Shipyards could face hardship, warns director

Press, 18 December 1985, Page 7

Shipyards could face hardship, warns director

PA Dunedin Shipyards will face serious financial hardship withl- - Government protection, says Mr E. N. Sims, managing director of Sims Engineering, of Dunedin.

Mr Sims made his comment after the Lyttelton Harbour Board let a contract for a new tug to a Japanese firm. His firm built the previous tug. Mr Sims said that his firm and others had lost contracts recently for the supply of tugs and other vessels to New Zealand authorities in what amounted to “dumping” by foreign shipyards. Suppliers including firms in South Korea, Taiwan and Japan had been successful because of low tendering. “These people are able to quote a price that is equivalent to only our net cost for materials and equipment,” he said.

They could do this, because of a low wage structure and low inflation particularly in South Korea and Taiwan and because of the conglomerate structure in Japan where the same com-

pany also owned subsidiaries supplying the materials. Another factor was that the New Zealand Government discount to the purchaser was only 15 per cent compared with between 22.5 and 40 per cent in other countries.

Mr Sims said it was significant that other countries including the United States had banned dumping practices.

“It is all very well for the Government to ask us to be competitive,” Mr Sims said, “but this sort of thing is beyond our control.” He said over the years the Government had encouraged local shipyards to develop engineering and other skills to safeguard the industry.

“Now there has been a change of rules.” There needed to be a strategic move to assist the local industry. “We don’t want subsidies but I think it would be reasonable for the Government to restrict the supply of vessels of between 18 and 80 metres for Government and local authority use to

New Zealand shipyards.” Mr Sims said that unless there was a turnround the shipyard division of the company might have to be closed.

The secretary of the Otago Boilermakers’ Union, Mr C. J. Fisher, said he knew of four cases in the last 18 months when ships for New Zealand owners had been lost to tenders from other countries.

These included three tugs ranging from $3.2 to $4.5 million in value and a ferry boat worth $1.5 million. Two contracts went to Japan and the other two to Australia. Mr Fisher said that it was clear that the Japanese and Australian tenderers were receiving subsidies for steel right through to the finished product where New Zealand shipyards had been told to stand alone and be competitive.

Mr Fisher said the union was furious at the Government’s lack of protection for the shipbuilding industry. The result would be closings, the loss of highly skilled workers, and serious consequences for many subcontractors.