Turkish shipbuilding sector continues to lose ground in exports

Domestic shipyards, which have lost tenders to competitors in the construction of special-purpose vessels—a field where they were once global leaders—due to rising costs and difficulties in accessing financing in Turkey, are seeking solutions abroad. GYHİB President Cem Seven stated, "Some of our shipyards have begun shifting their production lines into the Eurozone to maintain their global competitiveness."

Domestic shipyards, which became global brands by achieving many firsts in special-purpose shipbuilding, have faced the danger of losing their global leadership in this field. With rising costs and difficulties in accessing financing added to the long-standing issue of letters of guarantee, the sector's leading shipyards have begun losing tenders they entered in Europe to rival countries. Only firms that can self-finance their pre-production are able to secure work. This is because while shipbuilding prices in Turkey have reached levels on par with Norway, domestic shipyards are forced to bid higher than countries like Poland and Lithuania. Speaking to EKONOMİ in recent weeks, industry representatives warned that special financing support for exporters and bringing the exchange rate to a competitive level have become urgent, otherwise much greater losses for the sector are inevitable. Unable to find solutions to these problems domestically, Turkey's leading shipyards have begun investing in shipyards in Europe to maintain their global competitiveness.

"LABOR COSTS IN EUROPE ARE NO LONGER A PROBLEM"

Cem Seven, President of the Ship, Yacht and Services Exporters' Association (GYHİB), stated that both access to financing and the letter of guarantee problem persist in the sector, adding, "Those who can access financing are also struggling due to high interest rates. The fact that the foreign exchange rate is not devaluing in line with inflation continues to increase labor costs. Some of our shipyards have begun shifting their production lines into the Eurozone." Noting that firms operating within Europe are shielded from the risks of letters of guarantee and high-interest loans, Seven said, "High labor costs in European countries are no longer a problem."

TERSAN ACQUIRES NORWEGIAN SHIPYARD HAVYARD LEIRVIK

Tersan, one of the export leaders of the Turkish shipbuilding sector, recently announced that it has acquired Havyard Leirvik, one of Norway's long-established shipyards. Responding to questions from EKONOMİ, Tersan officials summarized the reasons for acquiring this well-known Norwegian shipyard: "We decided to make this investment to maintain our global competitiveness and to create a new working structure for our potential customers. The ships will be built in Turkey, but, for example, some machinery will be installed at Tersan in Norway. In this case, since the ship is completed in Norway, it will appear as Norwegian-made and can provide financial convenience for buyers. While this is not a finalized method, thanks to this investment, we will be able to implement new working structures there. This investment decision of ours has made Norwegian shipowners and design firms very happy. Thus, we will be able to develop new working partnerships and structures that will be to the advantage of the buyers. We will see over time what kind of cost advantage this investment will provide in the shipbuilding processes."

IT WILL ALSO CONTRIBUTE TO AFTER-SALES

Tersan officials stated that having a shipyard in Europe will also provide significant advantages to customers regarding after-sales services, adding, "Having a Tersan shipyard there will ensure better support, especially during warranty processes."

HICRI ERCILI INVESTED IN NORDEN IN THE NETHERLANDS

Another company that made a shipyard investment abroad this year was Hicri Ercili Shipyard. The company acquired the Norden Shipyard, which is located in the Netherlands and operates on a 40,000-square-meter site. Regarding the investment made in Europe, Hicri Ercili officials stated, "The Norden Shipyard, which we added to the Hicri Ercili Group in 2023, will be at the service of our business partners with a more advanced capacity in all areas of the shipyard, both with its geographical location and the investments planned for the coming period."

CONTRACTION IN EXPORTS HAS ACCELERATED

The Turkish shipbuilding sector continues to lose ground in exports due to rising costs and difficulties in financing. According to data from the Turkish Exporters Assembly (TIM), ship and yacht exports fell by 54 percent in October compared to the same period last year, amounting to approximately 97 million dollars. Thus, the sector's exports for the January-October period reached approximately 1 billion 458 million dollars, an annual increase of 21 percent. Evaluating the October export data, GYHIB President Cem Seven said, "As of the end of October 2023, we are above last year's export figures. Statistically, this is a positive development, but unfortunately, no new construction contracts are being signed. These figures belong to orders received 1.5 to 2 years ago."

News Source: 12punto