“There are docks and money, but no one to draw the design blueprints. Because Japan stopped cultivating talent and we seized that opening, Korea’s shipbuilding industry was able to grasp the lead in the global market.”

The assessment by the head of a Korean shipyard starkly shows the painful reality facing Japan’s shipbuilding industry. Japan, which led the global shipbuilding market in the 1980s, has now fallen behind China and Korea, with its share of new orders in the first quarter dropping to the 1% range. Even amid a global boom in ship orders, Japan’s new orders have declined for four straight years.

On the ground in Japan: “We can’t meet demand because we lack workers”

According to the Japan Ship Exporters’ Association on the 30th, export ship orders for fiscal 2025 (April 2025–March 2026) came to about 9.05 million gross tons (GT), down 15% from a year earlier. Orders for liquefied natural gas (LNG) carriers, a high value-added segment, have been virtually nonexistent since 2016. Data from Clarksons Research, a U.K.-based shipbuilding and shipping market analysis firm, show Japan’s global order share in the first quarter was 1.4% (250,000 CGT). By contrast, Korea posted a 20% share (3.57 million CGT) in the first quarter, continuing to win high value-added ship orders.

Sensing the crisis late, the Japanese government designated shipbuilding as one of 17 national strategic industries. The Cabinet of Sanae Takaichi unveiled a “shipbuilding industry revitalization roadmap” late last year to double annual shipbuilding volume to 18 million gross tons by 2035. The plan also includes injecting a 350 billion yen (about 3.2 trillion won) fund over 10 years through a three-stage support program.

But the local industry’s response is skeptical. Even if massive funds are used to expand hardware, there is a shortage of people to design and assemble ships. In fact, Tsuneishi Shipbuilding, a mid-sized yard, is said to have cut its plant operating rate by about 40% from the record high because it lacks workers. Higaki Yukito, president of Imabari Shipbuilding, Japan’s largest shipbuilder, said in a recent interview with Nikkei, “We can’t even meet replacement demand from Japanese cargo owners, let alone new overseas demand.”

The collapse of the elite talent training system is cited as the key reason for the decline of Japan’s shipbuilding industry. Observers say the industry is paying the price for halting the training of top-tier design personnel in pursuit of immediate expense cuts during past downturns. In 2000, during a department reorganization, the University of Tokyo consolidated the Department of Naval Architecture and Ocean Engineering (formerly Naval Architecture) into the Department of Systems Innovation along with three other departments. Hiroshima University likewise reorganized its Department of Shipbuilding, established in 1945, into the Engineering Systems Course in 1991, removing shipbuilding and ships from the department name. As the pipeline for producing top minds narrowed, critics within the industry say Japan ceded the initiative in newbuild development to Korea and China.

Korea’s shipbuilding labor shortage is worsening; the weapon against China’s low-price offensive is “brains”

Korea’s shipbuilding sector has seized the lead in the global market by exploiting Japan’s gaps, but labor issues are also challenging for Korea. During the severe downturn of the 2010s, many skilled workers in design and engineering left the field. The Korea Offshore & Shipbuilding Association estimates 135,000 specialists will be needed by 2027. As of the first half of 2024, the vacancy rate in shipbuilding was 14.7%, about twice the all-industry average of 8.3%.

China’s pursuit, producing thousands of shipbuilding engineers every year, is also a real threat. A shipbuilding industry official said, “Unlike Japan, where key departments were consolidated, Korea’s major universities have maintained departments related to naval architecture and ocean engineering, keeping the lineage alive,” and emphasized, “Building on this, industry, government and schools must upgrade curricula to match on-site demand.”

The government and Korea’s three major shipbuilders (HD Korea Shipbuilding & Offshore Engineering, Samsung Heavy Industries, Hanwha Ocean) launched the “K-shipbuilding next-generation initiative” two years ago and decided to invest a total of 9 trillion won by 2028 to secure super-gap technologies, including cultivating specialized talent. This year, the government allocated 194.4 billion won for shipbuilding research and development (R&D), up 63% from a year earlier.

But injecting money alone will not quickly ease the shortage of design talent. The weapon Korea’s shipbuilding industry is putting forward to stay ahead of China is super-gap technology. Because ships costing hundreds of billions of won can cause major losses to owners with a single breakdown during operation, the strategy is to lower total life-cycle expense with higher fuel efficiency and quality, even if initial construction costs are somewhat higher.

The problem is that the ultimate implementers of this advanced technology are “people.” Money can expand facilities, but the top minds who develop new ship types cannot be trained overnight. How hard it is to rebuild a collapsed talent ecosystem is laid bare by the 30 years Japan’s shipbuilding industry has just gone through.
Source: ChosunBiz