Three Seas Economic Journal

Vol. 5 No. 3, 2024

DOI: https://doi.org/10.30525/2661-5150/2024-3-7

SHIPBUILDING OF SOUTHERN UKRAINE:

FROM STATE MONOPOLY TO CLUSTER INTEGRATION
Volodymyr Parsyak1, Оlena Zhukova2

Abstract. The purpose of this article is to determine the prospects of Ukrainian shipbuilding, based on a review
of its historical development. Methodology. In this study, the authors used a mix of methods for collecting,
systematising and processing information. Primary data was collected through a review of thematic publications
and research conducted by predecessors. Retrospective analysis was used to identify trends in the historical
development of the shipbuilding sector of the domestic economy. Statistical analysis was used to determine
its current state and foreseeable future. Results. Since Porter's introduction of the cluster theory, the Ukrainian
shipbuilding business has failed to take advantage of the benefits it has offered. It has been reckless in building
cluster potential as a tool for local economic development and community (hromada) management. While most
shipbuilding and related enterprises are concentrated in the areas limited by the administrative boundaries of the
country's Black Sea regions. Pessimists insist that the chances of success have been lost completely and irrevocably.
The authors, on the other hand, based on a generalisation of current practice, observe the Phoenix effect.
The authors illustrate it empirically. In particular, on the example of the Ukrainian Maritime Cluster (UMC). Practical
implications. The first part of the article explores the former power of Ukrainian shipyards. The second part discusses
the constructive initiatives of the modern shipbuilding business. The third part highlights the initiative to create
the UMC. Value / Originality. This paper adds to the existing understanding and provides empirical evidence of
the strong and untapped potential of the country's shipbuilding cluster. It also focuses on its attractiveness for
cooperation with foreign investors after the onset of peace. The originality of this study lies in the holistic study
of shipbuilding practice in the context of development. The authors are optimistic despite the war and the tragic
consequences that accompany it.
Keywords: shipbuilding, ship repair, ship engineering, cluster, maritime cluster, small and medium business,
Ukraine.
JEL Classification: O25, O38, O57, R11

1. Introduction enterprises in international space programmes

De jure, Ukraine is a relatively young country, (Sazonets, Valiullina, 2017; Lee, 2008). It is not
situated in the eastern part of the European uncommon for individuals to observe the take-off
continent. This year marks the 33rd anniversary of its and landing of "MRIYA", the largest aircraft in human
history (Smith, 2015). Moreover, only a small
independence. The country's name has recently been
proportion of the population has any knowledge of
a prominent feature of media coverage, featuring in Ukrainian shipbuilding.
statements by politicians and in scholarly publications. The proposed statement is not surprising, as most
The general public associates the term with a number of the giant factories that have been the subject of
of significant events and issues. These include the full- national pride in the past have failed to adapt to the
scale invasion of Russian troops, the annexation of conditions of a market economy with its characteristic
part of the sovereign state by the northern neighbour competition. Their management, fascinated by foreign
(Pisciotta, 2020), the Chernobyl disaster (Fedii, practices (Mathea, et al., 2003), has long hoped for
2020), and corruption among civil servants (Rice, et government support. Unfortunately, this did not happen.
al., 2020). A smaller proportion of residents in Western The current generation of entrepreneurs has exhibited
countries are aware of the involvement of Ukrainian a distinct behavioural pattern. These entrepreneurs
1
Admiral Makarov National University of Shipbuilding, Ukraine (corresponding author)
Е-mail: volodymyr_parsyak@nuos.edu.ua
ORCID: https://orcid.org/0000-0002-4756-8977
2
Admiral Makarov National University of Shipbuilding, Ukraine
Е-mail: olena.zhukova@nuos.edu.ua This is an Open Access article, distributed under the terms
ORCID: https://orcid.org/0000-0001-8966-8354 of the Creative Commons Attribution CC BY 4.0

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Three Seas Economic Journal
Vol. 5 No. 3, 2024
combined an insatiable appetite for shipbuilding, recovering again and again, overcoming obstacles
first-hand experience of foreign shipyards and a novel and adversity. The Phoenix effect was making
vision of economic relations, which gained traction. itself felt.
This led to the establishment of new businesses, Before and after the fall of the communist regime,
including the acquisition of the assets of enterprises shipyards had different organisational and legal
that were being sold. Recently, those with the forms and were not formed solely on the basis of
greatest foresight have recognised the need to integrate. state investment. For example, Morskyi (1896-1919)
Their objective is to mobilise the accumulated was a joint-stock company. Dividends on its shares
potential, reinforce competitive positions within the were paid to Belgian, French and Russian owners.
country and abroad. To this end, they have created Opened in the middle of the last century, the state-
the Maritime Cluster. owned "Ocean" shipyard was corporatised in 1994.
The authors of this study have set themselves the Since then, its activities have been controlled by the
following goals: Damen Shipyards Group (Netherlands), the Aker
– First, to look at the genesis of Ukrainian Group (Norway) and the Russian investment fund
shipbuilding through the prism of retrospective "FLC West". It is now owned by Ukrainian businessmen.
analysis of events. It uses one of the largest dry docks in Europe.
– Second, to find out how the driving forces and It is 355 metres long, 60 metres wide and 17 metres
trends of its development have changed over time. deep. These dimensions make it possible to build
– Third, to determine the chances of initiators Panamax, Aframax and Suez-Max vessels.
of new business projects to find available market The nomenclature of ships once built in Ukrainian
niches, gain a foothold in them and launch further shipyards could form the basis for the classification
expansionary activities. in the academic textbook (Figure 1). Obviously,
this far from exhaustive list met the needs of every
customer: military, commercial cargo and passenger
2. Past and Reflections carriers, fishermen-industrialists. The scale of the
The former greatness of Ukrainian shipbuilding production programme can be gauged by reference
has always been based on numerous government to the construction of a single production line for the
orders. The lion's share of them was for military manufacture of large freezer trawlers at the Black Sea
products. This was also the case in 1790, when the Shipyard. Eight ships of this type departed annually.
first South Ukrainian shipyard built the frigate Sviatyi In order to have a basis for a comparative assessment,
Mykolai, equipped with 44 cannons. It was a great consider the statement of the Administrator of the
power at the time. It was the same in the days of the Maritime Administration of the US Department
former Soviet Union. At that time, four enterprises of Transportation: "The five largest commercial
in Kherson and Mykolaiv were already fulfilling shipyards in the United States are building a limited
exclusively state orders for warships and commercial number of large cargo vessels for domestic use,
vessels. Other requests simply did not exist in a centrally averaging five such vessels per year over the past five
planned economy. The state ordered, owned, and years." (Buzby, 2019).
managed. Tens of thousands of employees were involved in
In the more than 230 years since its launch, many implementing the ambitious plans. In its heyday, the
unfavourable events have taken place. The Crimean War Black Sea Shipyard employed about 25,000 people,
(1853-1856), the Russo-Japanese War (1904-1905), Mykolaiv Shipyard 13,000, and Ocean Shipyard 12,000
the Civil War (1918-1921), and the Second World (Shipbuilding industry of Ukraine, 2015). The
War (1939-1945). Ukraine lived through these hard companies used the funds to build housing for them,
times as part of the Russian Empire and the Soviet run kindergartens, hospitals and recreation centres.
Union. Now there is the annexation of Crimea (2014), Future welders, assemblers and other workers acquired
which led to the loss of the shipbuilding cluster on knowledge and skills at corporate vocational training
the peninsula. In particular, Zaliv Shipbuilding Yard, centres. In 1967, a branch of the Mykolaiv Admiral
Kerch Shipyard, More Shipyard, Joint-Stock Company Makarov Shipbuilding Institute was opened in
"Sudokompozit Design and Technological Bureau", Kherson with the financial support of a local
Sevastopol Shipyard, Ship Repair Plant “Pivdennyi". shipbuilding company. It is still in operation. What
The full-scale invasion of the Russian army in happened after the collapse of the USSR?
February 2022 and the blockade of the northern Black First, the huge domestic market with a guaranteed
Sea is the latest example in this series. As a result, five-year order book collapsed. It used to be updated
sometimes for years and sometimes for decades, annually, but only upwards.
shipyards' production activities were slowed down or Second, along with the end of the Cold War,
even suspended. But this did not prevent them from military shipbuilding programmes were curtailed.

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Vol. 5 No. 3, 2024
Classification groups

Naval ships Commercial vessels and structures

Destroyers Light carriers Refrigerators

Cruisers Container vessels Whaling vessels

Guard ships Bulk carriers

Supply ships
Timber carriers
Submarine destroyers
Food tankers
Research vessels
Armored boats
Dredging vessels
Trawlers
Combat ships

Tugboats Ore carriers

Submarines

Reinforced concrete floating docks,

Aircraft and helicopter carriers
mooring docks, pontoons
Figure 1. Some types of vessels built at Ukrainian shipyards
Source: compiled by the authors on the basis of information from the official websites of Mykolaiv and Kherson
shipbuilding enterprises

Third, the management of the shipbuilding giants without exception. This is also the case for those
was completely unprepared to work in international countries with the most powerful economies.
markets with their fierce competition. Since the passage of this cabotage law a century ago
Fourth, the burden of maintaining a corporate social (1920), the arguably exogenous growth of foreign
sphere proved to be too onerous. Socialism in the competition has led to the closure of most US shipyards
Soviet sense became a historical fact. and a decline in the number of ships built in America
Fifth, the state showed complete indifference to (Olney, 2020). Ukraine's shipbuilding industry was
the fate of shipbuilding. Its leaders lacked wisdom, once a bastion of American manufacturing, but decades
experience and foresight. of neglect, ambivalence towards predatory foreign
The above factors led to the gradual and irreversible markets, and sequestration have left it running on
collapse of the giant factories. The latest event in this fumes. If the holes aren't patched now, it won't just be
series occurred in mid-2021. The court declared the the industry that drowns. It could become a threat to
Black Sea Shipyard bankrupt. Many analysts have economic and national security, as people will not be
pointed out that Ukrainian shipbuilding has ceased able to protect the world's sea lanes – the arteries of
to exist and it is time to start its revival. trade and veins of national defence (Navarro, 2020).
The COVID-19 outbreak has come as an unfortunate
surprise to shipyards in the European Union.
3. Ukrainian Shipbuilding has Prospects Production has been reduced or halted, supply chain
Those who say that shipbuilding in Ukraine has activities have been disrupted, the workforce is in
declined are mostly those who live in the memories a state of temporary unemployment, and many
of past greatness. Apparently, they are not familiar companies are facing serious liquidity problems
with the events that took place in the country and in or need bank loans. In addition, orders for new
the world in the pre-war period. In a broader context, shipbuilding or ship repairs and refits are being
the authors had the opportunity to express their own delayed, declared force majeure or cancelled as all
opinion on this issue (Parsyak, 2018). Accordingly, shipowners, including cruise and ferry operators,
this study will concentrate on elements that are are facing serious difficulties. These economic
pertinent to the subject matter of this publication. consequences will last much longer than for many
It is evident that the crisis is a typical phenomenon other sectors due to the nature of the sector, and are
in the field of shipbuilding across all countries, superimposed on the existing severe competitive

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Vol. 5 No. 3, 2024
distortions from Asia (Strategic maritime technology into private ones. Thus, the conclusion is in: Ukrainian
industry in urgentneed for specific EU measures, 2020). shipbuilding is a reality. But it has become different.
It can be reasonably deduced that the periodic shifts Consider the features that are now inherent in it.
in economic circumstances that are characteristic of First, the scale of shipbuilding has decreased (Table 2).
challenging market environments and the emergence The military-political confrontation between Ukraine
of new participants in value chains are a natural and Russia had a markedly detrimental impact on
phenomenon. It is sufficient to cite the transformations the region. In 2014, production volumes exhibited
occurring in shipbuilding as a result of Industry 5.0 a decline of 33.3% in comparison to the 2010 baseline.
innovations. Nevertheless, consumers are invariably In particular, this was due to the seizure of production
drawn to those who are able to impress the participants facilities located in the territory of Crimea that had
in the marketing process with the most compelling been annexed by Russia. Nevertheless, the "Phoenix"
product offer, one that is balanced in terms of quality effect is once again evident. In 2020, the number of
and price, and which secures their support in the ships constructed reached double the figure recorded
form of contracted orders. Producers who fall into this in the first year of the war (2014). Approximately
category include representatives of the new generation 30% of the total 176 constructions are attributable to
of the Ukrainian shipbuilding industry (Table 1). the Mykolaiv Shipyard "Nibulon" (50 vessels). Even
As can be seen, the number of shipbuilding after the full-scale invasion of enemy forces in 2022,
companies in the southern industrial district has aluminium processing began here to build the first of
almost doubled since independence. And this fifteen minesweepers. They will be used to ensure the
happened thanks to the initiative of private capital. safety of inland waterways.
Investors and management would, of course, welcome The structure of the order book has changed
state motivation. But in an environment where it radically from what is shown in Figure 2. Please
keeps them waiting, they are looking for their own note that there is not a single warship in it. This has
ways to develop their business. been the case for all the years of independence. The
The occurrences that have transpired have maritime country neglected its security, naively relying
irrefutably validated the conviction that the state on the promises of the Budapest Memorandum
has demonstrably failed to demonstrate efficacy as signatories. In 1994, Ukraine joined the Treaty on the
a dominant force in the contemporary economic Non-Proliferation of Nuclear Weapons, eliminating
milieu. At present, only two shipyards remain under its missile arsenal in exchange for guarantees of
state control. Three of them are newly created. inviolability of its borders from the United States,
Two other state-owned enterprises were transformed Britain and Russia.

Table 1
Shipbuilding companies in Mykolaiv and Kherson oblasts of Ukraine*
Name Origin Organisational form Number of employees, people
Mykolaiv Oblast
Nibulon N LLC 350
Mykolayiv Shipyard SE SE 756
Ocean Shipyard NPO LLC 700
Mykolaiv Shipyard Company "Mykolaivska verf " N LLC 429
Southern Ship Repair Company N LLC 31
Kherson Oblast
Pallada Shipyard SE PSC 422
Smart Maritime Group NPO LLC 484
* Excluding small enterprises specialising in small-tonnage shipbuilding (boats, yachts, boats up to 24 m long).
Remark: N – newly founded; SE – state enterprise; NPO – new private owner.
Source: summarized by the authors according to Catalogue of Ukrainian enterprises (2024), official websites of enterprises and other sources.

Table 2
Shipbuilding in Ukraine, units
Year
Indicator 2010-2020
2010 2012 2014 2016 2018 2019 2020
Built 27 22 9 13 13 14 18 197
Including exports 4 3 1 2 1 2 2 26
Export share, % 14,8 13,6 11,1 15,4 7,7 14,3 11,1 13,2
Source: calculated by the authors according to (Overview of the maritime industry of Ukraine, 2020; Grigorenko, 2021)

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Vol. 5 No. 3, 2024
But every cloud has a silver lining. In 2020, is appropriate for the purpose of the vessel. Everything
OCEA, together with the Ocean Shipyard, signed else is outsourced and purchased from contractors.
a memorandum with the State Defence Holding of Including foreign ones.
the Republic of Turkey on the special construction of Another feature of Ukraine today is the dynamic
corvettes for the Ukrainian Navy. development of ship repair and conversion (Figure 3).
One year later, a memorandum on maritime A comparison of the number of executed orders
partnership was signed between a consortium of UK with the volume of shipbuilding demonstrates
industry and the Ukrainian Navy. The parties reached that the former is an order of magnitude greater. The
an agreement regarding the joint engineering and ship repair industry experienced a significantly lesser
shipbuilding of eight missile boats. Furthermore, decline in 2014 and demonstrated a more rapid
the document outlines plans for the reconstruction recovery. In 2019, the number of contracts approached
of Ukrainian shipbuilding enterprises and the the level recorded in 2010. In 2020, the maritime
construction of two naval bases. With the support Smart Maritime Group was the only entity to improve
of the aforementioned partners, it was possible to more than fifty ships. Two dry cargo vessels, Gelius 1
implement measures to protect against hostile in and Dremora 2, exhibited an increase in their
cursions into inland and territorial waters in the Black deadweight tonnage (45% and 38%, respectively)
and Azov Seas. It seems reasonable to posit that it will due to the incorporation of a cylindrical insert.
be possible to achieve this objective, but only after the Furthermore, they have been converted into double-
victory has been secured. In the existing global order holds (Smart Maritime Group, 2021).
book, it is notable that there are non-self-propelled The authors sees this as a timely response to
structures, specifically barges. Approximately 25% changing market conditions. As the global fleet grows,
of the book is dedicated to the discussion of tugs. the need for service is logically increasing. Moreover,
The rest were built in the amount of one or two vessels. modern ships are heavily equipped with electronic
And this is the next feature of the order book. Large devices, systems and equipment that should create
series are a thing of the past. Today, one-off production comfortable conditions for crews, passengers and
dominates. This encourages the use of modular cargo. All this equipment requires careful maintenance.
technologies and rational supply chain management. Like any other machinery, ships or parts of their
They allow contracts to be fulfilled quickly, efficiently global system fail from time to time. Once again, repairs
and at a competitive cost. In an effort to achieve the are necessary. It should be noted that ship owners
latter goal, the shipyards have been transformed into tend to favour the longest possible period of efficient
one-stop shops with a wide range of related businesses operation of their vessels. Therefore, they seek assistance
(engineering, foundry, painting and even furniture from experts in their respective fields. This is the
production). Their specialisation is metal processing, genesis of companies that have identified ship repair
hull construction and fitting out with equipment that as their core competency. One such example is

1 1 11
1,9 1 Barges
1,9
1,9 Tugs
1,9
Passenger

2,9 Dredgers
General cargo
6,7
Boats
Dry cargo

51,9 Bulkers
Garbage collectors

24 Tourboat
Ro-Ro
Self-elevating platforms
Tankers

Figure 2. The structure of the order portfolio of Ukrainian shipyards, %

Source: (Overview of the maritime industry of Ukraine, 2020)

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Three Seas Economic Journal
Vol. 5 No. 3, 2024
201 198
190 190
190
193 Repaired
184 181
177 ships
163
140 148

90 Under
61 64 67 contracts
56 53 55 59
52 49 with foreign
41 clients
40
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Figure 3. Number of ships repaired at Ukrainian shipyards, units
Source: (Maritime Industry Review, 2020)

the "Southern Ship Repair Company", which was and technological documentation for the repair and
established in Mykolaiv in 2013. modernisation of naval ships.
Finally, the last feature of modern Ukrainian The majority of operating enterprises are representative
shipbuilding is the true flourishing of engineering of a new generation of investors, management
(Table 3). personnel and engineers. The duration of their tenure
As can be observed, the number of bureaus has on the market is of secondary importance; what
increased to 12, which is six times the figure that existed matters is their approach to the task at hand and the
during the Soviet era. This figure represents only course of action they deem appropriate. This signifies
those in Mykolaiv and Kherson oblasts. Subsequently, that their enthusiasm and capital have facilitated the
only two state-owned enterprises have remained emergence of an intelligent services industry that can
under the umbrella of the Ukroboronprom holding. be likened to the IT business. A novel development
The remainder of the market is comprised of privately strategy based on the standards of the intelligent
owned enterprises that are consistently expanding digital economy was devised and implemented.
the scope of their services to both international and Engineering companies are 100% small and
domestic clientele. It is imperative to acknowledge medium-sized enterprises. This means that they are
the continued presence of three engineering centres characterised by:
in Crimea, namely the Joint-Stock Company – Flexibility and the ability to quickly manoeuvre
"Sudokompozit Design and Technological Bureau" and in response to changes in the environment
the Central Design Bureau "Coral". The Chernomorets (requirements of customers, classification societies,
Central Design Bureau is a particularly regrettable loss. technological changes at shipyards, software and
Its specialists took care of the development of design hardware upgrades);

Table 3
Shipbuilding engineering bureaus in Mykolaiv and Kherson oblasts
Region Name Specialisation
Combat surface ships and boats, auxiliary vessels and special floating
SE "Research and Design Shipbuilding Centre"
structures
PKB CHORNOMORSUDNOPROEKT Vessels of all types and purposes, their conversion and modernization
LLC "Marine Design Engineering Mykolaiv" Vessels of all types and purposes
LLC "Zaliv Ship Design" Vessels of all types and purposes
Mykolaiv LLC “ALA Design Group” Yachts, special and small fishing vessels
LLC Design Bureau "ProLine" Mega yachts, recreational and service vessels of executive level.
Working documentation for the construction of hulls, completion
POSS Torola Ltd
and equipment of ships, pipelines, plasma technology programs
"C-Job Mykolaiv" LLC Vessels of all types and purposes
LLC "Asaba Design Centre" Vessels of all types and purposes, combat surface ships
Central Design Bureau "Izumrud" Reinforced concrete floating structures
Kherson Branch LLC "Marine Design Engineering
Vessels of all types and purposes
Mykolaiv"
Source: summarized by the authors according to (Overview of the maritime industry of Ukraine, 2020; Zhukova O. et al., 2017; official websites of
enterprises)

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Vol. 5 No. 3, 2024
– the ability to act as an experimental link in the companies and engineering bureaus. It was thus
value chain; decided that they should follow the constructive
– acceptable cost of the work performed, not experience of their foreign colleagues. Furthermore,
burdened by high overheads typical for organisations in the field under examination, clustering has been
with branched management structures of a elevated to the status of state recognition and
bureaucratic type. As a result, the cost of the project support (Integrated Maritime Policy of the European
as a whole is reduced and its competitiveness is Union, 2021). Furthermore, on the European
increased. And this advantage does not go unnoticed continent, maritime clusters have already constituted
by customers. their own network (European Network of Maritime
One illustrative example is the company Marine Clusters, 2021).
Design Engineering Mykolaiv (MDEM). The "Ukrainian Maritime Cluster" is the name of the
principal consumer of its services is Damen Group. public association, the initiative of which was
As trust between the Dutch partners and the company announced by Mykolaiv enthusiasts in 2019. Since
deepened, the company's portfolio was gradually then, work has been carried out to raise awareness
expanded to include a range of maritime assets, of the potential range of participants, the personnel
including transport and offshore vessels, pontoons, of the governing bodies, key planning decisions
barges, floating cranes and mega yachts, high-speed that underlie further activities. A year later, all legal
ferries, pilots and multipurpose boats, and tugs. In formalities were completed. The Maritime Cluster
response to the accelerated growth in demand, the has become a de jure reality. The vision is to build
management of MDEM has devised a personnel economic relationships between the shipbuilding
strategy, the ramifications of which are illustrated in industry and other maritime industry players,
Figure 4. global and national regulators, policy makers and
It is noteworthy that the growth rate of the total organisations involved in its implementation.
number of staff has been dominating the number of It is obvious that the founders took into account
design engineers since 2012. This was not hindered global practice. They built a bridge between industry
by the war, as new structural units specialising in cluster structures and opened up prospects for
digital marketing services and special engineering integration into the Blue Economy system. This is
calculations were created and gained capacity. true, because shipbuilding is essentially a business that
The company has become a multi-divisional company. creates the means of production for a whole range of
The increased workload led to an increase in the other activities: offshore energy, fishing, mariculture,
number of workplaces. mineral exploration and production, and shipping.
The success of each and all of them depends on
how well they understand each other. In addition,
4. Cluster Prospects of Shipbuilding shipbuilding is part of an extensive supply chain,
The value of a self-created business is a unique and thus fuels the business activity of related sectors
asset for each founder. Consequently, they assume of the economy (metallurgy, machine building and
responsibility for its safeguarding, endeavour to instrumentation).
promote its growth and prosperity. This attitude is This interpretation of the vision is corroborated
intrinsic and is not contingent on the nature of the by the cluster mission formula. The objective is to
economic activity, its scale, or its organisational and advance the development of the Ukrainian maritime
legal structure. The same can be observed in the economy by uniting the efforts of the enterprises
case of private owners of new wave shipbuilding that comprise it. The focus of attention today is the

220
200 Total number of 176 216 212
180 personnel
160 146
Engineers
140 123
154 158
120
100 79 126
70 109
80
60 42 89
40 59 66
20
34
0
2007 2009 2011 2013 2015 2017 2019 2021
Figure 4. The number of "MDEM" personnel, persons
Source: compiled by the authors on the basis of data from the MDEM HR department

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Three Seas Economic Journal
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sustainable development of a climate-neutral, circular, 1. Use of joint assets. In particular, the website,
productive Blue Economy. It is evident that this development funds, advertising materials, stands
cannot be achieved without the decarbonisation and space at exhibitions and fairs. It is expected that
of maritime transport, the definition of emission in this way, everyone will save their own money and
control zones, a new vision of the role of ports, and achieve their business goals more quickly.
the preservation and increase of natural capital. It is 2. Information exchange of business intelligence
therefore essential to unite the efforts of all stakeholders. and customer databases to establish production and
And the shipbuilding industry in Mykolaiv and innovation cooperation at home and abroad.
Kherson oblasts should become a model for others. 3. Accounting and segmentation of value chains and
This directly follows from the analysis of the first the development of competitive strategies based
19 cluster members. Shipbuilding and ship repair on this that align producers' resources with market
companies account for 32% of them. Shipbuilding needs.
companies account for 16%. Business associations, 4. Dissemination of information on the market
business support centres, educational institutions, positioning of cluster members, joint and individual
and the administration of the Mykolaiv hromada PR to improve their image and reputation, search for
account for 15%. Most notably, 37% are related partners and customers.
businesses. The idea turned out to be exciting, 4. Integration and leadership in local high-tech
attractive, promising and full of optimism. It has found development programmes through participation
supporters who link their future to the prospects of in the creation of industrial and technology parks,
shipbuilding. accelerators of relevant start-ups, and Industry 4.0
The cluster administration ensures that it meets centres.
the relevant expectations. Its structure and staffing 6. Fundraising and innovation brokerage to find
are based on the principles of reasonable sufficiency. sources of concessional financing and grant support for
Currently, the staff consists of four employees, headed development projects (improving business processes,
by an executive director. The head of the engineering upgrading technologies, supporting innovations,
company MDEM was unanimously elected to this improving the level of knowledge and skills of staff).
position. Given the modest size of the entrance The use of the Now-How-Wow Matrix technology
and membership fees and the costs of financing the during the strategic sessions allowed to identify
planned activities, the staff 's activities are fully the main areas of the cluster's activities. These include
categorised as "volunteer". the presentation of the shipbuilding industry on the
The supervisory board is responsible for overseeing international stage, the overcoming of staff shortages,
the efficiency of the top manager and the quality the development of innovation infrastructure
of work of her subordinates. The supervisory board (in particular, in the field of digital technologies),
is elected by the general meeting of authorised and the lobbying of the industry's interests in
representatives of the participating enterprises. state legislative and executive authorities. Each is
In order to enhance the legitimacy of significant updated with comprehensive annual plans, approved
strategic decisions, several committees have been and supported by available funding sources.
established, including the "Shipbuilding and Ship The distribution of activities is based on the
Repair", "Naval Shipbuilding", "R&D and Education", determination of priorities, which is achieved
and "Marine Equipment and IT" committees. It is through the evaluation of efforts and the potential for
anticipated that a new committee, the "Ports and achieving results.
Shipping" committee, will be established in the near Today, this promising project is on hold. The war
future. (the real one – cruel and relentless) has taken its toll.
Nevertheless, critical infrastructure, including At the same time, it should be noted that business,
ports, is currently the subject of sustained and intense at least in the machine-building sector, continues
fire. It has been demonstrated that a cluster will to operate, overcoming incredible organisational
flourish when the firms operating within it are able to challenges and personal tragedies of its employees.
enhance their competitiveness through the creation of This means preserving, above all, the intellectual
a more conducive business environment. In order to potential for the future. The authors are convinced that
achieve this, it is necessary to enhance the capabilities the "Phoenix" effect will definitely manifest itself again.
of personnel, gain access to crucial components
of infrastructure and finance (including foreign
investment), and sustain demand for their products. 5. Conclusions
With this in mind, the administration has formulated The objective of this study was to ascertain
a number of value propositions for current and whether shipbuilding in Ukraine has a future, based
potential cluster partners: on a comprehensive analysis of historical data

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and a detailed examination of recent industry potential of these higher education institutions
developments. The decline and subsequent resurgence and relevant stakeholders. Ultimately, it is once
of domestic shipyards over the course of two centuries more a private business initiative that is the subject
was found to be influenced not only by economic of discussion. This individual is keen to establish
considerations, but also by military and political Ukraine's status as a maritime state. This includes
factors. It is regrettable to note that this remains the case. the utilisation of cluster integration of production
It has been demonstrated that public administration potentials, which has an extensive reach comparable
bodies demonstrated a striking lack of attention to the to that of the blue economy of developed countries.
development of shipbuilding in the pre-war period, A number of documented facts demonstrate
which was unnatural and irresponsible. In effect, since that there are prerequisites for the deepening and
the country gained its independence. The identified establishment of new forms of cooperation between
deficit was partially offset by the initiative of small domestic and foreign shipyards. This is particularly
and medium-sized enterprise owners. Some of them evident in the fields of ship engineering and
were driven by the need to meet internal requirements. shipbuilding. In view of the current state of the
To illustrate, the transportation of agricultural Ukrainian Navy, it is reasonable to assume that this
products accumulated in river elevators to marine waters, work will continue for several years. Furthermore, this
where transshipment to heavy bulk carriers occurs. process should not only result in an increase in the
Others perceived a demand from external customers physical volume of ships, but also in the development
for ship repair services and were able to cultivate of new types that can complement the collective
interest in the quality of work and pricing policy. power of the participating countries in current and
Evidence has been obtained indicating a rapid future military-political alliances.
increase in the field of ship engineering. This high- A continuation of this study will facilitate the
tech, intelligent digital service aligns perfectly with identification of current trends in the further expansion
the key trends of Industry 5.0 and is therefore in of industrial clusters for domestic producers. This
high demand from well-known global shipbuilding may be achieved by extending the application of this
companies. It constitutes the primary foundation upon form of business alliance to other industries, such as
which business is built. The second is the production shipbuilding in European countries. It is imperative to
of the National University of Shipbuilding, situated conduct further research into effective dual education
in Mykolaiv, and its Kherson branch of intellectual technologies, with a view to corroborating the isolated
capital, comprising relevant professional competencies. single facts of their application. Based on the current
The third approach is the implementation of dual evidence, it can be concluded that their inherent
education programmes, which seek to harness the potential remains largely untapped.

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Received on: 15th of September, 2024

Accepted on: 29th of October, 2024
Published on: 15th of November, 2024

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