A.P. Moller-Maersk's announcement that it will close its Odensk Steel shipyard in Denmark must have been a wrenching decision at the company's Copenhagen headquarters. But in light of industry trends, it wasn't that much of a surprise.
Facing the worst downturn that container shipping has ever seen, Maersk is cutting costs and shedding unprofitable activities wherever it can. Shipbuilding, meanwhile, has been gravitating for years from western countries to lower-cost Asian shipyards.
Shipbuilding's shift to the Far East began more than three decades ago. Japan was the first big growth region but in recent years has been overtaken by South Korea, which now has seven of the world's 10 largest shipyards in capacity. Now Korea's dominance is coming under threat from China, which last year leapfrogged Japan into the No. 2 position in vessel orders.
Since the demise of construction subsidies in the early 1980s, U.S. construction of large seagoing vessels has been limited to Navy ships and to construction of vessels for the protected Jones Act trade, which restricts the trade between U.S. states and territories to U.S.-built vessels. European yards also have been losing ground to Asian counterparts, and Maersk's closing of Odensk and the Baltija shipyard in Lithuania are the latest manifestions of that trend.