Shipbuilding Costs

Press, Volume LXXIII, Issue 22193, 9 September 1937, Page 10

Shipbuilding Costs

A recent message reported Lord Craigmyle, chairman of the P. and O. Shipping Company, as saying in a speech at Leith that the costs of shipbuilding had reached a level at which it was "practically impossible for shipowners "to hope even for a moderate profit." The shipbuilding correspondent of the "Glasgow " Herald " recently quoted figures which illustrate and support Lord Craigmyle's statement. The advance in costs has been so rapid that a company which ordered two cargo ships on the Clyde towards the end of last year refused an offer from another company, six months later, to take over the contracts at a premium of 30 per cent, or £60,000. Few

such transfers are being made; but a British shipping company sold its contract for a 9000 ton freighter for £128,725 to a Norwegian owner, who immediately resold for £131,500. The British company's profit was estimated at £25,000 or £30,000. As for new contracts, which were difficult to place, towards the middle of the year, for earlier delivery than the spring of 1939, the price for these could be estimated from the contract, dated early in May, for a cargo ship of 9150 tons deadweight, which was to cost £128,500. Special features of this contract, which works out at about £l4 a ton, suggest that a normal figure would be perhaps 10s a ton less. The advance in costs was therefore set out by the " Herald^" contributor as follows, for large cargo steamers: Deadweight Cost per ton. £ s. d. June, 1933 .. .. 8 5 0 June, 1934 . . .. 810 0 June, 1935 . . .. 8 15 0 June, 1936 .. .. 915 0 December, 1936 .. .. 10 10 0 March, 1937 .. .. 11 10 0 May, 1937 .. .. 13 10 0 • The interest of this to New Zealand may seem remote; but it is not. Inevitably the tendency of higher, building costs (plus others) will be to push freights up to a proportionately higher level; and the importance of such a development to New Zealand, with its enormous seaborne trade, does not need to be pointed out. The freight charges on the Dominion's major exports are regulated by special contracts; but it will not be easy to renew them orr terms as favourable as those now ruling.