17th, June, 2003

Mototsugu Ito
The Shipbuilders' Association of Japan

I have been elected the 29th Chairman of The Shipbuilders' Association of Japan at its ordinary general meeting today. My predecessor, Mr. Okano, has made great contributions by steering the SAJ under the primary theme of "enhancing sturdiness of the Japanese shipbuilding industry." Succeeding Mr. Okano, I have taken over the important responsibility for the next two years as chairman of this association having great tradition. The heavy responsibility which I have now assumed braces me up particularly in view of the situation in which we find ourselves today. Deflation is going on worldwide, and uncertainty about the economic future of Japan is increasing.

Thanks to the current brisk newbuilding demand, the Japanese shipbuilding industry is keeping an annual output level of over 10 million GT, and our orderbooks are filled for more than two years ahead, supported by contracts centred mainly in the bulk carrier segment. The shipbuilding market thus remains steady in terms of volume, but the future of shipbuilding prices allows no optimism since intense international competition continues against a background of chronic supply-demand imbalance.

To adapt to this tough shipbuilding environment, Japanese shipbuilding companies are working hard for fundamental rationalization as exemplified by moves for consolidation or spinning off since last year, and their efforts are being accelerated in pursuit of transformation of corporate management that can meet the requirements of the 21st century. Yet I perceive a need for further continuation of their self-help endeavors.

To strengthen the industrial basis of Japanese shipbuilding, which is the very source of the industry's vitality and competitiveness, and to ensure stable business operation, I have chosen "earning further trust and confidence in the Japanese shipbuilding industry" as the primary theme under which our member companies get together and mobilize their all available resources to challengingly address the following issues:

(1) Strengthening of basis for technological development
For us Japanese shipbuilders, strengthening of our competitive position in the world market is an urgent requirement. In particular, securing our technical advantage constitutes the core of non-price competitiveness. I think it is essential to enhance strategic technological themes and to broaden the scope of our initiatives in other new fields of technology in addition to going farther ahead in our ongoing technological attempts for the utilization of ocean space. I also find it imperative to further impress our clientele with the excellence of our technology and product quality by consolidating the common basis of technology in anticipation of the needs of the times.

(2) Strengthening of business basis
At present, the Shipbuilding Industry Competitive Strategy Conference (a consultative committee reporting to the Director-General of the Maritime Bureau), in which the industry, the government and the academic community are represented, is discussing how Japanese shipbuilding can continue to develop as a stable industry in an environment of free and fair competition and to play a vital role in the world shipping and shipbuilding industries. As the discussions have identified key issues to be addressed, we would like first to endeavor for the development of a common perception regarding these issues while taking due note of differences in business environment among individual companies, and then to evolve specific actions and implementations to help increase our competitive strength out of the issues individually identified by the industry, the government and the academic community.

(3) Promotion of international cooperation
At the international level, there is an ongoing interplay of complex factors including the EU’s filing of complaint with the WTO against Korea, the start of negotiations for a new OECD Shipbuilding Agreement and intensive environmental and safety initiatives promoted by various countries and bodies. We will make our best efforts to keep track of these developments and find out what we can do to address them, and actively make Japanese shipbuilders’ views known in all relevant international scenes. Especially, we will continue to approach the competent governmental authorities and international organizations in pursuit of the realization of a free and fair competitive environment for steady development of world shipbuilding.On the other hand,the JECKU Top Executive Meeting, which is our important international framework, has arranged a new forum of consultation in which the fast growing Chinese shipbuilding industry is now represented. SAJ will continue its efforts to promote not only mutual understanding with China but also discussions in further depth among the five regions, Japan, Korea, Europe, the U.S. and China in search of ways to greater stabilization of world shipbuilding.

I have stated some of my thoughts on this occasion of taking on my new important duty. The more because of the environment in which we find ourselves today, where globalization is in greater progress and international competition is intensifying, I am keenly aware of the need for shipbuilders to work together to address the common problems before us and to mobilize all the wisdom at our disposal to overcome these strenuous problems.I would like to ask all the parties concerned for continued support and guidance.

For further information, please contact:
Shipbuilders' Association of Japan (SAJ)
Tel: +81-3-3502-2014
Fax: 81-3-3502-2816
E-mail: info@sajn.or.jp