The world history of shipbuilding is being written by 30 researchers

“If shipbuilding were to stop in Turku it would probably be a worse downfall than if Nokia were to close one of its factories in some Finnish town,” Teräs says.

The current shipyard crisis is one of the gravest ever

”There have been several turning points in the history of shipbuilding in Finland and the current crisis is one of the gravest ever. Big changes are part and parcel of this industry,” says Kari Teräs, the newly appointed Professor of History at the University of Tampere who used to work as an acting professor in Turku, the home of the shipbuilding crisis.

Teräs is a member in an international research project that will map out the history of the world shipbuilding industry in the past 60 years. The project started last spring and the history is written by 30 researchers from all continents.

Kari Teräs writes about the shipbuilding in Turku and Tapio Bergholm, Docent at the University of Helsinki, will write about Helsinki. What is new in the research is the global perspective which enables comparisons. The research results are expected in 2015.

The shipbuilding industry has weathered hardships

The shipbuilding industry in Finland weathered hardships already before the current crisis which was caused when the STX shipyard in Turku lost the contract to build a luxury cruise ship. At the same time EUR 500 million were lost in wages.

”The threats seem to be quite big at the moment. The situation is unpredictable as we do not really know what the owner of the shipyard is planning,” Teräs says.

Prediction is hard because no accurate information about the financial standing of STX is available. It has even been suspected that the company is ready for bankruptcy.

”There have been several close calls before. So far it has been possible to survive by forming partnerships that have enabled upholding this traditional industry which has roots in the 18th century.”

One of the breaking points was the bankruptcy of Wärtsilä Marine Ltd in 1989. The Masa-Yards was founded after that only to be taken over by the Norwegians later on.

However, the breaking points have also been starting points for expanding the business just like happened at the time of the war reparations.

The competition in shipbuilding has become distorted because of state subsidies and overcapacity. Korea and Japan have become shipbuilding superpowers chiefly because of state subsidies.

“Normal business principles are ignored as shipbuilding is considered such an important national endeavour.”

A bigger downfall than the Nokia lay-offs

In Finland the shipyards in Turku and Rauma have very big regional significance.

“If shipbuilding were to stop in Turku it would probably be a worse downfall than if Nokia were to close one of its factories in some Finnish town,” Teräs says.

The municipalities in the Turku and Rauma region have expressed their wish to support shipbuilding after the government withdrew its support.

“It is a cry for help; the municipalities are trying to get people to pay attention to the gravity of the situation. However, municipal aid is not a long-term solution. They are trying to make the government relent,” Teräs estimates.

There are historical examples of how state subsidies have been able to help a shipyard to get back to its feet.

There is a lot of shipbuilding expertise in Finland which partly originates from the trade with the Soviet Union.

”If these professional skills disappear from Finland, it is a big thing but not totally unheard of. The shipbuilding industry has disappeared from Sweden much earlier than it has from Finland. In the other European countries the crisis has happened somewhat earlier than it has in Finland,” Teräs explains.

The contract on the luxury cruise ship that was first coming to Turku now went to France. Did France act against the European Union competition law?

“We do not know this, but in such large purchases something is usually needed to cover your back,” Teräs says.


Text: Heikki Laurinolli
Photograph: Teemu Launis
Translation: Laura Tohka

This story was originally published in Finnish in Aikalainen 2/2013