TOKYO -- A Japanese government fund for revitalizing the shipbuilding industry has begun to spur private-sector investment in a string of projects that would bring the country closer to its goal of doubling capacity by 2035.

Hakodate Dock in northern Japan, which handles ship repairs for the Maritime Self-Defense Force, is moving to reopen a dock at its shipyard that was once used for supertankers but has remained out of commission since suffering damage in a 1993 earthquake.

The project is its first big capital investment since the construction of a repair dock that opened in 2010. It also plans at least two new factories for hull component assembly and other work at its manufacturing hub, aiming to start them by 2035.

"Shipbuilding has a broad base of related industries and leads directly to regional revitalization," a Hakodate Dock representative said. "We want to strengthen our presence as a key northern shipyard." The project is receiving support from the government fund which was created in fiscal 2025 to bolster the competitiveness of Japan's shipbuilding industry.

Funding has been approved for eight projects so far, with up to 311 billion yen ($1.97 billion) to be provided between fiscal 2026 and 2034. Total spending with private-sector investment included is expected to reach around 900 billion yen.

The Imabari Shipbuilding group, Japan's largest shipbuilder, will receive as much as 113.8 billion yen to expand hull block construction and welding facilities.

In addition to dock expansion plans, Shin Kurushima Dockyard looks to add to and reorganize assembly and painting facilities, aiming to boost capacity at least 50% compared with 2024.

The company has a total of 131.5 billion yen in big capital expenditures planned groupwide by fiscal 2034, which would be its largest investment to date.

"With government support, we've been able to move forward with capital spending that had been postponed due to market conditions," President Katsushi Mori said.

Oshima Shipbuilding and Naikai Zosen are set to receive 6.1 billion yen and 4.3 billion yen, respectively, for projects including cranes, production line upgrades and factory expansion.

Shipbuilders affiliated with heavy industry groups, which had lost ground to specialized local players, are starting to expand as well.

Mitsubishi Shipbuilding, a unit of Mitsubishi Heavy Industry, plans to boost capacity at its Shimonoseki shipyard Kawasaki Heavy Industries will spend about 45 billion yen on automation and other equipment at a factory that makes gear for carriers of liquefied petroleum gas, ammonia and hydrogen -- its first big investment in the facility in two decades.

Although the creation of the fund has improved prospects for achieving the government's shipbuilding capacity goals, challenges still remain.

These include production of liquefied natural gas carriers, which have not been built in Japan since 2019. Know-how and engineers have flowed out of the country since then, meaning Japan now cannot construct these ships without technology from South Korea There is also little room to pull from Japan's limited pool of shipbuilding personnel, which is already being stretched by the broader push for more capacity. Whether Japanese shipping companies would be willing to buy ships that would be costlier than equivalents from China or South Korea is an open question as well.

memorandum of understanding Japan signed with the U.S. last October to cooperate on shipbuilding is another issue. With vessel designers in short supply, Tokyo will need to figure out how to provide support.

Japanese shipyards now have three to four years of backlogs, thanks to demand for replacing conventional ships, in what Imabari President Yukito Higaki described as "the first boom in a long time." But the industry lags far behind China and South Korea in terms of scale -- a crucial factor in price competitiveness -- with just 10% or so of the global market.