Turkey is losing its leadership in special purpose boat production. Shipyards are shifting their investments abroad due to increasing costs and financing problems.
Domestic shipyards, which have lost tenders to competitors in special purpose shipbuilding in Turkey, where they are global leaders, due to increasing costs and problems in accessing financing, are looking for solutions abroad. GYHİB President Cem Seven said, “Some of our shipyards have started to shift their production lines to the Eurozone in order to maintain global competitiveness.”
Domestic shipyards, which had become world brands by breaking new ground in special purpose shipbuilding, were in danger of losing global leadership in this field. When increasing costs and difficulties in accessing financing were added to the long-standing letter of guarantee problem, the leading shipyards of the sector began to lose the tenders they entered in Europe to rival countries. Only companies that do their own pre-financing can get work. Because while shipbuilding prices in Turkey are at par with Norway, local shipyards are forced to pay prices higher than those of countries such as Poland and Lithuania. Speaking to ECONOMY in the past weeks, sector representatives warned that special financing support for exporters and bringing the exchange rate to a competitive level had become urgent, otherwise much greater losses to the sector were inevitable. Turkey’s leading shipyards, which could not find solutions to the problems domestically, started to invest in shipyards in Europe in order to maintain their global competitiveness.
“Labor cost is no longer a problem in Europe”
Ship, Yacht and Services Exporters Association (GYHİB) President Cem Seven stated that the problem of both access to finance and letters of guarantee continues in the sector and said, “Those who access finance also experience difficulties due to high interest rates. The fact that the foreign currency is not devalued as much as inflation continues to increase labor costs. “Some of our shipyards have started to shift their production lines into the Eurozone,” he said. Stating that companies operating in Europe have moved away from the risk of letters of guarantee and high-interest loans, Seven said, “High labor costs in European countries are no longer a problem.”
Tersan acquired Norwegian Havyard Leirvik
Tersan, one of the export leaders of the Turkish shipbuilding industry, recently announced that it has acquired Havyard Leirvik, one of Norway’s well-established shipyards. Answering ECONOMY’s questions, Tersan officials summarized the reasons for purchasing this well-known Norwegian shipyard as follows: “We decided to make this investment in order 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, a few machines will be installed at Tersan in Norway. In this case, since the ship was finished in Norway, it will appear Norwegian made and will provide ease of financing for buyers. Although this is not a very definitive method, we will be able to put new working structures there thanks to this investment. This investment decision made Norwegian shipowners and design companies very happy. Thus, we will be able to develop new working partnerships and structures that will be to the advantage of buyers. “We will see over time what kind of cost advantage this investment will provide in shipbuilding processes.”
It will also contribute to after sales
Tersan officials stated that having a shipyard in Europe will provide significant advantages to customers in terms of after-sales services and said, “Having a shipyard there will enable Tersan to receive better support, especially in warranty processes.”
Hicri Ercili invested in Norden in the Netherlands
Another company that invested in shipyards abroad this year was Hicri Ercili Shipyard. The company acquired the Norden Shipyard, located in the Netherlands and serving on an area of 40 thousand square meters. Regarding the investment made in Europe, Hicri Ercili officials made a statement: “Norden Shipyard, which we incorporated into 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 in the coming period.”
The contraction in exports accelerated
The Turkish shipbuilding industry continues to lose in exports due to increasing costs and financing difficulties. According to the data of the Turkish Exporters Assembly (TİM), ship and yacht exports decreased by 54 percent in October compared to the same period last year, reaching approximately 97 million dollars. Thus, the sector’s exports in the January-October period increased by 21 percent on an annual basis, reaching approximately 1 billion 458 million dollars. Evaluating October export data, GYHİB President Cem Seven said, “As of the end of October 2023, we are above last year’s export amount. Statistically, it is a good development, but unfortunately, new construction contracts are not signed. “These amounts belong to orders received 1.5-2 years ago,” he said. (Ekonomim)
The opinions expressed herein are the author’s and not necessarily those of News2Sea.
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