a few today should have liked to see those sales undone.
Price-wise the peak was in September, before the downward trend started. The end result of 2008 as far as total investments in new ships are concerned altered direction from that moment on, and as per 1 December it looks like the year will show an investment decline of over 40%. It is indicative that November gave the lowest number of new contracts in a single month since January 1996. And the world’s number three shipbuilding nation, Japan, did not receive a single new order during the month.

When it comes to forecasts for 2009 the old shipping saying has perhaps never been more appropriate than just now: “The only certain thing is that everything is uncertain”.

zachs@skipsrevyen.no

We are now facing extraordinary economic challenges which started by the turmoil in the financial markets. We need to have a long term perspective in times like these and particularly seize the new opportunities that are created.

The Government’s ambitions were put forward in the White Paper “An Innovative and sustainable Norway” in December 2008.  Innovation is an important part of companies’ day-to-day efforts to develop better products for their customers and generate greater value for their owners and society at large. Not least is investment in research and development essential for the company’s future competitiveness. Companies in the private and public sector must take upon themselves the responsibility for innovation, and the authorities will provide the framework that supports their innovative activities.

In the white paper the Government emphasises strategic use of design as particularly important to develop attractive and user friendly products and solutions. A strategic approach to industrial design will, without doubt, contribute to competitiveness and profitability also for companies in the maritime industries. It is therefore important to increase the awareness of industrial design in all levels of the organization.

A report based on a thorough market analysis of the global reputation of the Norwegian maritime industries was finalised in the autumn of 2008. This report was also part of the follow up of the various measures in the Government’s maritime strategy, put forward in 2007. The analysis shows that the Norwegian maritime industries are associated with high quality and advanced products. However, the report indicates there are room for improvements in particular concerning after sale services. We will work in close contact with the industry on improving our weak points, and on further development of our existing competitive advantages and qualities in 2009 and onwards.

I hope you will enjoy this publication. We are looking forward to continue developing relations with our maritime partners all over the world, and together create innovative and environmentally friendly solutions in the maritime industry.

Mrs. Sylvia Brustad
Minister of Trade and Industry

The offshore service vessel “Island Wellserver”, owned by the Norwegian company Island Offshore and built by Aker Yards ASA, Langsten (now STX Offshore Norway AS – Langsten), was declared SHIP OF THE YEAR 2008 by the Norwegian State Secretary Mrs. Rikke Lind at the SMM 2008 exhibition in Hamburg, Germany.– “Island Wellserver” is a subsea riserless oil and gas well intervention vessel, and represents new technology in the offshore market. The ship also introduces new standards for working environment, safety and comfort, according to Mrs. Lind.
– This ship is the result of a vision that the subsea well intervention market should be served by a vessel, instead of a drilling rig, which so far has been the case, Mr. Asle Strønen, Editor of Skipsrevyen, says.
– She is a masterpiece in Norwegian shipbuilding and reflects the high market demands in the booming sector of shipbased light well intervention services, says State Secretary Lind.
Described as a Subsea Riserless Well Intervention Vessel with a running wire line through a subsea lubricator system, she is equipped with the most advanced systems available. She will perform production logging, plugging and gauging operations, re-perforations and downhole mechanical works.
– This purpose designed vessel fulfils the latest rules and regulations for being an Installation, working on the Norwegian continental shelf. This includes among others the Norwegian Petroleum Directorate (PTIL). By doing this service and fulfilling all these requirements, this vessel is unique, and therefore a natural choice for the jury electing Ship of the Year 2008, Asle Strønen underlines. – There is no such vessel ever built.
Built to the highest DNV Comfort Class notation, “Island Wellserver” has a noise and vibration level similar to a modern cruise ship. This makes her the world’s only offshore vessel with DNV’s highest Comfort Class, V(1) C(1). The HSE philosophy is an important aspect for the ship owning company who aims to give the crew the best living and working environment possible.

The prestigious SHIP OF THE YEAR-award is instituted by the major Nordic shipping magazine SKIPSREVYEN. Price candidates are nominated by the readers of the magazine, but the final election is the responsibility of a jury consisting of the Publisher and Editor of SKIPSREVYEN, Mr. Asle B. Strønen, the former MD of the Norwegian Shipowners’ Association Mr. Rolf Sæther and the MD of the sales and marketing organization Norwegian Shipbuilders, Mr. Birger Skår.
www.nssm.no
www.skipsrevyen.com
www.shipoftheyear.com
www.islandoffshore.com

Vessel     HELØYGUTT II
Yard No.     312
Owners     Leif Siver Heløy, Nordvernes
Type of Vessel    Coastal Fishing Vessel
Delivery date     22 December
Main engine    Nogva Deere 6068 of 2000 bhp

Main particulars:
Length o.a.      10.65 m
Breadth mld.      4.20 m
Capacity cargo holds      14 m3

SHIP OF THE YEAR 2007 – M/S «NORMAND SEVEN»

SHIP OF THE YEAR 2006 – M/V «BOURBON ORCA»
M/V “Bourbon Orca”, an Anchor Handling Tug Supply Vessel of ULSTEIN AX104 design with ULSTEIN X-BOW, was elected SKIPSREVYENs SHIP OF THE YEAR 2006.

The ceremony took place at the SMM 2006 Exhibition in Hamburg in September.
More information about this ship available on ShipoftheYear.com

SHIP OF THE YEAR 2005
No ship delivered during 2005 qualified as Ship of the Year.

SHIP OF THE YEAR 2004 – M/V «VIKING AVANT»
Aker Langsten AS, Tomrefjord (Aker Yards) delivered in 2004 a Platform Supply Vessel of a complete new design by Norwegian company Vik-Sandvik, VS 493 Avant, to her Owners Eidesvik Shipping AS, Bømlo as the yard’s Hull No. 197. M/V «VIKING AVANT» is built with bridge and engine aft, contrary to all previously built PSVs. Due to her innovations this ship was elected SHIP OF THE YEAR 2004 by the Nordic shipping magazine SKIPSREVYEN. Mr. Andreas Gaarder, Norway’s chargé d’affaires to Germany, performed the handing over of SKIPSREVYEN’s awards for 2004 to the ship’s captain, owner, building yard and designer at the SMM exhibition in Hamburg.
More information about this ship available on ShipoftheYear.com

SHIP OF THE YEAR 2003 – “G.O. SARS”
The “G.O. SARS” was awarded SKIPSREVYEN’S “SHIP OF THE YEAR” for 2003. Norwegian Minister of Trade and Industry, Mr. Ansgar Gabrielsen, announced the price as he opened the Nor-Shipping 2003 Exhibition on 3rd June. The Institute of Marine Research (IMR) and the University of Bergen UiB) joined forces when ordering the new fishery research vessel “G.O. SARS”, which is possibly the most advanced research vessel in the world. The vessel was christened by Her Majesty Queen Sonja on the 7th of May 2003 in Bergen, but was handed over from Flekkefjord Slipp & Maskinfabrikk AS to the Owners already on the 25th of April 2003.
More information about this ship available on ShipoftheYear.com

SHIP OF THE YEAR 2002 – KV “Svalbard”
The new pride of the Norwegian Navy KV “Svalbard” built by Aker Langsten AS, was delivered from the yard in January 2002. Described as the world’s most sophisticated Coast Guard Vessel KV “Svalbard” received SKIPSREVYENs SHIP OF THE YEAR award at SMM 2002.

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SHIP OF THE YEAR 2001 – «The World»
HM King Harald is congratulating captain Ola S. Harsheim of «The World» with SKIPSREVYEN’S «SHIP OF THE YEAR 2001» award at Nor-Shipping in Oslo. Building yard was Fosen Mek. Verksteder AS, and with «The World» as «SHIP OF THE YEAR» Norway entered the Super League of shipbuilding – The Cruise Ship Building Nations.

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SHIP OF THE YAER 2000 – M/F «Glutra»
In 2000 the world’s first LNG fuelled ferry – M/F «Glutra» – was elected SHIP OF THE YEAR, built by Aker Langsten AS for Norwegian owner Møre og Romsdal Fylkesbåtas AS. The handing over of SKIPSREVYEN’S awards was performed at SMM in Hamburg by Ms. Grete Knudsen, Norwegian Minister of Trade and Industry (right).

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SHIP OF THE YEAR 1999 – «Geco Eagle»
In 1999 the extremely advanced seismic research ship «Geco Eagle», owned by Geco-Prakla and delivered from Bergen-based Mjellem & Karlsen Verft AS, was presented with the «SHIP OF THE YEAR» award. Once again the event took place as part of the official opening ceremony at Nor-Shipping in Oslo.

SHIP OF THE YEAR 1998 – M/S «Pasiphae»
In 1998 the handing over of SKIPSREVYEN’S «SHIP OF THE YEAR» awards took place at the international shipping exhibition SMM in Hamburg. Winner of the award was the luxurious M/S «Pasiphae», hull no. 67 from Fosen Mek. Verksteder owner by Minoan Lines S.A. in Greece.

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SHIP OF THE YEAR 1997 – M/T «Bow Faith»
SKIPSREVYEN’S «SHIP OF THE YEAR» 1997 was awarded the chemical tanker M/T «Bow Faith», Hull no. 134 from Kværner Florø AS and owned byStorli/Odfjell ASA. The handling over was performed by Ms. Grete Knudsen, Norwegian Minister of Trade and Industry (left), at Nor-Shipping 1997.

Fast Rescue Daugther Craft    Design MP 1000
Propulsion     Yanmar diesel diesel engine(s), Hamilton water jet(s)

Yard No.    Owners        Delivery date    SR issue

107    Swedish Coast Guard        27 May    3/2008
114    Vroon Offshore Services    30 May    3/2008
109(*)    Technip            22 May    3/2008

Main particulars:
Length o.a.      10.28 m
Breadth mld.      3.50 m

(*)    Yard no. 109 is MP 1211 design and 12.35m l.o.a.

Yard Nos.     75 / 77
Owners     PGS Geophysical / Ramform Sovereign
Type of Vessel    Work boats
Design     WP950SW
Main engine    2 x Yanmar diesel engines of 290 bhp each, 2 x Ultrajet 305HT water jets

Main particulars:
Length o.a.      9.60 m
Breadth mld.      3.40 m
Bollard pull      2.7 t
Fuel oil      700 l

Vessel     SKJERSTADFJORD
Yard No. 52
Owners     Wenberg Fiskeoppdrett AS/Edelfarm AS, Fauske
Type of Vessel    Work boat
Delivery date     26 November
Main engine    2 x Sabb Iveco NEF 370 of 270 bhp

Main particulars:
Length o.a.      14.99 m
Breadth mld.      7.00 m