Shipbuilding & Repairing
Description
Companies in this industry build and repair barges, cargo ships, naval vessels, and passenger ships, as well as platforms used for oil and gas drilling and production. Major companies include the shipbuilding division of General Dynamics and Huntington Ingalls (both based in the US), along with China Shipbuilding Industry Corporation and China State Shipbuilding Corporation (China); Hanwha Ocean, Hyundai Heavy Industries, and Samsung Heavy Industries (all of South Korea); and Mitsubishi Heavy Industries (Japan).
Asian countries dominate the global shipbuilding industry, with South Korea, China, and Japan producing the vast majority of bulk carriers, containerships, oil tankers, and general cargo ships. Military vessels are a major product of the US shipbuilding industry.
The US shipbuilding and repair industry includes about 700 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $25 billion.
COMPETITIVE LANDSCAPE
Demand for military shipbuilding is largely determined by military budgets. Commercial shipbuilding demand is determined by international and domestic trade, the health of the global economy, and rate of fleet replacement due to age or obsolescence. Small companies usually specialize in building and repair of small commercial vessels. Large companies tend to offer a wide range of building and repair services for both commercial and military vessels, and enjoy economies of scale in purchasing, design, and manufacturing. The US industry is highly concentrated: the largest 50 companies account for about 90% of revenue.
In the US, most companies in the industry are involved in repair; only a handful of active shipbuilders manufacture large military and commercial vessels. US-made military vessels are sold to the US government and its allies. US builders of commercial vessels primarily serves the domestic, or Jones Act, market. (The Merchant Marine Act of 1920, or Jones Act, restricts the carriage of goods or passengers between US ports to vessels built in the US; it also limits foreign repair work on US-flagged vessels.) Due to factors including relatively high US labor costs, Jones Act restrictions, and a highly competitive global shipbuilding market, US imports and exports of ships are negligible.
PRODUCTS, OPERATIONS & TECHNOLOGY
Revenue is generated by designing and constructing new ships including self-propelled (about 55% of industry revenue) and ship modification, military and nonmilitary (about 20% and about 10%, respectively). Other products include yachts, support vessels, tugboats, towboats, and ferry boats.
Shipbuilding takes place at large, coastal shipyards. Shipbuilding facilities include dry docks, shipways, wharves, outfitting piers, cranes, and covered or indoor facilities for assembly and construction. Other operations include steel fabrication, pipe, and sheet metal shops, and repair and maintenance facilities. In some cases, labor requirements have been reduced by using modular construction techniques.
Lead times for new vessels can be quite long. Extremely complicated (and expensive) vessels such as Virginia-class attack submarines are built at a rate of one or two per year.
Maintenance, overhaul, and repair schedules and specifications for commercial vessels usually are negotiated during the competitive bidding process. Maintenance is then determined by the agreed upon contract. Commercial vessels typically have a service life of about 25 to 30 years.
Builders of large naval vessels provide life cycle support services for the vessels they deliver to the US Navy. These services include configuration and data management, fleet services, integrated logistics support, and life cycle engineering and design.
While large military vessels are usually maintained by life cycle support services provided by the original builder, contracts for smaller or older vessels can be open to competitive contract bidding. These contracts are usually awarded based on repair capability and the shipyard's geographic proximity to a given vessel's location of service.
Raw materials include steel, aluminum, electronics, and plastics. Due to the large scale of the manufacturing process, shipbuilding depends on subcontractors, and in some cases, corporate partnerships. Builders of military ships work closely with the US military on vessel engineering and design. Both military and commercial ships are delivered directly from shipyards to military or commercial customers.
Asian countries dominate the global shipbuilding industry, with South Korea, China, and Japan producing the vast majority of bulk carriers, containerships, oil tankers, and general cargo ships. Military vessels are a major product of the US shipbuilding industry.
The US shipbuilding and repair industry includes about 700 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $25 billion.
COMPETITIVE LANDSCAPE
Demand for military shipbuilding is largely determined by military budgets. Commercial shipbuilding demand is determined by international and domestic trade, the health of the global economy, and rate of fleet replacement due to age or obsolescence. Small companies usually specialize in building and repair of small commercial vessels. Large companies tend to offer a wide range of building and repair services for both commercial and military vessels, and enjoy economies of scale in purchasing, design, and manufacturing. The US industry is highly concentrated: the largest 50 companies account for about 90% of revenue.
In the US, most companies in the industry are involved in repair; only a handful of active shipbuilders manufacture large military and commercial vessels. US-made military vessels are sold to the US government and its allies. US builders of commercial vessels primarily serves the domestic, or Jones Act, market. (The Merchant Marine Act of 1920, or Jones Act, restricts the carriage of goods or passengers between US ports to vessels built in the US; it also limits foreign repair work on US-flagged vessels.) Due to factors including relatively high US labor costs, Jones Act restrictions, and a highly competitive global shipbuilding market, US imports and exports of ships are negligible.
PRODUCTS, OPERATIONS & TECHNOLOGY
Revenue is generated by designing and constructing new ships including self-propelled (about 55% of industry revenue) and ship modification, military and nonmilitary (about 20% and about 10%, respectively). Other products include yachts, support vessels, tugboats, towboats, and ferry boats.
Shipbuilding takes place at large, coastal shipyards. Shipbuilding facilities include dry docks, shipways, wharves, outfitting piers, cranes, and covered or indoor facilities for assembly and construction. Other operations include steel fabrication, pipe, and sheet metal shops, and repair and maintenance facilities. In some cases, labor requirements have been reduced by using modular construction techniques.
Lead times for new vessels can be quite long. Extremely complicated (and expensive) vessels such as Virginia-class attack submarines are built at a rate of one or two per year.
Maintenance, overhaul, and repair schedules and specifications for commercial vessels usually are negotiated during the competitive bidding process. Maintenance is then determined by the agreed upon contract. Commercial vessels typically have a service life of about 25 to 30 years.
Builders of large naval vessels provide life cycle support services for the vessels they deliver to the US Navy. These services include configuration and data management, fleet services, integrated logistics support, and life cycle engineering and design.
While large military vessels are usually maintained by life cycle support services provided by the original builder, contracts for smaller or older vessels can be open to competitive contract bidding. These contracts are usually awarded based on repair capability and the shipyard's geographic proximity to a given vessel's location of service.
Raw materials include steel, aluminum, electronics, and plastics. Due to the large scale of the manufacturing process, shipbuilding depends on subcontractors, and in some cases, corporate partnerships. Builders of military ships work closely with the US military on vessel engineering and design. Both military and commercial ships are delivered directly from shipyards to military or commercial customers.
Table of Contents
- Industry Overview
- Quarterly Industry Update
- Business Challenges
- Business Trends
- Industry Opportunities
- Call Preparation Questions
- Financial Information
- Industry Forecast
- Web Links and Acronyms
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