OECD works at decreasing shipbuilding overcapacity

Manufacturing & Technology News, March 3, 2003

The OECD launched a new round of negotiations aimed at countering overcapacity in the world shipbuilding industry. The current level of overcapacity of 15 percent will likely rise to 30 percent in the next two years if steps aren't taken to eliminate government subsidies. These subsidies "have allowed shipyards that would otherwise have gone bankrupt to continue to operate," says the OECD.

"The result has been to push new ship prices to artificially low levels, as many shipyards reduce their prices to below economic levels in order to attract the business needed to keep workforces employed." The OECD held the first meeting in December of a "Special Negotiating Group" that included non-OECD member shipbuilding representatives from China, Brazil, Croatia, Romania, Russia, Chinese Taipei and Ukraine, representing 95 percent of the worldwide shipbuilding production. The group has put together the basic structure of a possible new agreement to deal with subsidies and pricing and will meet again this month. It hopes to conclude its work by the end of 2005, says the OECD.