Japanese shipbuilder Sumitomo no longer sees a future in the construction of new merchant ships. The shipyard has stopped accepting orders and is focusing on a different business segment.
“Given the need to counter rising prices for steel and other materials and equipment, along with the significant fluctuations in ship prices and continued intense competition with foreign companies due to an increasing supply-demand gap, we have been thinking in detail about the future of the shipbuilding business together with SHI-ME,” the shipbuilder said. [ds_preview]
It has realized that it is difficult to maintain the shipbuilding business and has decided not to accept new orders for general merchant ships from fiscal 2024, it said. SHI-ME plans to withdraw from the business after all orders on hand have been completed by the end of the 2023 financial year.
It is committed to completing the construction and delivery of all new vessels in the order book. In addition, the shipyard will continue to offer services for the ships already built and operate the ship repair business.
Sumitomo focuses on offshore wind
In line with the Energy & Lifeline Division’s policy outlined in the 2026 Medium-Term Management Plan, Sumitomo aims to “promote the commercialization of basic structures for offshore wind power generation together with the corresponding vessels in the decarbonized energy sector”. By reallocating personnel and management resources to other projects, the aim is to stabilize the revenue situation.
As for part of the site used for ship newbuilding, subsidiary Sumitomo Construction Machinery plans to build the Yokosuka factory and produce some models of dredgers there.
SHI’s shipbuilding business had its origins in the establishment of Uraga Senkyo Corporation in 1897. In 2003, the shipbuilding business was spun off from the company and transferred to a separate company, SHI-ME. The aim was to become a top player in the medium-sized tanker market, with a focus on Aframax tankers.
Since the Lehman Brothers bankruptcy and the subsequent global financial crisis from 2008, the environment for the shipbuilding business deteriorated with a rapid decline in newbuilding prices. SHI-ME took various measures, including limiting the number of ship orders accepted and overhauling its shipbuilding system. However, the competition from South Korea and China, which now dominates the shipbuilding industry, was ultimately too much for the Japanese.
