UK, JAPANESE YARDS IN TALKS

UK, JAPANESE YARDS IN TALKS

A cooperative venture between Japanese and British shipbuilders could pave the way for a much closer working arrangement.

Britain's state-owned shipbuilding group, British Shipbuilders, is negotiating a technical exchange agreement with Sumitomo Heavy Industries of Japan, following the recent expiry of a similar accord with Mitsubishi Heavy Industries.Neither British Shipbuilders nor the Department of Trade and Industry would comment on rumors that a full-scale takeover of the ailing corporation was on the negotiating table, although industry sources reckon this may be the only alternative to a complete rundown of Britain's merchant shipbuilding industry.

The Japanese yard almost certainly would want to take any joint venture arrangement one step at a time, Japanese experts warned, and would not be rushed into any early agreement.

A Department of Trade and Industry spokesman, however, said the British government was prepared to consider all options in view of the heavy costs of keeping British Shipbuilders in business.

The corporation reported a trading loss of 148 million ($270 million) for the year to March 1987 following a 137 million deficit in 1985-86.

At the beginning of the year, British Shipbuilders had an order book of around 200,000 compensated gross tons worth 200 million, compared with orders valued at 212 million a year earlier.

British Shipbuilders yards are currently working at around 70 percent capacity, a British Shipbuilders' spokesman said.

Talks between British Shipbuilders and Sumitomo on some kind of consultancy arrangement have been under way for some time, and Lord Young, Britain's trade and industry secretary, paid a courtesy call on the president of Sumitomo when he was in Japan last month. Since then, Sumitomo officials have visited British Shipbuilders yards.

The agreement under discussion with Sumitomo would involve an exchange of information on comparative methods of shipbuilding and newbuilding techniques. British Shipbuilders said the corporation also was in touch with other yards in Japan and Europe about possible joint ventures.

Some sort of tie-up would benefit both sides. One of the options being considered by the British government is the withdrawal of subsidies for British Shipbuilders, a move that would put the corporation in a perilous

financial situation.

Industry experts, however, believe British yards are technically superior in many ways to those in Japan and could offer considerable technical expertise in exchange for management and organizational help.

With the European Community threatening to impose punitive port levies on any unfairly priced ship built in Japan or South Korea, an arrangement with a British shipbuilder would have added appeal for a Japanese yard.

In addition, wages paid in the Japanese shipbuilding industry are generally higher than those in Britain, another incentive for Japanese builders.

Although the shipping industry is starting to show signs of recovery after more than a decade of recession, the world's shipbuilding industry is still in a parlous state. Although the global shipbuilding order book recovered slightly last year to 22.5 million gross tons, actual completions sank to 12.3 million gross tons, the lowest level for more than 20 years. Of the world total, 13.6 million tons is due for delivery this year.

Figures published by Lloyd's Register of Shipping earlier this month show that Japan's 1987 output of 5.7 million gross tons represented 46.6 percent of the world total, but South Korea is expected to move into the top spot this year. Out of a total shipbuilding order book of 5 million gross tons, Japan is expected to complete 3.2 million tons this year.

British Shipbuilders Chairman John Lister met union leaders Friday for pay talks, but did not discuss a possible Sumitomo agreement.

The size of the British Shipbuilders work force now stands at around 6,300, compared with more than 10,000 two years ago and double that before the corporation's warship yards were privatized. The U.K. government also owns Harland & Wolff, the Belfast-based shipbuilder that is managed independently

from British Shipbuilders and is not thought to be threatened with a removal of state aid.