Politics and the Economy in Shipbuilding: Germany in the Face of International Competition

Shipbuilding is far more than just an industrial sector – it is the strategic backbone of the maritime economy and defence. How Politics and the Economy shape the German shipbuilding industry, the role played by maritime strategy, EU programmes and government subsidies, and why German suppliers account for the most significant part of the value chain.

Estimated reading time: 9 minutes

What influence do politics and the economy have on shipbuilding?

Shipbuilding is not simply an industrial sector. It is also the strategic backbone of the maritime economy and maritime defence. This ranges from protecting our coasts to securing energy supplies, keeping export routes open and supporting exports by providing means of transport. In other words, a high-performing industry is particularly crucial here to ensure that Germany remains capable of acting and to enable the German economy to export.

How do geopolitical upheavals shape maritime strategy?

The global arena is not simply a place of peace, friendship and cooperation. Instead, it is characterised by economic and political competition, environmental challenges and significant geopolitical upheavals. These factors shape the German Government’s maritime strategy and the coordinated European shipbuilding policy. To this end, the political, business and research sectors must pull together to ensure that shipbuilding in Germany remains competitive in the long term and is strengthened through innovation.

What are the objectives of Germany’s maritime strategy?

Germany’s maritime strategy in itself provides the political framework for the future of shipbuilding in this country and the maritime industry as a whole. It focuses on three objectives:

Strengthening our capacity for technological innovation
This will ensure that Germany remains competitive in the future.

Preserving the industrial value chain
This means that Germany can still benefit even when shipyards in other countries build ships but rely on German components to do so.

Safeguarding shipbuilding jobs in Germany
This ensures that Germany retains the experience and technical expertise required for shipbuilding.

What role does the German Maritime Conference play?

One tool for achieving these objectives is the German Maritime Conference. This is where representatives from politics, trade unions, industry and academia come together. They set out objectives and guidelines for the coming years, which all parties then implement jointly. Key topics include digitalisation, climate protection, sustainable mobility and Germany’s defence capabilities.

How does the EU support green and digital shipbuilding?

There is also support for this at EU level. For example, the EU is supporting the transition to green ships and digital shipbuilding. Various programmes are in place to this end, such as „Horizon Europe“ and the „Green Deal“. These aim to ensure that research institutions, shipyards and suppliers invest jointly in innovation, ranging from alternative propulsion systems to zero-emission logistics chains.

To find out exactly which technologies this green transition is bringing to shipyards – from alternative propulsion systems to smart green ships – read the article Digitalisation in yacht and shipbuilding: smart ships and digital twins.

How does government funding differ when compared internationally?

When comparing countries internationally, it is important to consider the role of state support. Countries such as China, Japan and South Korea make targeted use of subsidies in the maritime industry. In doing so, they strengthen their own shipyards’ position in international competition by covering part of the costs of shipbuilding. This ranges from low-interest loans and tax breaks to fleet orders backed by state guarantees.

In Germany, by contrast, state support for shipbuilding takes a different form: the federal government is placing greater emphasis on research and development. To this end, the „Federal Maritime Research Programme“ supports digitalisation, automation and the widespread adoption of green technologies. Direct subsidies for shipbuilding projects, on the other hand, are less common.

However, this also means that it leads to different starting points in the competitive landscape. Asian shipyards operate with political backing and a coordinated industrial policy. This reduces their costs and boosts their competitiveness, particularly with regard to the mass production of ships.

German shipyards, on the other hand, are less notable for their lower costs. Instead, technological innovation is the only factor that sets them apart from the competition. So far, this has been sufficient to safeguard employment and research in this sector in Germany. With the focus on innovation, this also extends to the various supplier companies, which in turn play a role on the international stage that should not be underestimated.

Why are German suppliers key to value creation?

A large proportion of international shipbuilding capacity has shifted to Asia, and this is also having an impact on Germany. However, that does not mean that the shipbuilding industry here is left empty-handed.

The reality is that the ships themselves are merely hulls, which, taken on their own, represent only a small part of the value chain. These hulls only function as ships if they are equipped with the necessary systems and components. This is where the German shipbuilding industry comes into its own as a technology leader.

Many supplier companies receive orders from shipyards in Asia. They supply the diesel engines, drive shafts and propellers for the ships. In addition, they supply the power and control systems, as well as the electronics for safety and navigation systems.

This means that, whilst many ships are built in Asia, they still rely on key components from Germany and Europe. This ensures high export figures even when the ship itself is built in another country. A large part of the value chain – in fact, the most important part – is based here.

What is the market breakdown in the global shipbuilding industry?

The global shipbuilding market is overwhelmingly dominated by shipyards in Asia. Over 90 % of the world’s newbuilds are constructed there. It is primarily China, South Korea and Japan that are reaping the rewards of their efforts following decades of coordinated industrial policy. Governments, banks and shipyards are working together to make the shipbuilding process as straightforward as possible for customers.

European shipbuilding policy – and Germany in particular – is characterised by more liberal market conditions. Here, companies must hold their own in a free market. There is no large-scale, long-term support of the sort enjoyed by their Asian competitors in the shipbuilding industry. This occasionally leads to crises in the shipbuilding sector here, particularly in the case of major civil projects.

How do naval contracts stabilise the German shipbuilding industry?

At the same time, however, the Federal Government is creating targeted public demand in Germany through its naval contracts. This stabilises the economy and shipbuilding exports, and sustains the industry in our country. Military projects, in particular, safeguard core technological capabilities. They also promote innovation in the fields of materials, sensor technology and propulsion systems. Last but not least, they provide economic support for employees in the maritime industry, even if shipbuilding may occasionally experience a downturn.

What sort of skilled workers does the German shipbuilding industry need?

Whether it be naval projects, major civilian contracts or technologically leading supply firms – the German shipbuilding industry thrives on its innovative strength and, consequently, on skilled workers. Where the domestic labour market reaches its limits, experienced skilled workers from Eastern Europe fill the gap.

Welder & CNC operator
Precision work in hull and component construction, including for naval projects

Electricians & Electronics Technicians
Safety, navigation and control electronics

Mechanics & Industrial Mechanics
Drive shafts, propellers, power and propulsion systems

Pipe fitters & pipework installers
On-board supply and fuel systems

Shipbuilder & Steelworker
Fuselage and section construction, structural work

---

Enquire about skilled shipbuilding workers from Eastern Europe

Are you looking for qualified welders, electricians, mechanics or shipbuilders for civil or maritime projects? We provide experienced staff from Poland, the Czech Republic, Romania and other EU countries – quickly, in full compliance with the law and with the right qualifications.

---

Frequently asked questions

Why is shipbuilding so strategically important for Germany?

Shipbuilding is the backbone of the maritime economy and defence – from coastal protection and energy supply to keeping export routes open. A thriving industry ensures that Germany remains capable of acting and enables the economy to export.

How does the EU support the shipbuilding industry?

Through programmes such as „Horizon Europe“ and the „Green Deal“, the EU is supporting the transition to green ships and digital shipbuilding. The aim is for research institutions, shipyards and suppliers to invest jointly in innovation – from alternative propulsion systems to zero-emission logistics chains.

Why does Germany benefit, even though over 90 % of ships are built in Asia?

A ship’s hull accounts for only a small part of the value added. Many ships built in Asia rely on key components from Germany – propulsion systems, shafts, propellers, and power, control and navigation electronics. The most important part of the value chain therefore lies here.

How does government funding in Asia differ from that in Germany?

China, Japan and South Korea rely on direct subsidies, low-interest loans, tax breaks and guaranteed fleet orders. Germany, by contrast, focuses primarily on supporting research and development, for example through the Federal Government’s Maritime Research Programme – direct project subsidies are rare.

How can supplier companies meet their demand for skilled workers?

Technologically leading suppliers, in particular, need qualified welders, mechanics and electronics technicians. By recruiting experienced skilled workers from EU countries, vacancies can be filled quickly and in full compliance with the law.

What is the legal procedure for seconded EU staff?

Full freedom of movement for workers applies to EU citizens. We apply for A1 certificates, ensure AÜG compliance and take care of minimum wage reporting to customs - completely and without any effort on your part.

Do you need shipbuilding subcontractors on a contract basis instead of temporary labour? Our sister platform takes care of that zeitarbeit-international.de.