Sumitomo Heavy Industries to leave commercial shipbuilding industry
The company said that intense competition from overseas companies had led to the shock decision.
Historic Japanese shipbuilding company Sumitomo Heavy Industries Marine & Engineering (SHIME) is pulling out of the shipbuilding industry after more than 125 years, citing a “deteriorating environment” for the business amid rising material costs and volatile ship prices, Ship Technology reported.
SHIME, which mainly focussed on producing mid-size Aframax tankers, said that it will stop taking orders for new vessels from FY2024 and will exit the shipbuilding business once it has fulfilled its current backlog at its shipyard in Yokosuka.
The company was spun off as a subsidiary of its parent company Sumitomo Heavy Industries (SHI) in 2003 but can trace its origins back to the establishment of Uraga Senkyo Corporation in 1897 and has marked achievements such as the construction of the longest self-propelled ship ever built, the Seawise Giant, in 1979.
A notice from SHI reporting the decision to pull out of the industry highlighted the financial crash of 2008 and the bankruptcy of investment bank Lehman Brothers as one of the factors contributing to the “deteriorating environment for the shipbuilding business.”
It continued: “The company implemented various measures, including limiting the number of vessel orders it accepted and overhauling its shipbuilding system.
“However, anticipating the necessity to address the rising prices of steel and other materials and equipment, along with significant fluctuations in vessel prices and persisting intense competition with overseas companies due to an increasing supply-demand gap, we have extensively deliberated on the future of the shipbuilding business together with SHIME.”
