Eriksbergs Mekaniska Verkstads AB
Encyclopedia
Eriksbergs Mekaniska Verkstads AB was a Swedish shipbuilding
company based in Gothenburg
. It was founded in 1850 by Christian Barchman under the name Ericsbergs metall och tackjerns-gjuteri. It delivered its last ship in 1979.
. The first shipyard wharf
was opened in 1871, and two years later they delivered their first ship. In 1876 the company was transformed into a joint-stock company, and so the name was changed to Eriksbergs Mekaniska Werkstads AB. In the beginning of the 1890s, the shipyard was still the smallest of the three wharfs that existed in Gothenburg. Production was based on passenger ships, steam cutters and towboats for Denmark
, Norway
and Finland
, and ferries for Stockholm
's public transportation. In 1915 Eriksberg underwent massive developments to accommodate production of larger ships after a major takeover of the corporation
's stocks by Dan Broström
.
Mekaniska Verkstads AB, AB Götaverken
and AB Lindholmens Varv - partly through World War I
and the post-war
period until 1940; a successive expansion triggered by a shipping boom and in particular by Norwegian and Swedish shipowner's need of new and bigger ships. In this regard, Eriksberg had an advantage through the direct-ownership by the Broström
family (later through their listed mother company Ångfartygsaktiebolaget Tirfing). With a relatively modest share capital (6.5 million SEK) Eriksberg was able to make net profits of 40-50 million SEK every year during the 1940s. The cause for this was an unprecedented profitability during the second world war]], repairing war-damaged tonnage
and strong demand for replacement tonnage for Swedish and Norwegian shipping companies. This was enhanced by the favourable "wartime windfall taxes" introduced during the war. Most of these extraordinary profits were reinvested within shipping and industrial investments of the Broström Group, and this contributed to Broström's becoming the country's richest group in the beginning of the 1960s.
In the beginning of the 1950s, Eriksberg obtained the rights to manufacture Burmeister & Wains diesel motors, unlike Götaverken who chose to manufacture their own original designs. This involved a certain lead for the production of large tanker
s, and the size records of ships were being constantly broken. Many thought that the weight limit, 40,000 tonnes deadweight
, was reached.
Eriksberg's financial position was solid, like the other competitors in Sweden. Both Kockums
and Götaverken
were listed and were independent companies, while Eriksberg and Lindholmen
were owned by shipping companies. During the 1950s and the 1960s, Eriksberg was the most profitable shipyard in the country, and to work at 'Torpet' (the name used by the public) was a 'status job' in Gothenburg.
was the 1960s, before the competition from the Japanese shipbuilding industry became more accentuated. When Norwegian shipping companies got into difficulties with refinancing their vessel purchases, especially in the US, requirements were put on Swedish wharfs to hand out credit
s with subventionary interest
s and conditions, like the Japanese wharfs did. Eriksberg succeeded however, unlike its competitors Götaverken and Kockums, to retain high solvency and go through the last years of the 1960s relatively unhurt. Both Kockums and Götaverken were insolvent and were saved, through state intervention in the case of Götaverken and by Skadinaviska Banken in the case of Kockums.
In the beginning of the 1970s, it became clear to the company's management that this was only a respite of a few years. The rise in salaries, enforced by the trade unions in the beginning of the 1970s, increased the company's cost by around 25% in the span of only a few years. The Swedish currency with returning devaluation raised the import prices for the wharf. When the Bretton Woods system
was abandoned in 1973 and the US dollar became "buoyant", it became clear that the Swedish wharf industry was at the brink of ruin. For Eriksberg, the 1970s started nevertheless relatively positive. They acquired Lindholmens Mekaniska Verkstad and built the Portuguese wharfs Lisnave and later Setenave, that among other things, delivered the bows for the company's supertankers. In 1973 Eriksberg sold their maintenance business to Götaverken to become a pure wharf for new constructions.
In 1974 the company's management issued an anticipated warning about the serious state of the company, and the Managing Director Bengt Eneroth resigned after being with the company for 30 years. He had consciously held back investments in wharf activities but the company was still hit, like the other wharfs, by the initial problem of their customers, the shipping companies. This situation however, was not handled in a well thought out way by the new company management within Tirfing, and they were forced to sell Eriksberg for 1 krona and sign unnecessary ship building contracts with the Department of Industry. In the long run, this meant a coup de grace for Broströmkoncernen and Tirfing, which were listed on the stock market.
The obstinate attitude of the trade-union and the government to not lose a single job opportunity at the wharf, was to be a ticking bomb that in the end led to the death of the shipbuilding industry in Sweden. But this would take another 10 years. The government's irresponsible economic policies, driven by the Social Democratic governments, in cooperation with the metal-workers union, alongside the devaluation of the Swedish Krone that made importing expensive, the unreasonable wage increases that were eaten up by progressive taxes and an inconsistent currency regulation, which made it impossible to fuse the currency for the credits in US dollar, brought the wharf to an end.
Today, all that remains of EMV is an 84m high, orange gantry crane and two workshop halls; the engine workshop 'Blå Hallen', today hosting a hotel and conference facility, and the former workshop 'Eriksbergshallen' with the text 'Eriksbergs Mek. Verkstads AB Shipbuilders Engineers & Repairers' still painted on the facade. Along the former equipping quays are now blocks of fancy condos and boutiques.
Shipbuilding
Shipbuilding is the construction of ships and floating vessels. It normally takes place in a specialized facility known as a shipyard. Shipbuilders, also called shipwrights, follow a specialized occupation that traces its roots to before recorded history.Shipbuilding and ship repairs, both...
company based in Gothenburg
Gothenburg
Gothenburg is the second-largest city in Sweden and the fifth-largest in the Nordic countries. Situated on the west coast of Sweden, the city proper has a population of 519,399, with 549,839 in the urban area and total of 937,015 inhabitants in the metropolitan area...
. It was founded in 1850 by Christian Barchman under the name Ericsbergs metall och tackjerns-gjuteri. It delivered its last ship in 1979.
Introduction
Founded in 1850 by Christian Barchman, the company originally worked with galvanizationGalvanization
Galvanization is the process of applying a protective zinc coating to steel or iron, in order to prevent rusting. The term is derived from the name of Italian scientist Luigi Galvani....
. The first shipyard wharf
Wharf
A wharf or quay is a structure on the shore of a harbor where ships may dock to load and unload cargo or passengers.Such a structure includes one or more berths , and may also include piers, warehouses, or other facilities necessary for handling the ships.A wharf commonly comprises a fixed...
was opened in 1871, and two years later they delivered their first ship. In 1876 the company was transformed into a joint-stock company, and so the name was changed to Eriksbergs Mekaniska Werkstads AB. In the beginning of the 1890s, the shipyard was still the smallest of the three wharfs that existed in Gothenburg. Production was based on passenger ships, steam cutters and towboats for Denmark
Denmark
Denmark is a Scandinavian country in Northern Europe. The countries of Denmark and Greenland, as well as the Faroe Islands, constitute the Kingdom of Denmark . It is the southernmost of the Nordic countries, southwest of Sweden and south of Norway, and bordered to the south by Germany. Denmark...
, Norway
Norway
Norway , officially the Kingdom of Norway, is a Nordic unitary constitutional monarchy whose territory comprises the western portion of the Scandinavian Peninsula, Jan Mayen, and the Arctic archipelago of Svalbard and Bouvet Island. Norway has a total area of and a population of about 4.9 million...
and Finland
Finland
Finland , officially the Republic of Finland, is a Nordic country situated in the Fennoscandian region of Northern Europe. It is bordered by Sweden in the west, Norway in the north and Russia in the east, while Estonia lies to its south across the Gulf of Finland.Around 5.4 million people reside...
, and ferries for Stockholm
Stockholm
Stockholm is the capital and the largest city of Sweden and constitutes the most populated urban area in Scandinavia. Stockholm is the most populous city in Sweden, with a population of 851,155 in the municipality , 1.37 million in the urban area , and around 2.1 million in the metropolitan area...
's public transportation. In 1915 Eriksberg underwent massive developments to accommodate production of larger ships after a major takeover of the corporation
Corporation
A corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business. Early corporations were established by charter...
's stocks by Dan Broström
Dan Broström
Dan Broström or Daniel Broström was the Swedish Naval Minister from 1914 to 1917. He was the son of Axel Broström. He was married to Anna Ida Broström, and had a son called Dan-Axel Broström. Broström died in a car accident near Trönninge, south of Halmstad on the 24th of July 1925....
.
Eriksberg's developments up to the 1960s
Eriksberg underwent similar developments as the other Swedish major shipbuilding companies; KockumsKockums
Kockums AB is a shipyard in Malmö, Sweden owned by the German shipyard Howaldtswerke-Deutsche Werft in Kiel. HDW itself is a subsidiary of the German ThyssenKrupp Marine Systems....
Mekaniska Verkstads AB, AB Götaverken
Götaverken
Götaverken was a shipbuilding company that was located on Hisingen, Gothenburg. It was founded in 1841, and went bankrupt in 1989.The company was founded in 1841 by a Scottish businessman called Alexander Keiller under the name Keillers Werkstad i Göteborg, and was aimed at industrial production...
and AB Lindholmens Varv - partly through World War I
World War I
World War I , which was predominantly called the World War or the Great War from its occurrence until 1939, and the First World War or World War I thereafter, was a major war centred in Europe that began on 28 July 1914 and lasted until 11 November 1918...
and the post-war
Post-war
A post-war period or postwar period is the interval immediately following the ending of a war and enduring as long as war does not resume. A post-war period can become an interwar period or interbellum when a war between the same parties resumes at a later date...
period until 1940; a successive expansion triggered by a shipping boom and in particular by Norwegian and Swedish shipowner's need of new and bigger ships. In this regard, Eriksberg had an advantage through the direct-ownership by the Broström
Broström
Broström or Brostrom is a surname, and may refer to:* Anders Broström* Axel Ludvig Broström* Dan Broström* Leonard C. Brostrom...
family (later through their listed mother company Ångfartygsaktiebolaget Tirfing). With a relatively modest share capital (6.5 million SEK) Eriksberg was able to make net profits of 40-50 million SEK every year during the 1940s. The cause for this was an unprecedented profitability during the second world war]], repairing war-damaged tonnage
Tonnage
Tonnage is a measure of the size or cargo carrying capacity of a ship. The term derives from the taxation paid on tuns or casks of wine, and was later used in reference to the weight of a ship's cargo; however, in modern maritime usage, "tonnage" specifically refers to a calculation of the volume...
and strong demand for replacement tonnage for Swedish and Norwegian shipping companies. This was enhanced by the favourable "wartime windfall taxes" introduced during the war. Most of these extraordinary profits were reinvested within shipping and industrial investments of the Broström Group, and this contributed to Broström's becoming the country's richest group in the beginning of the 1960s.
In the beginning of the 1950s, Eriksberg obtained the rights to manufacture Burmeister & Wains diesel motors, unlike Götaverken who chose to manufacture their own original designs. This involved a certain lead for the production of large tanker
Tanker (ship)
A tanker is a ship designed to transport liquids in bulk. Major types of tankship include the oil tanker, the chemical tanker, and the liquefied natural gas carrier.-Background:...
s, and the size records of ships were being constantly broken. Many thought that the weight limit, 40,000 tonnes deadweight
Deadweight
Deadweight may refer to:* Deadweight loss, an economics concept* Deadweight tonnage, a ship's carrying capacity with crew and supplies* "Deadweight" , a song on Beck's 1997 album A Life Less Ordinary...
, was reached.
Eriksberg's financial position was solid, like the other competitors in Sweden. Both Kockums
Kockums
Kockums AB is a shipyard in Malmö, Sweden owned by the German shipyard Howaldtswerke-Deutsche Werft in Kiel. HDW itself is a subsidiary of the German ThyssenKrupp Marine Systems....
and Götaverken
Götaverken
Götaverken was a shipbuilding company that was located on Hisingen, Gothenburg. It was founded in 1841, and went bankrupt in 1989.The company was founded in 1841 by a Scottish businessman called Alexander Keiller under the name Keillers Werkstad i Göteborg, and was aimed at industrial production...
were listed and were independent companies, while Eriksberg and Lindholmen
Lindholmen
Lindholmen is a locality situated in Vallentuna Municipality, Stockholm County, Sweden with 810 inhabitants in 2005....
were owned by shipping companies. During the 1950s and the 1960s, Eriksberg was the most profitable shipyard in the country, and to work at 'Torpet' (the name used by the public) was a 'status job' in Gothenburg.
The financial crisis
The last profitable decadeDecade
A decade is a period of 10 years. The word is derived from the Ancient Greek dekas which means ten. This etymology is sometime confused with the Latin decas and dies , which is not correct....
was the 1960s, before the competition from the Japanese shipbuilding industry became more accentuated. When Norwegian shipping companies got into difficulties with refinancing their vessel purchases, especially in the US, requirements were put on Swedish wharfs to hand out credit
Credit (finance)
Credit is the trust which allows one party to provide resources to another party where that second party does not reimburse the first party immediately , but instead arranges either to repay or return those resources at a later date. The resources provided may be financial Credit is the trust...
s with subventionary interest
Interest
Interest is a fee paid by a borrower of assets to the owner as a form of compensation for the use of the assets. It is most commonly the price paid for the use of borrowed money, or money earned by deposited funds....
s and conditions, like the Japanese wharfs did. Eriksberg succeeded however, unlike its competitors Götaverken and Kockums, to retain high solvency and go through the last years of the 1960s relatively unhurt. Both Kockums and Götaverken were insolvent and were saved, through state intervention in the case of Götaverken and by Skadinaviska Banken in the case of Kockums.
In the beginning of the 1970s, it became clear to the company's management that this was only a respite of a few years. The rise in salaries, enforced by the trade unions in the beginning of the 1970s, increased the company's cost by around 25% in the span of only a few years. The Swedish currency with returning devaluation raised the import prices for the wharf. When the Bretton Woods system
Bretton Woods system
The Bretton Woods system of monetary management established the rules for commercial and financial relations among the world's major industrial states in the mid 20th century...
was abandoned in 1973 and the US dollar became "buoyant", it became clear that the Swedish wharf industry was at the brink of ruin. For Eriksberg, the 1970s started nevertheless relatively positive. They acquired Lindholmens Mekaniska Verkstad and built the Portuguese wharfs Lisnave and later Setenave, that among other things, delivered the bows for the company's supertankers. In 1973 Eriksberg sold their maintenance business to Götaverken to become a pure wharf for new constructions.
In 1974 the company's management issued an anticipated warning about the serious state of the company, and the Managing Director Bengt Eneroth resigned after being with the company for 30 years. He had consciously held back investments in wharf activities but the company was still hit, like the other wharfs, by the initial problem of their customers, the shipping companies. This situation however, was not handled in a well thought out way by the new company management within Tirfing, and they were forced to sell Eriksberg for 1 krona and sign unnecessary ship building contracts with the Department of Industry. In the long run, this meant a coup de grace for Broströmkoncernen and Tirfing, which were listed on the stock market.
The obstinate attitude of the trade-union and the government to not lose a single job opportunity at the wharf, was to be a ticking bomb that in the end led to the death of the shipbuilding industry in Sweden. But this would take another 10 years. The government's irresponsible economic policies, driven by the Social Democratic governments, in cooperation with the metal-workers union, alongside the devaluation of the Swedish Krone that made importing expensive, the unreasonable wage increases that were eaten up by progressive taxes and an inconsistent currency regulation, which made it impossible to fuse the currency for the credits in US dollar, brought the wharf to an end.
Eriksberg is taken over and is closed down
At this point, Eriksberg Mekaniska Verkstad had 6000 employees. Despite the example of Eriksberg, it was not taken seriously and so investments at Götaverken and Uddevallavarvet was not questioned. Billions were lost because of over optimistic wharf directors. Eriksberg became a sister company of Götaverken, before both became part of Svenska Varv, which was run by the government, in 1978. During 1978-79 all activities were successfully terminated at Eriksberg, and on 15 June 1979 the shipyards last vessel, a product tanker M/T Atland was delivered to Broströms, that was already on the brink of bankruptcy. Just about a year before the shut down Erikbergs Mekaniska Verkstad had delivered the ULCC:s 'Nai Superba' and 'Nai Genova' at about 460 000 dwt each! The greatest ships ever built in Gothenburg as well as they were among the last. The Nai-ships were demolished in year 2000-2001.Today, all that remains of EMV is an 84m high, orange gantry crane and two workshop halls; the engine workshop 'Blå Hallen', today hosting a hotel and conference facility, and the former workshop 'Eriksbergshallen' with the text 'Eriksbergs Mek. Verkstads AB Shipbuilders Engineers & Repairers' still painted on the facade. Along the former equipping quays are now blocks of fancy condos and boutiques.