OF PIRAEUS
4. Spatial Paradigm: The Greater Area of Piraeus
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Chart 1 Sector fragmentation by region.
in the face of international competitive pressures that will try to pull the cluster apart. The axis of world economic activity is moving eastwards and competing centres in the Far East are expected to gain in stature (Lagendijk, 2000).
4.1. The structure of the Piraeus maritime cluster
The maritime industry in the greater area of Piraeus constitutes a complete cluster. It is composed of three main bodies: shipping, maritime services and maritime industry. The cluster is also surrounded by research & educational institutions, governmental bodies, the port & port authority and some maritime associations.
Figure 3 suggests that the three core segments in the cluster consisting of services that are directly connected to each other. This network of services is not abandoned in the marketplace, but it acts in the framework of big co- operating institutions that are concerned with the quality and the quality of the services provided. The maritime associations, port authority, research
&educational institutions and governmental bodies not only are part of the cluster but they also surround it since they can contribute into policy making. The most important competitive advantages of the cluster are described and explained in textbox 1 below. Over the years, a variety of factors has affected the structure of the cluster as described above. However, there are four significant variables recognized: the agglomeration effects, internal competition, cluster barriers and heterogeneity (Langen, 2004).
These variables will be later on specifically discussed for our case study.
Fig. 3 Structure of the Piraeus cluster.
Textbox 1. The core segments of the Piraeus maritime cluster.
Shipping: Shipping is the core of this cluster and it is constituted by owners and operators of all kinds of vessels, e.g., bulk carriers, oil tankers, container ships, general cargo, gas carriers, reefer ships, fishing vessels, cruise ships and ferries. The shipping segment is considered to be the most important in the cluster not only because it is the largest network of companies, but also because shipping companies are the most international and fundamental ones in the internationalisation of the cluster (Wijnolst, 2009). Shipping companies create the excessive demand in services of high quality, hence stimulating innovation and creativity in the whole cluster. According to our survey 2009, there are 608 shipping firms in the greater area of Piraeus.
(Continued)
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Textbox 1. (Continued)
Shipbrokers:The role of shipbrokers as explained earlier is crucial for the shipping market and for the cluster. The greater area of Piraeus hosts approximately 290 companies, composed from small, medium even large firms with international reputation and branch offices in important maritime centres.
Marine Consultants (Naval Architects — Surveyors): There is a massive concentration of technical offices or individual brand firms specializing in technical consultancy, ship design and surveying in Piraeus. According to our survey, there are 168 marine consulting firms active in the greater area of Piraeus, mostly addressing the demand created by shipping companies located in the area.
Spare Part Suppliers: Firms specializing in spare part supplies dealing with repairs in the shipping industry of Piraeus. More than 400 firms support the most demanding fleet of the world constantly.
Machinery & Engine Repairs:This segment is constituted of 160 companies, specializing in low cost repairs of machinery and engines; it is a crucial service for the shipping companies located in the area.
Legal Services: There are a large number of lawyers specializing in maritime law and consulting in the greater area of Piraeus, this segment consists of both big firms and individual lawyers, counting over 100 lawyers in the core area of Piraeus.
Banking & Financial Services: Another strong segment of the cluster. There are over 210 institutions, banks and firms specializing in financial services for the maritime sector in Piraeus. This includes local banks and firms as well as representatives of famous international institutions.
4.2. The economic footprint of the maritime industry in the region
There are several ways to assess the economic importance of an industry.
Such are employment, profitability, productivity and knowledge externali- ties. The maritime industry in Greece is large, internationally competitive and geographically concentrated. These characteristics make it a very important asset of the Greek economy. The geographical concentration of
the industry, as indicated above, tempts us to assess its economic footprint on the corresponding region.
The shipping sector, only one segment of the maritime cluster con- tributes strongly to the Greek Economy. Only for the year 2007, the net income from shipping was $17 billion, meaning 7% of the GDP covering 28% of the trade balance deficit (World Bank, 2007). The added value of the maritime sector in Greece according to a report form ‘Policy Research Corporation’ is 6400 million, that is 3.24% of the GDP of the country.
Added Value is the net output of a sector after adding up all outputs and subtracting intermediate inputs.
Concerning the employment factor, the maritime industry in Greece is a substantial employer. There around 76,200 people employed in the sectors of the maritime cluster. The concentration of the cluster in Attica and Piraeus represents 43.3% of the total maritime employment in Attica and 55% of that in the Greater Area of Piraeus.
Source: Policy Research Corporation, Report on Greek Maritime Industry.
4.3. SWOT analysis
The SWOT analysis is a summary of the results coming from a preliminary survey undertaken as well as a comparison with other prominent clusters and a review on the perspective of sector experts. On one hand, strengths (S) and weaknesses (W) can reveal the internal conditions of the cluster and its current position while on the other hand, opportunities (O) and threats (T) focus on future growth and suggestions (Wijnolst, 2009).
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Fig. 4 Multi-scale cluster organization for ABMS modeling.
• There may certainly be additional weaknesses, threats, etc. other than those mentioned in Figure 4 such as:
• Deindustrialization of Greece and gradual relocation of industries from Western Europe to emerging countries with cheaper labor force.
• Relatively expensive Greek labor force compared to emerging countries wage levels.
• The Mediterranean Sea no longer plays a central role in international trade as it used to, since it is faraway from BRIC countries.
• Major shipyards are nowadays located in the Far East, very faraway from Greece.
• Countries such as China are beginning to develop commercial fleet as well.
• The new international industrial center is in the Far East.
• London is Europe’s major trade center and represents direct threat to Piraeus, as it attracts so many Greek shipping companies.
Therefore Table 2 must not be considered as comprehensive.
The basic conclusion from the analysis is that Greece is a leading maritime center, but there are a number of actions and initiatives that should take place in order to become a maritime centre of excellence, pro- viding quality maritime services for international customers. The identified opportunities should be encountered in policy strategies and the threats and weaknesses shall be balanced out by direct public and private initiatives.
Table 2 Summarized SWOT analysis based on survey & interviews.
SWOT-Strengths
Large number of leading international companies in shipping The largest fleet of the World
Concentration of diversified maritime services at a specific region
Very high gross earning from shipping & high added value from the entire maritime industry
Strong networking, trust and family ties between the member of the maritime community
Competitive taxation for shipping companies
Concentrated knowledge and experience in maritime matters International reputation and long maritime tradition SWOT-Weaknesses
Declining Seafarer’s labor force
Lack of R&D and Private Maritime Institutions Limited number of institutions for maritime education
Lack of awareness of the significance of the maritime industry in the Greek Economy Lack of Maritime Cluster Organization backed from public and private initiatives Lack of regulatory framework and initiatives for high capaciy activities such as: Marine
Arbitration, Greek P&I Clubs, Greek Stock Market open to shipping, New financing tools for shipping
SWOT-Opportunities
Attract more shipping companies and other maritime activities in Greece Greater government efforts to promote and support Greek maritime interests
internationally
Further support and development strategies for the small enterprises of the Greek maritime community
Creation of an official Greek Maritime Cluster organization
Support the shipbuilding industry and increase shipbuilding capacity Increase Research & Development expenditures on maritime matters Greater focus on quality of maritime services and international competition Increase networking and intitiatives for collaboration
SWOT-Threats
Competition from countries with high innovation index and advanced R&D activity in the maritime sector
Insufficient flow of skilled labor into the sector Lack of integrated maritime policy and strategic plan Lack of unified safety culture and environmental awareness
5. Methods for Evaluating and Benchmarking