What are the transformations in the global shipbuilding market?

In July 2024, Maersk, a key player in the shipbuilding industry, reiterated its commitment to safety. The company’s safety culture, a source of pride, is a testament to its unwavering dedication to the safety and security of its mariners and Shoreside colleagues.

The Labor Department, a crucial regulatory body, empowers workers to report safety concerns directly to authorities without fear of retaliation, ensuring a safe working environment.

‘This seaman showed the kind of bravery for which mariners have long been known by raising concerns that, left unchecked, could have endangered everyone aboard the Safmarine Mafadi,’ said Seema Nanda, the department’s top lawyer.

But what is really happening in the shipbuilding industry?

The shipbuilding industry, a cornerstone of global trade and maritime safety, navigates a sea of challenges and transformations. The market is growing rapidly, from technological advancements and shifts in economic policies to the critical need for stringent safety protocols. Environmental regulations push for greener ship designs, while digital innovations enhance efficiency and safety. However, the industry faces labor disputes, supply chain disruptions, and the ongoing need for skilled labor. The story of Maersk and Safmarine Mafadi underscores the importance of maintaining safety standards and protecting workers’ rights within this dynamic and vital sector.

The shipbuilding industry in 2024 represents a dynamic market, including talent acquisition, that is developing due to technological advances, geopolitical influences, and environmental considerations. The industry outlook is characterized by steady growth forecasts, significant market opportunities, and transformative trends affecting the design, construction, and operation of vessels. Let’s consider this in more detail:

The global shipbuilding market is projected to grow significantly from 2024 to 2032, driven by demand for energy-efficient vessels, technological advancements, and a resurgence in global trade. The market is expected to expand at a CAGR of approximately 5%.

Technological innovation continues to be a critical driver in the shipbuilding industry. Adopting automation, digitalization, and advanced manufacturing techniques is revolutionizing shipbuilding processes. Innovative ship technologies incorporating artificial intelligence and the Internet of Things (IoT) enhance operational efficiency, safety, and sustainability. These advancements are expected to play an essential role in shaping the future of shipbuilding, providing competitive advantages to early adopters.

Environmental sustainability remains a paramount concern for the shipbuilding industry. Stricter international regulations on emissions and environmental impact are pushing shipbuilders to innovate and adopt greener practices. The development of alternative fuels, such as liquefied natural gas (LNG) and hydrogen, alongside advancements in hull design and propulsion systems, are key focus areas. These efforts aim to reduce ships’ carbon footprint and comply with global environmental standards.

Innovations in materials science are creating more durable and lightweight materials, which can further enhance fuel efficiency and reduce emissions. Among the related jobs in the shipbuilding industry are:

• Environmental compliance officer. Ensures that shipbuilding processes and operations adhere to environmental regulations and standards.
• Sustainable design engineer. This position focuses on integrating sustainable practices into ship design, including using alternative fuels and efficient propulsion systems.
• Marine environmental scientist. Studies the environmental impact of shipbuilding and operation, proposing measures to mitigate adverse effects.
• Waste management specialist. Develops and implements advanced systems for ships to reduce marine pollution.
• Materials scientist. Innovates in creating more durable and lightweight ship materials, improving fuel efficiency and reducing emissions.
• Alternative fuels engineer. Works on developing and integrating alternative fuels like LNG and hydrogen into ship propulsion systems.
• Electrification specialist. Focuses on incorporating electrification technologies into ships to reduce reliance on fossil fuels.
• Sustainability consultant. Advises shipbuilding companies on best practices for achieving environmental sustainability and compliance with international standards.

Geopolitical dynamics significantly influence the shipbuilding industry, affecting trade routes, demand for military vessels, and shipbuilding contracts. The ongoing tensions and strategic interests in regions such as the South China Sea and the Arctic drive investments in naval and ice-class vessels. Additionally, trade policies and international relations are shaping the demand for commercial ships, impacting the industry’s growth trajectory.

The shipbuilding market is poised to capitalize on various opportunities arising from global economic trends. The increasing need for maritime transportation and the expansion of offshore energy projects creates demand for diverse vessel types, including container ships, bulk carriers, tankers, and specialized offshore support vessels. Emerging markets in Asia, particularly China and South Korea, continue to dominate the shipbuilding sector, with significant investments in shipyard capacities and technological advancements.

The global shipbuilding market is expected to grow significantly in 2024, driven by rising energy consumption and the growth of the shipping industry. From 2023 to 2027, the market is forecast to expand by USD 24.52 billion, with a compound annual growth rate (CAGR) of 4.5%. China’s shipbuilding industry also holds a significant share of the global market, with substantial investments in modernizing its naval fleet and enhancing its shipbuilding capabilities.

Looking ahead, the shipbuilding industry is expected to witness transformative changes driven by digitalization, environmental regulations, and developing market demands. Integrating digital twin technologies, predictive maintenance, and autonomous ship operations will redefine shipbuilding and maritime operations. These advancements promise enhanced efficiency, safety, and cost-effectiveness, positioning the industry for sustainable growth and resilience in the face of future challenges.

Digital twin technologies enhance operational efficiency and allow shipbuilders to simulate and address potential issues before they occur, significantly reducing maintenance costs and downtime. For instance, a digital twin can predict equipment failures and optimize repair schedules, preventing costly disruptions. Similarly, predictive maintenance leverages real-time data to anticipate and resolve issues, ensuring ships remain in peak condition. Additionally, the push towards autonomous ship operations is gaining momentum. AI and IoT advancements are driving the development of smart ships that operate with minimal human intervention, enhancing operational efficiency and safety by reducing human error.

The shipbuilding industry, a critical component of global trade and military infrastructure, is characterized by a diversity of companies, each with unique growth trajectories and workforce dynamics. In our review, we analyzed workforce development in 36 shipbuilding companies located in Europe, Asia and North America. This analysis reveals growth, retention, and departmental health patterns that are critical to understanding industry trends and challenges.

Workforce growth in the companies analyzed is mixed, with some companies showing strong expansion while others struggle to maintain their workforce.

• FINCANTIERI exemplifies significant growth, increasing its workforce by 28.9% over two years, with substantial contributions from departments like Human resources (67% growth) and Engineering (46% growth). It suggests a strategic focus on expanding technical and support capabilities.
• Seatrium stands out with an impressive 63.8% workforce growth over two years, indicating aggressive expansion strategies and effective growth policies across multiple departments, such as Finance, Human resources, and Engineering.
• Grupo Bravante also demonstrates a steady upward trajectory, with a 23.7% increase over two years, highlighting a well-managed expansion, particularly in Operations, which grew by 100% in the past year.

However, not all companies share this upward trend:

• Chantiers de l’Atlantique has experienced a notable decline, with a 22.2% reduction over two years. This suggests significant retention and recruitment challenges that need urgent addressing.
• Samsung Heavy Industries has seen a 1.8% decrease in its workforce over two years, reflecting possible internal and industry-wide challenges that hamper growth.

A closer look at departmental growth across these companies reveals key insights into their strategic priorities and operational health.

• Human resources (HR): Companies like FINCANTIERI and Damen have prioritized expanding their HR departments, with growth rates of 67% and 70% over two years, respectively. This expansion indicates a strategic investment in talent management and employee engagement.
• Information technology (IT): Significant growth in IT departments at companies like FINCANTIERI (100% over two years) and Seatrium (61% over two years) underscores the increasing importance of technological infrastructure and digital transformation in the shipbuilding industry.
• Engineering: Many companies have focused on bolstering their engineering capabilities. For example, Seatrium reported a 46% increase in engineering staff over two years, and Estaleiro EBR saw a 78% increase, reflecting their emphasis on innovation and technical proficiency.

Conversely, some departments have faced declines, signaling potential issues:

• Sales: Companies like Royal IHC and Keppel Shipyard have seen significant drops in their sales departments. Royal IHC experienced a 20% decrease over two years, indicating possible market challenges or strategic shifts away from sales-driven growth.
• Finance: Keppel Shipyard saw a 22% increase in finance staff over two years, reflecting robust financial management, whereas companies like Mazagon Dock Ltd. experienced a 9% decline, pointing to potential financial instability or restructuring efforts.

Retention remains a critical issue across the industry, with varying success in maintaining a stable workforce.

Positive retention examples:

• Seaspan ULC has demonstrated effective retention strategies, with steady new hires and manageable churn contributing to 20.6% growth over two years.
• Navantia shows significant retention in its accounting department, which grew by 100% over one or two years, suggesting solid departmental health.

Negative retention examples:

• Royal IHC and Damen face significant retention challenges. Over two years, Royal IHC saw a 17% decline in HR retention, and Damen struggled with a 50% decline in IT retention. This suggests internal issues that may need addressing through improved employee engagement and satisfaction strategies.
• Chantiers de l’Atlantique exhibits severe retention issues, especially in the Engineering department, which has shown no growth and high churn rates. This underscores the need for focused retention strategies.

The geographic spread of employees provides insights into these companies’ global operations and market focus.

Global presence: Companies like Damen and HD Hyundai Heavy Industries have significant international footprints, with employees distributed across Europe, North America, and Asia, reflecting their global market engagement and strategic positioning.

Regional focus: Some companies, such as Estaleiro Mauá S/A and ICN – Itaguaí Construções Navais, show a strong regional concentration in Brazil, indicating a focus on local market dominance with potential for future global expansion.