One shipyard closes, another expands! Is it a case of mixed fortunes for the century-old shipyards?

One major Japanese shipyard will completely withdraw from the new shipbuilding market, while another will expand its shipyard to target the demand for green ships—in the face of increasingly fierce competition in the shipbuilding industry between China and South Korea, two well-known Japanese shipyards with a century of history have made diametrically opposed choices.

Sumitomo Heavy Industries will exit the new shipbuilding market due to consecutive years of losses and insufficient revenue to cover expenses.

Recently, Sumitomo Heavy Industries Group announced that it will end its new shipbuilding business, ceasing to accept new merchant ship orders from this year onwards. Existing orders will be completed by January 2026. The group's chief financial officer, Toshiro Watanabe, explained that the business restructuring was due to the "new shipbuilding business having been consistently unprofitable. Although the revenue from ship repairs could partially offset the losses, the situation has become unsustainable in recent years."

Sumitomo Heavy Industries' shipbuilding business is handled by its wholly-owned subsidiary, Sumitomo Heavy Industries Marine Engineering Co., Ltd., which had 413 employees as of December 2022. Its Yokosuka shipyard is located in Yokosuka City, Kanagawa Prefecture, and can build 3 Aframax tankers of over 110,000 deadweight tons annually. Sumitomo Heavy Industries specializes in building Aframax tankers, fully adopting Toyota's production methods to reduce costs and improve efficiency.

Clarkson's data shows that Sumitomo Heavy Industries currently has only 6 Aframax tankers of 115,000 deadweight tons in its order book. One was ordered by Greek shipowner Alberta Shipmanagement in June 2022; the owners of the remaining 5 are unknown, with the latest order signed on November 1, 2023.

After withdrawing from the merchant ship construction field, Sumitomo Heavy Industries plans to focus on the decarbonization energy sector, mainly offshore structures and vessels related to offshore wind power, wind propulsion components, ship repair business in the resource recycling field, and wind propulsion-related engineering as a service sector. President Shinji Shimomura said that in the future, the shipyard's dry docks will be used for some ship repair work, and it may also manufacture large floating structures for offshore wind power.

It is understood that Sumitomo Heavy Industries is a shipbuilding company with a century-long history. Its predecessor can be traced back to Uraga Dockyard, established in 1897, a large privately-owned shipyard located in Uraga, Kanagawa Prefecture, Japan. By 1919, Uraga Dockyard had become one of the largest and best-equipped private shipyards in the world. In 1969, Sumitomo Machinery Industries and Uraga Dockyard merged to form Sumitomo Heavy Industries, and in 1971 established the Oihama Shipyard, which is now the Yokosuka Shipyard.

“Seawise Giant”

In 1975, Sumitomo Heavy Industries launched and delivered Japan's first 420,000-deadweight-ton ultra-large crude carrier (ULCC). Later, in 1979, Sumitomo Heavy Industries delivered the world's largest supertanker—the 564,753-deadweight-ton “Seawise Giant.”

Despite Sumitomo Heavy Industries' long history, the Japanese shipbuilding industry is not surprised by its withdrawal. In addition to facing fierce competition from Chinese and South Korean shipbuilders, Sumitomo Heavy Industries' construction base is located in the relatively high-cost Tokyo metropolitan area, making it difficult to reduce fixed costs.

In fact, Mitsui E&S Group, which was also once a Japanese "shipbuilding giant" like Sumitomo Heavy Industries, ended its shipbuilding business at its Chiba plant in the Tokyo metropolitan area in 2021, transferring its merchant ship construction business to Tsuneishi Shipbuilding and the Sino-Japanese joint venture shipyard Yangzi Mitsui Shipbuilding.

Optimistic about the demand for alternative fuel vessels, Imabari Shipbuilding invests in dock expansion.

While Sumitomo Heavy Industries is sadly leaving due to consecutive years of losses, another major Japanese shipyard with a century-long history—Imabari Shipbuilding—is actively expanding.

Imabari Shipbuilding recently announced plans to begin equipment investment at its main shipyard, Onishi Works, in fiscal year 2024, including the expansion of a new shipbuilding dry dock. Imabari Shipbuilding hopes that this equipment investment will better meet customer needs, further improve productivity and quality, and contribute to the local community by creating job opportunities.

In addition, Imabari Shipbuilding also announced that it has acquired all shares of Yatsuhashi Kogyo Co., Ltd., a ship hatch cover manufacturer located in Imabari City, Ehime Prefecture, through a share transfer. Imabari Shipbuilding stated that the group, with its superior technology and quality, has built a trusting relationship with customers over many years. The acquisition of Yatsuhashi Kogyo demonstrates the group's continued commitment to building small and medium-sized vessels for inland waterway shipowners, coastal shipowners, and operators.

As early as 2021, Imabari Shipbuilding acquired Sanoyas Shipbuilding from Japan's Sanoyas Holdings and renamed it Imabari Sanoyas Shipbuilding, increasing the number of shipyards in the group to six. Since then, Imabari Shipbuilding has begun independent manufacturing of LNG fuel tanks at its Sanoyas Shipbuilding's Mizushima Works and Osaka Works, used for its under-construction LNG-powered car carriers.

Clarkson's data shows that Imabari Shipbuilding Group currently has a total order book of 54 vessels with 1.9966 million deadweight tons, including as many as 8 LNG dual-fuel 7,000-car capacity car carriers, as well as bulk carriers, general cargo ships, product tankers, chemical tankers, and cement carriers, with delivery dates extending to 2027.

It is understood that the predecessor of Imabari Shipbuilding was Hashihama Dockyard Co., Ltd., established in 1902, which initially engaged in the construction of wooden sailing ships and began steel ship construction and repair in 1924. In 1949, Hashihama Dockyard Co., Ltd. was dissolved, and Imabari Dockyard Co., Ltd. was established. In 1961, construction of the Onishi Works began in Ehime Prefecture, with dry docks No. 1 and No. 2 completed in 1968, and dry dock No. 3 added in 1972. In the same year, the construction of car carriers began.

Imabari Shipbuilding is also the first shipyard in Japan to build large LNG-powered car carriers. In November 2020, Imabari Shipbuilding delivered the 7,000-car capacity LNG-powered car carrier "SAKURA LEADER" built for NYK Line. This vessel was awarded the "Ship of the Year" award by the Japan Shipbuilding & Marine Engineering Association in 2021.