For the last several years, the development in the Norwegian shipbuilding sector has seen a downturn in profits for large and medium sized shipyards. An increase in offshoring strategies have been used, and less production is taking place in Norway. This means that orders for new ships are increasingly going to foreign shipyards. As a consequence, foreign shipyards in other European countries previously used as offshoring destinations have started to catch up to the Norwegian shipyards and are now able to compete in many of the same customer segments, but at lower prices. This is especially true for countries such as Turkey which is now Norway’s biggest competitor (Haugland et al, 2021)
One of the solutions used at Norwegian shipyards have been to try other strategic solutions where the Norwegian competitive advantages could be used while the relative disadvantages were mediated. One of these solutions were an increased production of modules in shipbuilding, though it was not an idea that was used or tested to a large extent.
Though module construction is not a new concept for Norwegian shipyards, there seemed to be a lack of research that described, targeted, or offered specific strategies or strategic considerations for module construction in Norwegian shipbuilding. Though there were studies such as Longva et al (2007) that research and speculated in the use of modules within ship construction, it was highly conceptual and did not offer an insight into a more holistic manufacturing strategy for modules. This is especially true for shipyards that would only focus on building complex modules, and there are no studies that discuss or present different strategies, decision areas, or manufacturing strategies for such a production. As there was evidently a gap in the research, this study set out to explore this topic, in hopes of being able to fill that gap at least partly. For this, three research objectives were developed:
RO1: Identify characteristics with module construction in shipbuilding and propose three different module construction strategies for Norwegian shipyards based on a relevant theoretical framework.
RO2: Perform an analysis of the module construction strategies using the results from RO1 to make a relevant comparison highlighting the similarities and differences, as well as identifying relevant challenges for decisionmakers.
RO3: Identify key decision areas to be addressed when a yard develops a module construction strategy based on Norwegian competitive advantages and disadvantages. Combine the discussion on module construction strategies and the identified decision areas to form a holistic perspective for decisionmakers.
In this study, modules were proposed as an alternative to traditional shipbuilding, where module yards would specialize in building complex modules containing complete subsystems for vessels, according to the module yards manufacturing strategy. This is conceptually different from other types of modular construction utilized by Norwegian shipyards, as both Ulstein and Kleven have used modules as a part of their complete shipbuilding programmes. The module yards addressed in this study would only focus on building modules, and this study was dedicated to developing parts of the manufacturing strategy. In this study, two strategic approaches for modules were investigated, discussed, and combined into one combined manufacturing strategy. In the literature review, several definitions of manufacturing strategy were used, and combined into a new definition for this study.
Manufacturing strategy in shipbuilding can be defined as coordination, planning, and execution of projects using the companies’ facilities, capabilities, resources, and competitive advantage in a way consistent with project specifications and the companies’ business plan.
The definition was wide, and in this study the focus was on developing module construction strategies that specifically targeted possible offshoring solutions and their performance, and to combine this with relevant decision criteria that could facilitate for a manufacturing strategy according to the definition. The main focus of this study was on facilities, capabilities, resources, and competitive advantages, though coordination, planning, and execution were also added to the discussions as general subjects because they were highly relevant to both the identified decision criteria and the performance of the module construction strategies.
The study was separated into three sections, each dedicated to work with one research objective. The results chapter addressed research objective one and proposed three module strategies based on offshoring strategies given by Semini et al (2018). These strategies were then evaluated using Beckman & Rosenfield’s (2014) competitive priorities framework to estimate their performance separately and in accordance with information from the literature study. Module strategy I was a module yard that had facilities for a complete module construction in Norway. This involved all parts of the production, including all the stages in the steelwork process. This strategy had a high score in flexibility, quality, delivery dependability, and lead times as it allowed for the best control of the entire construction process. It also had advantages in terms of quality control, innovation, and rapid problem solving. Module strategy II used offshoring for the steelwork, but retained in-house production of the outfitting, and in cases where it was suitable allowed for possible testing and installation. This allowed the module yard to offshore labour-intensive operations with competitive disadvantages, while retaining parts of the manufacturing operation where it was crucial to deliver with high quality, flexibility, and innovation. This would typically allow the yard to retain the value-added from the outfitting, while it would have to procure the services in the steelwork, which would be beneficial in operations where the outfitting was the dominating value-driver. The final module strategy would use complete offshoring both in steelwork and in outfitting, and would have the least value-added in Norway, while at the same time allowing for the lowest costs in terms of labour. In this module strategy, the Norwegian yard would for the most part be a facilitator involved in planning, coordination, and engineering, and even the expert of the particular module installation method. This solution would generally score the lowest on the competitive priorities that were improved by increased production control such as delivery times, flexibility, and quality.
In the first chapter of the discussion, the module strategies were discussed and compared in accordance with the competitive priorities that were identified in the results. The discussion showed that the module strategies have different areas where they perform well, and that other criteria and decisions would need to be included to consider the usability of each strategy.
In the second chapter of the discussion, eight relevant decision areas to be addressed when developing a module construction strategy, based on Norwegian competitive advantages and disadvantages, were identified and added to the discussion on module strategies. The discussions revealed that based on the strategic choices made by the module yard, the most fitting module strategy would vary, and it would have a significant impact on the total manufacturing strategy. This could be exemplified by the chosen product mix for the manufacturing strategy where the type of module had a large impact on the other strategic decisions and on the degree of offshoring. It clearly showed that there needed to be congruency between the module strategies and the strategic decision areas in order to create a well-functioning manufacturing strategy.
In this study, an attempt at identifying, describing, and discussing important strategic decision areas and considerations that goes into making a complex module manufacturing strategy has been made. This study has contributed to the research on the field of complex module construction in shipbuilding by proposing three different module construction strategies with different performance according to degree of offshoring. It has also contributed by identifying decision areas that are critical for the performance and viability of the manufacturing strategy, and that needs to be considered in combination with the offshoring strategies to make a holistic manufacturing strategy. This study shows that there is a place for module yards as long as there can be established a demand for complex modules designed independently from regular ship construction. There are many potential advantages to gain, as it would allow customers to split the production into complex module(s) and hull construction, each built where the competitive advantages are favourable.
The study has limitations, as the research on the field is still rather unexplored. The study is also almost purely based on qualitative data which could be misinterpreted or taken out of context. Limitations also had to be made in terms of scope, because the topics that went into the study had potential of reaching out too much. Manufacturing strategy was chosen as the overall strategic approach and divided into two strategic fields. However, the definition chosen for manufacturing strategy shows that there would be several other topics that would also be a part of the manufacturing strategy that has not been included in the study. The use of personal communication as a source of information in the study also opens for assumptions, personal meanings, and inaccurate information, however these sources have only been used to support or add to already established discussions. In this study, the main focus has been on the Norwegian shipbuilding sector, and many of the sources used have not directly been tied to module construction as these studies were more difficult to find. This might be a cause for inaccuracy or error as there are differences between module construction and more traditional shipbuilding, in which some of the points were identified in this study. It might also make the study less relevant for potential module yards in foreign countries.
To add to the field of study, there are several potential avenues for further research. A study that targeted costs for each of the proposed module strategies with a fixed set of decision areas would definitely add to the field, as decisionmakers would be able to make proper cost-benefit decisions on specific module yard scenarios. Studies that went more into depth on the different manufacturing strategy components in the proposed definition from this study would also add to the discussion, as the main focus of this study was more on the attributes directly tied to the physical construction. More in-depth studies regarding coordination, planning, engineering, resource management, and business plans would be a valuable addition to the field of module construction in Norwegian shipbuilding. These are studies that in many cases already exist in the field of shipbuilding, so a clear potential to adept and make them for module construction should be possible.