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									  Industry Outlook Forum – European Cruise Council



 Overview of the state of shipbuilding orders in Europe
 and a vision for its future

 Jacques HARDELAY, General Manager, STX France and CESA Vice President




 14th September 2010




02 October 2012 | Page 1
  General overview

      Financial crisis

      Sovereign crisis

      Cruise goes on but however deeply impacted :
              End customers behavior
              Cruise brands economy
              Shipbuilders and industrial network load and health


      Most probably long term changes and new configuration




02 October 2012 | Page 2
  Orderbook – status

      12 vessels ordered per year up to 2007

      0 vessel ordered the next 2 years

      Some orders were then placed from end 2009 to mid 2010:
                            1 Carnival Dream to Fincantieri
                            2 Princess vessels to Fincantieri
                            1 MSC vessel to STX France
                            1 GNMTC (Libya) vessel to STX France
                            1 Aida vessel to Meyer Werft
                            2 NCL vessels ?
                            1 Hapag Lloyd vessel ?
      6 to 7 vessels per year are expected to be ordered in the future
      Clients more and more demanding in term of price: 150 K€ per LB !
      Equipment prices do not necessarily follow the main trend !
02 October 2012 | Page 3
  Consequences on shipbuilding industry



      High outfitting load due to delivery of ordered vessels
              (ex: Epic mid 2010 / Allure of the Seas for end October 2010)


      A steelwork underload followed by an outfitting one


      Then, necessity to come back to higher load within a lower order context

      Such load variations are very detrimental to:
              . Management of human resources,
              . Efficiency,
              . Financial results


02 October 2012 | Page 4
  How to deal with underload periods ?




      Redeployment scheme such as:
           . Transfer from steelwork to outfitting work
           . Less subcontracting in favor of internal staff

      Training

      Unemployment measures

      Plan of Voluntary Departures

      Lay-off plan




02 October 2012 | Page 5
  How to deal with underload periods on a long term?




      By diversifying
             . Engineering works for other industries
             . Production for other segments of marine industry
             . LCS (Life Cycle Services) works

      By reduction of capacity ?




02 October 2012 | Page 6
  How to manage price drop?




 By monitoring shipyards' overheads

 By increasing productivity thanks to investments and process improvements

 By developing more efficient design in term of construction (ex: more compact
  GA and « lean » technical specifications… ). Good understanding of shipowners
 By proposing more efficient design in term of operation costs (ex: energy savings)
  Shipowners must accept to pay more considering good ROI




02 October 2012 | Page 7
   Importance of prototypes




      Today, new regulations (Safe Return to Port / Probabilistic Stability) is still
       leading to develop new prototypes

      Pressure on prices may encourage our customers to order longer series and
       develop platforms thinking

      But prototypes are necessary to maintain shipyard design resources and
       competences, essential to develop innovative designs in the future




02 October 2012 | Page 8
Improve productivity: some trends



      Computer systems (CAD)
      Logistics

      Quality
       « Lean » processes

       Investment capacity is limited !




02 October 2012 | Page 9
 Far Eastern appeal: is it a real threat?



   Volumes reduction in cruise segment
   Prices decrease
   More and more sophisticated vessels
   Higher Asian currency and standard of living
   Lead to think that Far Eastern countries should wait a little bit more !
   However present in some tenders




02 October 2012 | Page 10
  Conclusions



  Very challenging time for shipbuilding industry (load and price)

  Shipyards and network adapting themselves to present situation with difficulty

  Shipyards and network looking for better efficiency in the future
  Shipowners have to maintain sufficient level of orders, including some prototypes
  Shipowners must be open to shipyard initiatives when developing together
   efficient designs




02 October 2012 | Page 11
                        Thank you for your attention

02 October 2012 | Page 12

								
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