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Spain - Shipbuilding Industry History

In 1997, with the occasion of the 50th anniversary of its creation, the Empresa Nacional Bazán coined a commemorative medallion with the motto "50 years consolidating three centuries of shipbuilding". This legend could not be more timely, since the company was the legitimate heir of a tradition dating back to the first half of the 18th century, when Spanish military shipbuilding was the task of the arsenal of Ferrol. This establishment was much more than a simple military compound. Only its presence explains that a small town at the beginning of the 18th were to become the largest city in Galicia to 1800. But as impressive demographics settled on a nearly complete industrial monoculture: military shipbuilding.

Ferrol and its hinterland lived by the Navy, and for their arsenals. For this reason, the decline in the first third of the 19th century extended crisis in what is today known as Ferrolterra. The halt of the activity was brutal: from 1750 to 1800 arsenal launched more than 150 vessels of all kinds, between 1800 and 1850 it did not amount to a dozen.

The state management of stockpiles up 1909 was such that a few establishments which had been at the top of the technology applied to traditional shipbuilding failed in their adaptation to new conditions arising from the dissemination of steam propulsion and generalization of metallic hulls. In 1834 the technicians at the arsenal of Ferrol were unable to build a small steam engines. In the second half of the 1840s they began to assemble imported machines, and in 1850 the first steam ship was created at Ferrol. In 1858 the first such ship was built in a Spanish arsenal, but these initial successes had no continuity, and the Spanish gap in the construction of metal ships was manifest.

Ferrol started these constructions in 1880 and in 1887 launched the first steel ship, the tiny Mac-Mahón. Serve to compare know that since mid century Stettin and Gdansk shipyards built metallic ships for the Navy then backward prusiana.El problem was that the n value constructions require profound changes in the organisation and infrastructure of shipyards. And Although Spain tried to adapt their arsenals, the result was clearly negative, because ships eternizaban in stands. In Ferrol Cruiser Queen Regent, the keel of which had been released in March 1897, continued "under construction" ten years later, and the Cis Cardinal neros (1903) and Alfonso XIII (1897) also exceeded all previstos.La deadlines as SECN stage, in addition, early 20th century Spanish industry was unable to meet the demands of modern military shipbuilding without recourse to foreign support, not surprisingly, a change of course.

The 7 January 1908 Act gave the management of industrial areas in the arsenals of Ferrol and Cartagena to a private company, the Spanish society of naval construction (SECN), which was commissioned to build almost all units of the Navy until the Guerra Civil. In December, 1912, it was announced from Madrid that a new naval programme had been decided on by Spain', to comprise three Dreadnoughts, two of the latest types of destroyers, nine torpedo boats and three submarines, and it was boasted that "all the vessels are to be constructed in Spanish shipbuilding yards." It was not explained that the shipbuilding yards at Ferrol, where these vessels are built, is a branch of a British warship firm.

The SECN ferrolana factory reached levels of unknown activity. If between 1880 and 1909 had launched some 31,000 tons displacement, between 1910 and 1937 surpassed the 146,000. And between the delivered units were Alfonso XIII, James I (15,000 tonnes) and Spain cruisers were larger warships built in Ferrol until the Prince of Asturias. Logically, the volume of employment in the factory reflected the new situation: the almost 2,300 men in 1910 were nearly 3,400 in 1930.

Pero Ferrol not only built more, also diversified its activity (liner) and developed the production of marine turbines. Indeed, if the SECN became the second largest global constructor of marine engines to 1925, was due to the activity on the turbine factory ferrolana. These productive dimensions be on because the naval involved together with important Spanish as Altos Hornos de Vizcaya three major partners (Vickers, WG Armstrong and John Brown) British firms providing capital and technology advice and technical management. Proof of this are more than 100 English technicians working in Ferrol in 1910, and until 1925 this factory was in British hands.

The Spanish shipbuilding sector had an intense increase in capacity during the middle of the 1960s. It was a period of strong economic growth in Spain during which the Spanish authorities considered that the shipbuilding sector could act as the propeller of the development of the whole Spanish industry, thus the shipbuilding sector benefited from strong support. Therefore from 1963 until 1973 the shipbuilding capacity in Spain multiplied by 5, overtaking 200,000 CGT to more than a million. The 1970s was the most brilliant period for Spanish shipbuilding, occupying a place among the frost five countries in worlwide production ranking with Japan, Sweden, Germany and United Kingdom. This increase in Spanish shipbuilding capacity from 1963 to 1973 had its parallelism worldwide due to the fact that the global production multiplied by 4 during this same period.

But about 1976 the reduction of production and capacity, worldwide, began. The oil crisis of 1973 was the main cause of the shipbuilding crisis which has continued, with small fluctuations, for more than 20 years with a strong unbalance between supply and demand. That was provoked by the creation of a great number of shipyards for the construction of large oil tankers, which then had to dedicate themselves to the construction of other types and sizes of vessels. That gave way to the proliferation of subsidies worldwide with, luckily, disappeared at the beginning of 1996 thanks to the Organization for Economic Cooperation and Development (OECD) agreement reached in July of 1994.

This crisis provoked a workforce reduction of the shipbuilding sector with the OECD countries of 50% between 1976 and 1984, a percentage which was nearly accomplished as far as the capacity reduction of the OECD shipyards was concerned. Spain was, however, an exception since during the 1976-1984 period, only a 3.7% general workforce reduction was produced and still maintaining the construction capacity. However not being able to keep production according to its capacity, the Spanish shipbuilding sector suffered economic and technological decline.

This changed in 1985 with the start of the first Phase of Restructuration that ran from 1984-1987. The cause of this important delay in starting the rectructuration of the shipbuilding (and the Spanish industry generally), was the political and economical transition process which happened in Spain as a consequence of the change in the political control which occurred in 1975. Neither the political parties nor the Spanish trade unions were in a condition to simultaneously afford both the process of political change and the industrial restructuration. That would have provoked strong labor disputes increased by the fact that the industrial restructuring process coincided with the return of a great number of Spanish workers who were emigrants in European countries also involved in their own industrial restructuring processes.

The restructuring plan in this first phase was basically confined to reduction of the workforce from 40,000 to 30,000 workers, mainly by means of pre-retirement (25% reduction); and closing of capacity from 1,000,000 CGT down to 445,000 CGT by means of closing 6 shipyards and changing activity of two big shipyards from new construction to repairs and/or off-shore.

By the 1980s Spain had a large, modern shipbuilding industry within which much of its ship repair capabilities have been integrated. The industry has evolved, with considerable Government support, as a direct result of investment decisions made during the early 1960's. A significant portion of the industry is state owned through the Shipbuilding Division of the Instituto National de Industria (INA). INA is a semi-Government body founded in 1941 to promote and finance the establishment and development of new Spanish industries.

In essence, INA was a State Holding responsible for the efficient management of companies in which it helds a share. By the early 1980s INA owned outright the principal domestic shipbuilding and repair enterprises that accounted for between 60-70 percent of total Spanish commercial shipbuilding and repair capacity. The privately owned sector of the Spanish industry, while giving up much in terms of scale of operations to its publicly held counterpart, was nonetheless an important and viable segment of the total industry. Many of these small and medium yards are fully competitive with European yards and even with Japanese and Korean builders in some specialized vessels, such as chemical and gas tankers and fishing vessels.

Employment in the Spanish shipbuilding and repair industry totaled 43,000 persons in 1975. By 1981, this figure had fallen to 32,680 employees. The number of workers was estimated at approximately 40,000 in early 1984. However, industry sources indicate that mass layoffs in the industry, affecting as much as 16,000 employees, were scheduled to occur by late 1984. This announcement spurred work strikes and demonstrations in the main industrial ports of Spain's North Atlantic Coast.

Industry sources estimated that the Spanish shipbuilding industry had the capacity to produce over 500,000 grt of commercial ships in 1984. However, the industry was operating at 50 percent capacity. The worldwide oversupply of vessels and the slump in world and domestic freight markets were largely responsible. In general, 1983 was a very disappointing year for Spanish shipbuilding which resulted in across the board financial losses. The Spanish Government also became concerned over the future of the two largest Government-owned yards, AESA and Astano. Future workloads have been deemed insufficient to keep many of the yards operational. As a result, INA has put forth a planned large-scale restructuring of the nation's shipyards. If fully implemented, the plan called for the closure of two major yards and a total reduction of the labor force. Because of the drastic nature of these reductions, the plan met with sharp criticism.

The Spanish Government also called for a separate merger process among Spain's 35 small and medium, privately owned shipyards. This program was established in 1983, under the name Sociedad de Reconversion Naval (SORENA), to close yards where necessary, to merge companies, and to analyze and propose improved quality and production methods. While Spanish yards had in the past been able to build ships that were both technically and economically competitive with the rest of the world, by the 1980s the industry lost it's competitiveness. This has been largely due to problems of excess capacity and to the need to support an excessively large workforce. There has also been a lack of resources to support new investment. Spanish yards, nonetheless, appear to have the essential know-how and are expected to be able to readjust during the 2-3 years following this reorganization.