Europe’s Shipbuilders Need One Rulebook to Stay Competitive

Post by : Saif

Europe’s shipbuilding industry is facing a serious challenge. While defence spending is rising across the continent, Europe may still fall behind global competitors if its countries continue to follow different rules when building warships and military vessels. This warning comes from Europe’s largest shipbuilder, Italy’s Fincantieri, which says the solution is clear: Europe needs common design standards for naval vessels.

At present, each European country has its own specifications for warships, including frigates and submarines. These rules cover everything from design layouts to technical systems. While this may protect national interests, it also creates a costly problem for shipbuilders. Companies are forced to redesign vessels again and again to meet different national requirements. This wastes money, time, and resources.

Pierroberto Folgiero, chief executive of Fincantieri, says this system is no longer sustainable. Speaking to the Financial Times, he explained that Europe’s shipbuilders are losing efficiency because they cannot benefit from scale. In simple terms, they cannot build the same ship design for multiple countries. Instead, they must treat each project as a separate task, even when the ships serve similar purposes.

According to Folgiero, standardisation would not mean that countries lose control of their defence needs. Instead, it would provide a common starting point. With shared basic designs, shipbuilders could lower production costs and improve efficiency. Countries could still make limited custom changes if needed, but the core structure would remain the same.

This approach is common in other industries. For example, carmakers often use the same base platform for different models sold in different countries. This saves money and allows companies to invest more in innovation and quality. Shipbuilding, Folgiero argues, should follow a similar path.

The lack of common standards also affects Europe’s ability to compete globally. Shipbuilders in countries like South Korea and China benefit from large-scale production and more uniform requirements. As a result, they can build ships faster and at lower cost. European companies, by contrast, must spread their capital across many different designs, leaving them with less money to invest in new technologies.

Folgiero warned that if Europe does not act, its shipbuilders will continue to face higher costs than their rivals. Over time, this could weaken Europe’s defence industry, even as military threats grow more serious.

Since Russia’s invasion of Ukraine, European countries have sharply increased defence spending. Governments are investing more in ships, aircraft, and weapons systems. However, this rise in spending does not automatically mean better results. Without coordination, much of the money could be lost to inefficiency.

Despite this new defence focus, Folgiero does not believe that major mergers between Europe’s shipbuilders are likely. Many governments want to protect their own national defence companies. These firms are often seen as strategic assets tied to national security and jobs.

European Union competition rules also make large cross-border mergers difficult. Over the years, these rules have blocked or delayed several major deals. Fincantieri itself knows this well. Its talks with Germany’s Thyssenkrupp Marine Systems failed to produce results. In 2021, Fincantieri also tried to buy France’s Chantiers de l’Atlantique, but the French government opposed the move.

Because of these barriers, Folgiero believes cooperation is more realistic than consolidation. Aligning design standards, he says, could allow countries to work together without giving up national champions. Shipbuilders could share platforms, technology, and supply chains while remaining separate companies.

Standardisation would also help smaller suppliers. With common designs, shipbuilders could subcontract lower-value parts more easily. This would create a stronger and more connected European defence supply chain. It could also support jobs and innovation across the region.

Fincantieri appears confident about its own future. This week, the company forecast more than €50 billion in new orders. It aims to increase revenues by 40 per cent and nearly double its core profits by 2030. These targets show that demand for naval vessels is strong. However, long-term success will depend on how efficiently those vessels are built.

The European Union has taken some steps to encourage cooperation. New funding tools, such as the Security Action for Europe facility and grants under the European Defence Industry Programme (EDIP), are designed to strengthen the bloc’s defence industry. These initiatives support joint procurement, supply chain security, and technological upgrades.

Folgiero welcomed these efforts but stressed that funding alone is not enough. Many of these programmes require countries to work together. They also push nations to close the technology gap, which is becoming more important in modern defence systems.

Modern warships rely heavily on advanced technology, including digital systems, sensors, and automation. Falling behind in these areas could leave Europe vulnerable. Shared standards could make it easier to develop and deploy new technologies across multiple fleets.

At its core, this debate is about balance. Europe wants strong national defence capabilities, but it also needs efficiency and competitiveness. Right now, too much emphasis on national differences is creating unnecessary costs.

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