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Last Updated:  Friday, 21 March, 2003, 12:48 GMT
How world forces starved the yard
James Kerr
BBC NI business editor

Shipyard view
The vast yard once employed 30,000 people
It is a long time since Harland and Wolff employed 35,000.

Its post-war employment levels have been in almost constant decline since then, to a point where the firm now has 30 shopfloor workers.

The reasons for that slide are varied and numerous; but business considerations aside, the fact is that increasing mechanisation and technology mean it would be possible to produce the number of ships built a generation ago with a fraction of the workforce.

So it is no surprise that employment levels have fallen. What has come as a shock to many is the idea that Harland's will no longer exist as a traditional shipbuilder.

It is not the first UK yard to find itself in difficulties and unlikely to be the last. The economics of shipbuilding have made sure of that.

Over the last two decades there have been several shifts in strategy.

When the company was privatised it won significant orders to build tankers and bulk carriers.

Competitive market

The idea was to create a production line that would maximise savings and efficiencies. Major steps were also taken to improve productivity levels among the workforce.

However, the emergence of Korean shipbuilders as a major world force undermined this line of business.

Korean yards have for some time been able to build tankers for about 60% of the cost of construction in Europe.

European shipbuilders claim that this is because of hidden subsidies, but the net effect has been for Korea to mop up a significant proportion of general shipbuilding worldwide.

The giant yards of Daewoo, Samsung and Hyundai have order backlogs that run into hundreds of ships.

More recently, Harland's has developed expertise in the oil and gas market.

The company built a number of relatively sophisticated vessels and carried out rig conversions and upgrades with reasonable success.

However, here too the company has encountered market difficulties. Global uncertainty appears to have had a negative impact on oil exploration.

Orders are thin on the ground - there are currently two rigs tied up at Harland and Wolff because there is no work for them.

Financial difficulties

Harland's has also had its own internal problems. Its management of large projects has had weaknesses.

Cost overruns on two drillships for the US firm Global Marine ran to almost 200m, which caused the firm significant financial problems.

Management have also said that it has been difficult to maintain productivity when at times up to 1,000 workers are brought in on short-term contracts.

Harland and Wolff now plans to operate on a much smaller scale.

The firm's design division, which employs 60 people, is successful. It is hoped that the firm's links with the French company Thales will result in significant design contracts for two new aircraft carriers for the Ministry of Defence.

The company hopes to supplement this with repair work and other engineering. The aim is to have an annual turnover of 15-20m, a fraction of what it used to be.

The company has been through a number of restructurings - the one just completed will be its last.

Olsen Energy, the yard's parent company, will inject no more capital. If the business can't break even it will close. But it does have sufficient financial resources to have a fighting chance.

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