Product mix is a big problem for shipyards. In the car industry, for example, the market share of, say, family cars or luxury saloons changes slowly. But shipbuilding orders can swing violently from one product group to another. Supramaxes one day and LNGs the next. It's like Toyota having to switch from family cars to heavy mining vehicles. Ordering in Bulk, Getting Special Today the yards are struggling with a very big product switch. During the 2000s orders poured in for steel intensive tankers, bulk carriers and container ships, growing in value from $23 bn in 2002 to $194 bn in 2007. Orders for specialised vessels were only 18% of the total value of contracts in that year. But then, in 2011, specialised orders surged to a level almost as great as for bulk orders $48.1 bn, compared with $53 bn of bulk orders. And so far in 2012 their market has held steady at $45.7 bn whilst steel intensive orders slumped to $20.6 bn (see graph).

Problem Being Special
Whilst shipyards today are certainly glad of any orders they can get, this change of product mix is a bit of a nightmare for an industry geared up to producing steel intensive ships. The eclectic mix of orders placed in 2012 is shown by the pie chart. It includes 30% drill ships, 18% jack ups and semisubmersible drilling units, 8% supply boats, 26% other offshore, 5% cruise and 9% gas.
These niche products present ship-yards with very different technical and management challenges from the steel intensive ships built in recent years. There is not much need for the massive and highly developed steel processing facilities built for bulkers. But they make far greater demands on the outfitting, project management and the ability to install and commission specialised equipment.

Better The Devil You Know?
As the yards move into 2013 the pressure is on. The dilemma is whether to make the giant leap into specialised vessels, or to find some way of encouraging investors to order a few more tankers, bulk carriers and container ships. For yards used to selling repeat designs, change is risky. Specialised vessels place extra pressures on the design office and, in a depressed market with no track record, fewer bids are successful leading to even more pressure on resources. So maybe it's better to stick to what you know. Or is it? With customers and competitors haemorrhaging cash, will there really be orders for vessels already in oversupply?

Speciality of the House
So there you have it. Today specialised vessels account for more than two thirds of new orders and for yards used to tankers and bulkers that's a problem. For newcomers, specialized orders often mean unexpected losses. But the bulk alternative is also unattractive. Although there is plenty of latent demand, it comes at a price. Well life is full of difficult choices, especially if you're a ship-yard.