AgS-Monitoring Shipbuilding in Europe last updated: 8.9.2012

AgS-Monitoring

Shipbuilding in Europe

last updated: 8.9.2012

Thorsten Ludwig, AgS

Selected Facts & Figures

prepared for the industriAll Sector Committee Shipbuilding

18.-19. September 2012 – Bordeaux/France

AgS-Monitoring Shipbuilding

industriAll - Sector Committee Shipbuilding 18.-19. September 2012 – Bordeaux/France

What happens in Europeanshipbuilding countries?

What happens in Europeanshipbuilding countries?



CroatiaCroatia

Job cuts in shipbuilding sincesummer 2008

• Job cuts as a result of fluctuation due to age.

Bankruptcies No bankruptcies reported

Restructuring • The privatization process of the Croatian shipbuilding industry is still ongoing. Out of six state-owned shipyards only one is profitable.

• After prolongation of deadlines for privatisation by the EU Croatia must finalize the privatization process by the end of June 2011.

• Analysts do not give positive prospects for the future of all shipyards. Approx. three out of the six state owned shipyards could survive.

• A private project has already been suggested to develop a tourist destination atthe site of the Brodotrogir Shipyard.

• 06/11: A delegation of Chinese investors have expressed interest in acquiringRijeka’s 3.Maj shipyard, planning to invest some 63.8 €.

• In April 2012, the European Commission urged Croatia to speed up the process of restructuring its five beleaguered shipyards

• The state has faced down opposition and resolved the future of two others, selling off Brodosplit (the only yard with significant scope for physical expansion), and declaring Kraljevica bankrupt. This leaves two: 3. Maj and Brodotrogir.

Support measures by the state

March 2010: Croatian government gave further state loans to three shipyards for several construction projects.

Employment trend:

No. 1.000 GT % share

2005 75 2.360 1,4

2006 61 1.879 0,9

2007 69 1.997 0,6

2008 64 1.665 0,5

2009 36 832 0,3

2010 24 542 0,2

2011 21 326 0,2

Orderbook/Year-end basis(ship size coverage: >=100 GT; Source: IHS)



DenmarkDenmark


• Odense Lindo Steel Yard will cease building ships in 2011 (the last ship in the orderbook is currently scheduled to be delivered in the beginning of 2012 after delivering of the last newbuilding. 2.600 shipyard workers will loose their jobs

• MAN Diesel will cut its workforce by 50% (500 lay-offs) and relocates large parts of production to Asia.

Bankruptcies • Some smaller companies shipbuilders and equipment suppliers have gone bankrupt.

Restructuring • The Odense Steel Ship Yard is being restructured into an industrial park, including the relocation of the Federicia shipyard to the Odense area.

• Vestas (world biggest wind turbine producer) iinvests more than 80 Mio DKK in the production of wind turbines on the area of Odense.

• 06/11: Equipment of Odense Yard sold to Maynyards Europe GmbH and HilcoIndustrial Europe. The deals includes 12 manufacturing and welding lines, robotic gantry systems, cranes etc.


• Government is supporting the restructuring of the former Odense area toestablish smaller maritime companies.

Employment trend:


2005 16 1.584 1,0

2006 11 1.424 0,7

2007 23 1.462 0,4

2008 21 1.148 0,3

2009 12 555 0,2

2010 5 116 0,0

2011 5 2 0,0




FinlandFinland


• STX Finland realized 400 lay-offs (out of 2.300 employees) at its Turku shipyard

• Appr. 800-1.000 workers are temporarily laid off at STX Finland (Turku and Helsinki) shipyards – should there be no newbuilding contracts for cruise ships more lay-offs are estimated.

Bankruptcies No bankruptcies reported

Restructuring • STX Rauma quits newbuilding sector and is focussing repair and conversion (new strategy enforced by STX).

• Wärtsilä: Relocation of huge parts of production from Finland to China.• STX is now looking to secure business in non-maritime sectors,

including wind energy and other marine renewable technologies. The cruise and ferry yards, based in France and Finland, could also be used for offshore vessel construction or naval vessels.

Support measuresby the state

• Government measures to promote orders, primarily based on domestic shipdeliveries, for the STX Finland Oy Turku shipyard during spring 2010. The support and financing measures planned by the task force are designed tocreate a work load of approximately 50% for the STX Finland Oy shipyard in Turku.

• Such orders could be worth approximately EUR 500 million. The proposedstate support measures may include:

• innovation aid for the shipbuilding industry; • publicly supported credit and guarantee arrangements for domestic

ship orders, corresponding to export financing terms;• support for environmentally friendly investments in sustainable new

vessels by Finnish shipping companies.

Employment trend:


2005 13 847 0,5

2006 11 851 0,4

2007 10 826 0,3

2008 7 582 0,2

2009 6 335 0,1

2010 5 131 0,1

2011 12 194 0,1




FranceFrance


• STX France in St. Nazaire wants to cut the number of hours worked equivalent to 19,000 days of chômage partiel, a French scheme under which the state makes up some of the affected workers’ wages.

• Unions oppose the move and point out that employees underwent 9,000 days of chômage partiel between April and August.

• The site employs 2,100 people and generates a further 4,000 jobs with subcontractors.

Bankruptcies No bankruptcies reported.

Restructuring • STX France is cutting its shipbuilding capacities from 2.5 vessels per year to 1.5 vessels for the coming years. This is threatening further jobs at the shipyard.

• STX is now looking to secure business in non-maritime sectors, including wind energy and other marine renewable technologies. The cruise and ferry yards, based in France and Finland, could also be used for offshore vessel construction or naval vessels.


• Feb 2010: French government announced financial support for STX St. Nazaireto achieve new orders and to enter new markets. The yard will also benefit from the national transport sector program which includes €1bn.

• Orders for naval vessels schould help French shipyards to survive.• Unions at STX France have written to the French government, demanding

that the state extends its 33.3% stake to take majority control.• The move comes after the yard lost orders for two cruiseships for Viking

River Cruises earlier this year, which went to Italy’s publicly owned Fincantieri, leaving the future of STX France in doubt.

Employment trend:


2005 11 676 1,0

2006 15 851 0,4

2007 20 763 0,2

2008 13 723 0,2

2009 9 438 0,1

2010 9 283 0,1

2011a) 8 384 0,2




GermanyGermany


• Shipyard workforce reduced by 18% since Sept. 2008 from 20.800 down to 16.582 employees in 9/2012.

• Share of subcontractors is increasing (13,9% in 2012).

Bankruptcies (sincesummer 2008)

• 2008 – 2011: SSW Shipyard (320 empl.); SMG GmbH (50 empl.); CassensGmbH (90 empl.); Wadan Yards/NORDIC Yards (2.500 empl.); LindenauShipyard (250 empl);

• 2012: JJ Siestas Shipyard (900 empl.) and P+S Werften GmbH (1.800 empl.)

Restructuring • TKMS is quitting merchant shipbuilding and sold Nordseewerke Emden(1.400 employees) to SIAG Schaaf Industries which will produce offshore-windmills in Emden: conversion is proceeding succesfully.

• TKMS sold it’s mechant shipyards (Blohm & Voss Shipyard and Blohm & Voss Repair) to STAR Capital (UK)

• Shipyards enter the offshore-windenergy market.

Supportmeasures by the state

• Prolongation of Innovation Aid Programme

Employment trend:

No. 1.000 GT % share empl.

2005 187 4.085 2,5 18.980

2006 199 4.151 2,0 19.591

2007 203 4.165 1,3 20.178

2008 181 3.568 1,0 20.530

2009 85 1.998 0,7 17.446

2010 55 1.459 0,6 16.760

2011 48 1.319 0,6 16.351

2012 n.A n.a. n.a 16.582

Orderbook/Year-end basis(ship size coverage: >=100 GT; Source: IHS/IGM)



GreeceGreece


• Meanwhile, the wider repair zone of Perama and Salamina, comprising scores of smaller yards and workshops, is virtually idle, partly because no projects are under way at the larger yards on which they depend.

• Some 3,000 yard workers in the zone – some 98% of the labour force –have registered themselves unemployed, according to the labourfederation.

• Hellenic Shipyards, now an affiliate of Abu Dhabi Mar, introduced work rotation for staff in April, saying the business was no longer viable after the EU barred it from commercial marine business for 15 years and after the state failed to pay its debts on existing shipbuilding contracts or to award new defence work.

• According to the unions, Hellenic Shipyards has illegally slashed working hours.

Bankruptcies (since summer 2008)

• No bankruptcies officially reported, but as a consequnece of the financial crisisin Greece, the closure or restructuring of shipyards seems likely. Lay-offs in that process seem inevitable.

Restructuring


No supporting measures reported.

Employment trend:


2005 1 16 0,0

2006 2 17 0,0

2007 3 20 0,0

2008 4 7 0,0

2009 4 3 0,0

2010 4 4 0,0

2011 2 2 0,0




ItalyItaly

Job cuts in shipbuildingsince summer2008

• Yards are facing problems due to unsatisfactory workload and are adopting temporarily lay-offs schemes.

• In Fincantieri, employees’ surplus has been set at 1.573 (excluding Castellammare di Stabia shipyard), which will be managed during the next years using a structured series of measures

Bankruptcies • De Poli (ca. 90 direct empl.), Cantieri Navali di Pesaro (ca. 50 direct empl.) in bankruptcy; Visentini (ca. 55 direct empl.) temporarily closed.

Restructuring • Fincantieri has drawn up a reorganization plan which will allow production capacity to be gradually reduced to match the lower demand.


• Feb 2010: Italian government announced public procurement of ships for Fincantieri to bridge the gap until starting production of new Princess vessels in 2011.

Employment trend:

Orderbook Completions New orders empl.

2005 2.619.000 399.000 1.096.000 n.a.

2006 2.617.000 607.000 423.000 n.a.

2007 2.945.000 767.000 1.178.000 12.245

2008 2.065.000 747.000 55.000 12.142

2009 2.214.000 635.000 135.000 11.790

2010 1.386.000 773.000 561.000 11.370 a

2011 1.016.000 323.000 333.000 11.260 a

Orderbook/Year-end basis(Year-end basis; in CGT; Source: VSM, CESA)

a) employees of Palumbo Group in Malta shipyard not included



NetherlandsNetherlands

Job cuts in shipbuilding since summer 2008

Cuts in indirect personnel. No direct job losses are reported.Wärtsilä is to reduce its workforce in the Netherlands by 570from the current total of 1,500.Some smaller shipyards faced problems in 2010 and reduced their staff .


Restructuring Temporary closure of IHC Merwede Offshore & Marine yard (location Hardinxveld- Giessendam). The staff has been relocated.


No specific supporting measures reported.

Employment trend:

No. 1.000 GT % share empl.b)

2005 233 614 0,4 n.a.

2006 232 622 0,3 11.700

2007 253 741 0,2 14.272

2008 100 516 0,1 14.400

2009 84 452 0,2 13.540

2010 70 331 0,1 13.083

2011 84 286 0,1 n.a.

b) Scheepsbouw Nederland




NorwayNorway


• 17 out of 29 shipyards are without orders since the beginning of 2010. • At Fosen Yard (Bergen Group) approx. 310 jobs are in danger due to a lack of

new orders.• Smaller shipyards reduced their workforce but exact numbers of the laid-off

workers are not available.• Kleven Maritime reduced ist number of employees from 527 (2009) to 457 (end

of 2010).

Bankruptcies • Flekkefjord Shipyard (8/08);• Havyard Solstrand AS (10/08);• Karmsund Shipyard (3/09)• For 2012 more bankruptcies are estimated.

Industry situation • 6/2012: OSLO-listed Bergen Group is suffering from its practice of getting third-party contractors to build hulls for newbuilding orders. The Norwegian shipbuilder has warned that its first-quarter results, to be announced next week, will be in the red because two hulls for a pair of dual-fuel ferries ordered for Fjord Lines are delayed. A third hull, being constructed in Ukraine for an offshore vessel, is also late into the Norwegian company’s facilities for fitting out.


• Norway is increasing funds available to its export credit guarantee program by10 billion kroner (US$1.7 billion) to provide more support to the shipyard andmaritime supply industry.

Employment trend:


2005 33 166 0,1

2006 81 347 0,2

2007 64 264 0,1

2008 36 132 0,0

2009 32 91 0,0

2010 30 130 0,0

2011a) 33 104 0,0




PolandPoland


• Appr. 9.000 shipyard workers lost their jobs by June 2009 due to the closures/bankrupt of Szczecin and Gdynia Shipyards - a result of implementing the decision of the European decision.


Restructuring • The shipyards in Szczecin and Gdynia are going to be tendered again after theEuropean Commission approved another attempt to sell the ailing companies.Polish shipyards won orders for specialized vessels (f.e. OCV) and are in morean more cases co-operating succesfully with Western European yards/companies.

• 04/11: Gdansk shipyard (1.700 employees) with ist new owner (Ukrainian steelmagnate) is building hueg steel constructions f.e. the roof of the Gdansk airportterminal.



Employment trend:


2005 126 2.585 1,6

2006 116 2.322 1,1

2007 122 2.031 0,6

2008 140 1.414 0,4

2009 82 327 0,1

2010 70 305 0,1

2011 68 211 0,1




PortugalPortugal


• 07/2011: State owned naval yard Astilleros Viana do Castello plans to cut380 jobs of the total employment (720 employees in total).


Restructuring • 08/2012: Portuguese government plans the re-privatisation ofshipyard Estaleiros Navais de Viana do Castelo and has receivedproposals from four parties interested in the re-privatisation of : Portugal’s AtlanticEagle Shipbuilding, Lda., Russia’s JSC River SeaIndustrial Trading, Brazil’s Rio Nave Serviços Navais Ltda. andNorway’s Volstad Maritime AS. Binding proposals must be presentedby the end of September. Another important condition is the maintenance of the number of jobs (630 empl.).



Employment trend:


2005 12 51 0,0

2006 9 60 0,0

2007 15 63 0,0

2008 15 54 0,0

2009 3 11 0,0

2010 2 8 0,0

2011 6 47 0,0




SpainSpain


• As an average, Spain is currently reducing between 20-25% of employment at both shipyards and subcontractors; expecting to lose up to 1/3 of the workforce in the first quarter of 2010.

Indutries situation • During the whole of 2011 and the first quarter of 2012, Spain’s 22 privately owned yards closed just 25 orders, all of them for small ships.

• Factorías Vulcano and Hijos de J Barreras , both remain idle, with the later suspending payments to creditors.

• Finding a solution to the crisis facing Spain’s shipyards is important because the sector has long been the backbone of employment in many coastal communities around Spain, where unemployment has now reached one in four.

Bankruptcies • Boluda-Group announced in Spring 2012 that it would cease shipbuilding activity at its Union Naval Valencia yard.

• Many Spanish shipyards are seemingly close to collapse, with a number already involved in insolvency proceedings (Lloyd’s List).

Restructuring • Government provides 65 Mio. EURO for yards and shipping lines .• 45,8 Mio. EURO are dedicated for the restructuring program of shipyards

and qualification measures.


• Spain is under pressure by different European countries because of its financing schemes for the shipbuilding industry /tax lease system).

Employment trend:

No. 1.000 GT % share empl.b)

2005 115 441 0,3 3.883

2006 143 744 0,4 3.711

2007 165 865 0,3 7.678

2008 148 784 0,2 7.840

2009 120 656 0,2 n.a

2010 83 349 0,1 n.a

2011 50 187 0,1 n.a

b) Espana. Technology for life.




TurkeyTurkey


• 75% of the appr. 38.000 shipyard workers have been laid-off since November 2008. In Feb 2010 only 8.000 employees in shipbuilding. Nearly all subcontracted workerswere fired and 60 percent of regular staff was laid off.

Indutries situation

• Production outlook: 120 ships in 2010; 23 ships in 2011• 200 orders (2 bn US$) have been cancelled since Dec 2008.• 06/11: only 50% of the estimated 140 Turksih yards are still understood to be

active.• 06/11Turkish shipbuilding industry is operating at 15% capacity.• Newbuilding shipyards still doing repair work.

Restructuring • Despite drying-up orderbooks and the lack of new orders Turkey is building 56 new shipyards which will only partly replace some of the current 84 shipyards.

• The yards in Tuzla will be relocated to other regions in Turkey, lay-offs in thatprocess seem to be inevitable.


• Shipbuilding industry is supported by government-backed loan scheme & a number of newly placed naval ships

• 05/11: Turkey and Japan agreed on a program to provide Turkish yards withshipbuilding technology.

• 06/11: Turkish government plans to establish barter companies to supportacquisition of newbuilding orders.

• 06/11: Turkey and Netherlands agreed on a scheme, which involves thereplacement of the aged Turkish coastal fleet with vessels built at Turkish yardsand financed with Dutch money.

Employment trend:

No. 1.000 GT % share empl.

2005 192 1.222 0,7 25.000

2006 247 1.615 0,8 28.580

2007 337 2.348 0,7 33.480

2008 332 2.650 0,7 34.500

2009 225 1.116 0,4 19.179

2010 162 804 0,3 11.000c)

2011 140 555 0,3 8.000c)

c) Estimation




UKUK


No lay-offs reported…. but:• According to Jane’s Defence ( 12/4/11) the results of the governments

consultation since Dec. 2010 with the UK defence an security industry on the country’s medium- and long-tem plans will see a huge decrease in shipyard employment:


Restructuring • 8/2011: Some yards enter the offshore-wind energy market (f.e. Harland & Wolf, Cammell Laird)

• 05/2012: Seajacks in Great Yarmouth on the UK’s east coast has diversified from building self-propelled jack-up rigs for the oil and gas industry to building vessels specifically to install turbines in rough waters.



Employment trend:


2005 5 3 0,0

2006 4 2 0,0

2007 7 2 0,0

2008 9 1 0,0

2009 7 1 0,0

2010 5 1 0,0

2011 4 2 0,0

a) as of 30/6/2011


Employees March 2011

Projected 2015

Babcock Dockyards 8.000 4.000

BAE Submarine Solutions 5.000 5.000

BAE Surface Ships 7.000 4.000

AgS-Monitoring Shipbuilding in Europe last updated: 8.9.2012

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