Ships Ahoy!

Foreign shipyards are having a peacetime boom. A shipper who wanted to order a freighter, tanker or liner in England, Norway or even Germany last week, might have to wait as long as six years for delivery. Under construction were a whopping 1,152 ships (a total well over 6,000,000 gross tons), 35% of them in the United Kingdom.

Though still far and away the world's leading shipmaker, Britain has already begun to feel the pinch from some unfamiliar competition. At the end of June, she had orders for 900 ships, but her share of the world market has shrunk from 53% in 1946 to under 30% last year, largely because of the fast increase in shipbuilding in Japan and Germany.

The world's shipbuilding score:

German yards, which were wrecked by Allied bombs during the war, last year produced 520,172 gross tons, almost 12% of all the ships launched throughout the world, and put Germany, according to Lloyd's Register, right up with Britain, Japan and the U.S.* among the world's leading shipbuilders (see chart). Handcuffed by Allied restrictions, German yards saw little activity until the start of the Korean war, when restrictions were taken off. Shippers were quick to order in Germany, where steel prices are controlled, skilled labor plentiful and deliveries prompt. By early this year, German yards had orders for 2,085,000 tons.

Japan has recovered even faster because its shipyards came through the war virtually unscathed. They have since produced more than 1,500,000 tons of new bottoms, and made $80 million building 300,000 tons for export. But shipbuilding in Nippon is precarious business: shipping firms, which took heavy losses during the war, must rely on bank loans, which are costly (up to 11% a year); prices are 15 to 20% higher than international levels, and Japan's early advantage of quick delivery no longer applies. Export orders fell from $70 million in 1951 to $10 million last year, and this year the industry may have to struggle to reach the Ministry of Transportation goal of 450,000 tons. Probable alternative: government subsidies.

Sweden has enough orders in its yards to keep them busy until 1958 (under construction are an estimated 200 ships of 1,800,000 tons, valued at over $400 million). But Sweden's problems are the high cost of foreign steel and a shortage of skilled labor (although, next to the U.S., it pays the world's highest wages). As a result, the yards, geared for higher production, have been forced to operate at only 40% of capacity.

Norway, where workers would rather find employment in the country's enormous housebuilding program, has a critical shortage of shipping hands. Nevertheless, Norwegian production is flourishing, with orders for 114 ships (700,000 tons), which will bring in $210 million and keep yards occupied until 1959.

In The Netherlands, there are 1,100,000 tons of ships worth $186 million on order. In Italy the yards turned out 131,951 tons of shipping last year, including the liner Andrea Doria, but they are heavily dependent upon government subsidies and none too efficient. (A U.S. economic expert recommended recently that six of Italy's 15 major shipyards be shut down.)

Despite the world boom, there are ominous signs of trouble ahead. Production costs are going up so fast that Germany's prices have doubled in the last two years. Sweden, which built a 20,000-ton tanker in 1950 for half the American price, now charges about the same. New orders are falling off at an alarming rate. In Britain, they are only half the rate at which old orders are being,completed. What is more, in the first half of 1953, Britain received cancellations on orders for 40,000 gross tons. Unless new customers turn up soon, the foreign shipbuilding boom will have run its course.

*The U.S. has 44 ships abuilding for delivery this year, 29 for 1954. But the future of U.S. shipbuilding looks dark. No new orders have been received to replace those now being completed, and a great part of the U.S. tanker and freighter fleets is growing old. To stimulate construction, the Eisenhower Administration is backing two bills. One, passed by the Senate this week, would allow trade-ins of old tankers for new ones; the other would invite private capital to invest in ship "mortgages.

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