ABSTRACT
From time immemorial, shipbuilders constrained to find alternatives for the vanishing merchant new-building orders accompanying cyclical downswings in trade conditions have resorted to warshipbuilding or, failing that, have temporarily revoked shipbuilding in order to concentrate on ship repair. The first has the obvious merit of utilising to the full plant and labour accustomed to new building whereas the second, while dispensing with the need for building berths, is a profligate user of manpower and, in these latter days, steel-fabrication plant, fitting-out facilities and graving docks: all surplus to new building and conveniently available for instant reuse. In the event, these expedients frequently fail to offset the decline in merchant new-building activity, in large part because they, too, are often concurrently undergoing the throes of recession. Tempted to transgress into businesses liberated from the cycle simultaneously dampening the operations of all marine industries, the shipbuilder could begin to undertake activities divorced from new building and increasingly remote from the marine sector to boot. Moderating this temptation, however, is the sobering thought that taking on businesses progressively removed from the competence of the shipbuilder’s core business is akin to stirring up a hornet’s nest in that it is inclined to foster perils aplenty. For a start, unfamiliarity with the novel operations is likely to breed managerial discord and multiply the difficulties preventing profitability. New-entry strategies are liable to fall back against the entrenched advantages of incumbents while entry via acquisition is apt to draw resources from the core activity, perhaps to its detriment. In all likelihood, such heightened riskiness will blunt any atavistic desire to plunge into diversification outside the marine sector; at any rate, until dire conditions in the core business drive shipbuilders into the perilous game that requires their penetration of unrelated and, all too often, unknown activities. This is not to say that involvement in related marine industries is devoid of risk and
uncertainty for the shipbuilders. The verdict of history soon quashes any illusions that may be held on that score. Diversification into allied operations has repeatedly been shown to be troublesome to shipbuilders. It has led, in short, to episodic patterns of diversification, with active acquisition of related activities occurring mainly during prosperous periods in shipbuilding and, in acknowledgement of a kind of symmetry, with divestment of such industries following as a virtual corollary of downturns in ship production.
