Report: Japanese Shipbuilders Seek Government Support to Double Capacity

Japan, like South Korea, has proposed large investments to expand and modernize its shipbuilding operations as part of its efforts to win a favorable trade deal with the United States. According to a new report by Nikkei Asia, the shipbuilding industry is seeking financial support from the Japanese government to meet the goal of doubling Japan’s shipbuilding capacity by 2035.

Japan, in recent years, has slipped to a distant third in the global shipbuilding industry behind China and South Korea. It lost more than half its market share, largely due to price competition falling from about 20 percent to a current estimate of 7 to 8 percent of new orders. Seeking to reverse this trend, Nikkei reports that the government is calling for the doubling of shipbuilding capacity and new investments in technology.

The chairman of the Shipbuilders’ Association of Japan and Imabari Shipbuilding, Yukito Higaki, Nikkei reports, will present a plan on Thursday, October 23, to a meeting of Japan’s ruling Liberal Democratic Party outlining how the industry can meet the goals set by the government. They report it would include the purchase of new equipment, such as cranes.

Japanese shipbuilders have been working in recent years to develop standardized designs for key types of ships to increase the efficiency of the construction process. Nikkei suggests that the industry is proposing to return to the LNG carrier construction segment, after not having built one of these ships since 2019. It looks for the government program to aid in the development of the standardized design for these vessels.

Nikkei says the association, which includes members Kawasaki Heavy Industries and Mitsubishi Heavy Industries, will tell the government that achieving the goals will require large investments beyond the capabilities of the companies. It says that participating companies plan to raise an initial approximately $2.3 billion through loans and financing. Beyond that, they are seeking government financial assistance.

The government, the report says, has proposed a fund of nearly $6.6 billion to support investments in shipbuilding capabilities.

The Japanese government has already been sponsoring a broad range of programs designed to support the development of next-generation shipping. This has included early tests into ammonia, hydrogen, and liquified CO2 shipping, as well as automation. Japan is facing a challenge of an aging seafarer population and a lack of new entrants into the field.

The United States is looking to South Korea and Japan to bolster their shipbuilding programs in its effort to counter China’s dominance. The U.S. Trade Representative argues that China used unfair business practices and government support to build its position so that it dominates up to three-quarters of all new shipbuilding orders in the world. China scoffs at the U.S. acquisitions, saying U.S. shipbuilding had long been in decline due to a lack of investment and focus on new technologies. China highlights its high level of efficiency in shipbuilding, which it says maintains lower costs against competitors, including South Korea and Japan.