There was a time when shipbuilding industry in Ukraine, consisting of shipbuilding and ship repair yards, was not only one of the most advanced and profitable, but also accounted for 30% of shipbuilding in the former USSR. Today, however, the industry is struggling and one can hardly talk about Ukraine's strong competitive position as a maritime country in the world.
Historically, this sector's development was built upon the scientific potential of the shipbuilding industry in Ukraine, our own raw materials, the existence of necessary capacities and skills. But as a result of inconsistent tax and customs policy, bureaucratic obstacles to the realization of investment projects in the shipbuilding industry, the mandatory sale of foreign currency, reduced capacity to timely purchase imported equipment, inflation, a significant increase in the cost of materials, continuous flushing out of working capital, lack of financing necessary for large government contracts, etc., companies are now faced with insufficient use of production capacities and a significant increase in construction costs of vessels. This often leads to exceeding contract value, increasing the risk of placing orders in Ukraine, loss of competitive position not only in comparison with China and South Korea, the world's leaders, but other smaller shipbuilding nations as well.
At the same time enterprises often operate by using out-dated funding mechanisms that given the long cycle of shipbuilding do not allow companies to pay the creditors on time and fulfil orders on schedule. At the present stage of development the industry is undergoing concentration and specialization of enterprises, which must be accompanied by the necessary reforms and restructuring of the shipbuilding sector.
To be successful Ukrainian companies must figure out what their strategic focus should be (internal or external market, military or civilian vessels, commercial or passenger fleet), they also ought to look into greater use of investment and financing tools available in the Ukrainian market and integrate their activities with other enterprises on the basis of a cluster.