Eriksbergs Mekaniska Verkstads AB

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 tackjerms-gjuteri". It delivered its last ship in 1979.

History

Introduction

Founded in 1850 by Christian Barchman, the company originally worked with galvanization. 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 passengerships, 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.

Eriksberg's developments up to the 1960s

Eriksberg underwent similar developments as the other Swedish major shipbuilding companies; Kockums Mekaniska Verkstads AB, AB Götaverken and AB Lindholmens Varv - partly through the first world war 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 theBroström 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 dieselmotors, unlike Götaverken who chose to manufacture their own original designs. This involved a certain lead for the production of large tankers, 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.

The financial crisis

The last profitable decennium was the 1960s, then the competition from the Japanese shipbuilding industry was becoming more accentuated. When Norwegian shipping companies got difficulties with the refinancing of their vessel purchases, especially in the US, requirements were put on Swedish wharfs to hand out credits with subventionary interests and conditions like the Japanese wharfs did. Eriksberg succeeded however, unlike its competitors Götaverken and Kockums, to retain a high solvency and go through the last years of the 1960s relatively unhurt. Both Kockums and Götaverken were insolvent and were saved through the state's intervention, in the case of Götaverken and by Skadinaviska Banken in the case of Kockums.

In the beginning of the 1970s, it became clear for the company's management that there was a respite of only a few years. The raise in salaries, enforced by the trade union in the beginning of the 1970s, increased the company's cost by around 25% during a couple 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 brought to the brink of ruin. For Eriksberg the 1970s started neverless 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 reparation 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 situation for the company, and the Managing director of the company Bengt Eneroth resigned after being with the company for 30 years. He had consciously held back investments in wharf activities but was still hit, like the other wharfs, by the initial problem within their customers, the shipping companies. This situation however, was not handled in a well thought out way by the new company management within Tirfing, that was forced to sell Eriksberg for 1 krona and sign unnecessary ship contracts by the Department of Industry. In the long run, this meant coup de grace for Broströmkoncernen, and Tirfing which was listed on the stock market.

The obstinate attitude from 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 took another 10 years. The government's inresponsible economical policies that was driven by the Social democratic governments in cooperation with the metal-workers union, with the devaluation that made importing expensive, the unreasonable wage increases that was eaten up by the 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.