“Concentrate on More Complicated Ships”

W.M. van Gulpen: The President of European Marine Equipment Council (EMEC) W.M. van Gulpen, the President of European Marine Equipment Council (EMEC) and also the President of Dutch Marine Equipment, attended to the General Assembly of EMEC in Istanbul on May 26, 2010. We asked van Gulpen about the effects of the crisis on the sector and his expectations regarding the marine equipment sector and his opinion of Turkish ship industry…

What was the aim of EMEC meeting in Istanbul?

The aim of our meeting is to reach an agreement about the policy we want perhaps to change to influence as much as possible in decision making process in Brussels. Also today we have discussed about future cooperation with the yards. Because shipbuilding industry is convinced that shipbuilding process is more and more dominated by the equipment industry. 75 percent or more is leading by equipment sector. Power has to be shared in another way. In the past, the boss of the yard was the boss. An equipment manufacturer had to wait outside of his office until he was allowed to come in the office. It had to be very humble and was giving a lot of price. But the situation has changed a lot.

What is the role of EMEC in European shipbuilding industry?

What we try to do is, especially in Brussels, create more attentions to the shipbuilding industry to guarantee that European politicians help to create a number of things, for instance to help to protect intellectual property, help to support innovation because innovation perhaps the most interesting item to be more competitive. If you want to stay one step ahead of your competitors you have to make sure that you run faster. So you have to invest much money in finding new solutions for existing problems. One of the things I noticed that society do not except any longer that there are problems like pollutions, exhaust gases that can be solved but they are not solved because of economic financial reasons. I understand that a shipowner is not willing to buy a new ship if the ship is five years old. The normal life of a ship is 25-30 years. On the other hand you can't wait for 30 years later before the ship is being modernized. We try to tell the European Committee that of course new buildings are fine, they use newest technology and make sure that pollution is reduced to minimum which we can do also something that we call retrofitting. Looking at the ship as it is, try to find out what you could do to reduce the amount of exhaust that has been created. Then you have to organize 2 things, you have to lure shipowners with a carrot and stick approach. Supporting them, perhaps in a financial way, helps them to decide. On the other hand you have to create strict regulations to enforce them to do what they are supposed to do. Stick and carrot will help to reach the situation where less polluting ships are sailing the seas, that's what we want. Again, the most important thing is, the solutions are available with current technology. And a lot of things are not in use. And the other thing is if the equipment manufacturers see that new solutions are not being used, they stop inventing new things. Because innovation is something that is only you can use as it is being sold. Innovation without commercial process is worthless. The most important thing is society want solutions we have to have a way to use those solutions that they are available. Industry is very able to create solutions that some pressure is needed before it happen.

How the crisis has affected European shipbuilding industry?

Depending on country you look for, in some countries shipbuilding industry has affected in a nasty way.  The affects have been more manageable in the other countries. So there is no single picture that counts for whole Europe.

Which countries have affected largely in this crisis?

I am coming from Netherlands and I know the situation there which is quite good. Because we had enormous change in 70s. The Dutch government was no longer willing to support us and there was real heavy shake out then. As the principal steps, Dutch industry concentrated on high-tech, complicated ships that are always necessary for special jobs such as drilling, pipe laying, navy industry, super-yachts, they are less affected by crisis than the normal type of ships like tankers, bulk carriers and container ships. And the countries concentrated on niche sector has affected less than the countries focused on ships that are build in everywhere. The more specialized you are, the better chances to survive in the crisis.

Obviously Netherlands is one of those countries, but what about Turkey?

I visited Turkey two years ago and there was no crisis yet. Then I was surprised by the enormous number of yards. Also I was surprised by the management of the yards, it was partly female and that is not the case in Europe. Well, of course we have number of female managers but most of them are men. In Turkey more women are attracted to the maritime industries and they gave me the impression that they were really capable. So if there had been no crisis I think Turkey would have very good chances to get a nice share of shipbuilding market. I think Turkey is very well able to create its own equipment industry. They are already visible. Sometimes you have to co-operate to learn from each other. Just an agreement was signed between Turkey and Netherlands' equipment sector. Dutch government will support Turkey and Netherlands in the shipbuilding process. That will be good for both parties. Turkey is not a part of Europe does not mean that Turkey is not a part of European Equipment Council. Korea also is not a part of Europe but they have created a very competitive environment so why not Turkey can't do that? But Turkey also has to concentrate on more complex ships. Otherwise it can't stay in the competition; we are not just talking about China, also India, and Brazil. So you have to fight for your share.

What do you think about Turkey's EMEC membership?

Well, there were good reasons for Turkey to become a member of EMEC. You could also said the fact we are here is proof that we see Turkey as an interesting market. What we are willing to do is share information and share knowledge is create joint ventures and help each other by exchanging information and exchanging experiences. I hate buracracy, I hate committees but I am sure that we will have a conversation within EMEC thanks to the Turkish that become a member about what we should do introduce more European manufacturers to the Turkish market. And the way to do it might be a committe or perhaps another solution. You should know that doing business is not something you can order doing business as to do with business oppurtunities, so if there are oppurtunities the business partners we use. I think, making use the fact that Turkey is a potentially interesting country something that should be translated at a national level to the companies that are interested. And what we try to do as EMEC is to make sure that this short of information is being transduced to the national organizations and the national organizations will inform their national companies they make use these sort of things and one of the best ways do it is taking number of companies transport to Turkey create oppurtunities for meeting each other then business will come as usual I think. So we will do our best and not only because we like but also because it might be commercially interesting.

Do you think that Turkey has a capacity to develop a leading role within Europe or stay just a subcontractor?

Labor intensive part is the less interesting part. 75 percent the value of the ship produced by the equipment sector not by the yards. That's why we concentrate on equipment part not on the yards part.

What do you think about governmental supports? Is it necessary for the growth of the sector?

Within Europe if one country supporting the shipbuilding industry much heavier than another one that creates different levels. So important thing is to decide in what way we support the industry. In the Netherlands we don't rely on governmental supports. Because we think that competition should not be distorted by support. But a lot of countries also within Europe using instruments to support their own industry and what we try to do is convince the EU that support is not given more than is strictly necessary. If there is no level playing field then at least you should try to create level playing field because otherwise you will not survive because other countries are really supporting their industries. The second thing is the importance of the innovation. If we do not innovate, we will be death in ten years. So sometimes you have to stimulate the companies to put more effort in innovation. An innovation can also be linked to environment that is really getting enough political support at this moment. If the outcome of the innovation process is that we produce cleaner ships that unless polluting then I think that supporting that sort of innovation by the government is something that should be considered worldwide because pollution will only take place in Europe also in rest of the world.

How do you see the competitiveness of Europe shipbuilding market against Asia?

We should stop competing with China, because we'll never win it. You must accept that other countries have lower prices than we are to build the relative simple ships. Because the added value of the ships is very limited. As long as you are able to produce the knowledge that is necessary to stay heavier in the competition, then you are rather safe. Also producing knowledge is a problem. So investing in education, in institutes that deliver knowledge, in universities is very important, otherwise we won't stay heavy for the rest.