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European Economic and Social Committee Consultative Committee on Industrial Change European Shipbuilding Dealing with the Crisis Reinhard Lüken Vigo, 1 December 2009. Introduction of CESA. CESA originates in 1937 16 Member countries > 99% EU production > 300 Shipyards turnover in bill. € - PowerPoint PPT Presentation
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European Economic and Social Committee European Economic and Social Committee Consultative Committee on Industrial ChangeConsultative Committee on Industrial Change
European Shipbuilding Dealing with the Crisis
Reinhard Lüken
Vigo, 1 December 2009
Introduction of CESAIntroduction of CESA
CESA originates in 1937
16 Member countries
> 99% EU production
> 300 Shipyardsturnover in bill. €
16 merchant10-15 naval3-5 maintenance,
repair & conversion
> 100.000 direct jobs
Production and Orderbook ValuesProduction and Orderbook Values(merchant newbuilding only)(merchant newbuilding only)
Source: CESA
Source: CESA
• Deep crisis impact on global maritime sector Deep crisis impact on global maritime sector • Shipbuilding in Europe successfully restructured Shipbuilding in Europe successfully restructured
into high-tech niche player with growth prospectsinto high-tech niche player with growth prospects• Key contributions to EU 2020 Key contributions to EU 2020 • Late cycle industry – 2010/2011 problems will riseLate cycle industry – 2010/2011 problems will rise• Acute unprecedented challenge to critical massAcute unprecedented challenge to critical mass• EU must respond to global market distortionsEU must respond to global market distortions• Need decisions before summer 2010!Need decisions before summer 2010!• Proposals serve multiple policy objectivesProposals serve multiple policy objectives
Key MessagesKey Messages
Quarterly New Orders by Shiptype Quarterly New Orders by Shiptype
Sou
rce:
Lloyd
’s R
eg
iste
r-Fa
irp
lay
0
2500
5000
7500
10000
12500
15000
17500
20000
22500
Q 1999 Q 2000 Q 2001 Q 2002 Q 2003 Q 2004 Q 2005 Q 2006 Q 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009
000
CG
T
Tankers Bulk Carriers Containerships and other dry cargo
Gas Tankers Ferries / Passenger Ships Other Non Cargo Vessels
(Average quarter 1999-2007)
Supply and DemandSupply and Demand
Source: Clarkson´s Forecast 2009
World Fleet and OrderbookWorld Fleet and Orderbook
Source: Lloyd’s Register-Fairplay
Fleet vs. Orderbook
44%43%
29%24%
23%19%
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
1,100,000
1,200,000
1,300,000
2003 2004 2005 2006 2007 2008
in 1.000 GT World Fleet Orderbook %
Fleet & Orderbook by ShiptypeFleet & Orderbook by Shiptype
14%
32%
1%
15%
30%
25%
47%
68%
39%
0 50.000 100.000 150.000 200.000 250.000 300.000 350.000 400.000
Tankers
Bulk Carriers
Containerships
Other Dry Cargoes
Gastankers
Ferries / Passenger Ships
Fishing
Offshore Activities
Other NON Cargo Activities
in 1 000 GT
Fleet Orderbook
Capacity ExpansionCapacity ExpansionProduction Index (cgt basis)
0
100
200
300
400
500
600
700
800
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1999=100
China South Korea Japan CESA
Focus on High-end ShipsFocus on High-end Ships
European Results: Value vs VolumeEuropean Results: Value vs Volume
Source: CESA
0
2.000
4.000
6.000
8.000
10.000
12.000
14.000
16.000
18.000
20.000
2005 2006 2007 2008
Tu
rno
ver
in 1
00
0 €
0
1.000
2.000
3.000
4.000
5.000
6.000
7.000
8.000
9.000
10.000
Vo
lum
e in
dw
t
Turnover in EURProduction in DWT
New Orders and Production in EuropeNew Orders and Production in Europe
Source: CESA
0
3.000
6.000
9.000
12.000
15.000
18.000
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 FY 2009
1.00
0 C
GT
orderbook new orders deliveries
Possible orderbook correction by end of 2009
• Capacity utilisation: 80% in 2010 and 50% in 2011Capacity utilisation: 80% in 2010 and 50% in 2011• No action will help without new orders!No action will help without new orders!• Numerous bankruptcies alreadyNumerous bankruptcies already• Almost 20% of jobs affected in 2009 Almost 20% of jobs affected in 2009
– 2010 will be worse!– 2010 will be worse!• Impact on suppliers evident but more difficult to Impact on suppliers evident but more difficult to
documentdocument
Crisis ImpactCrisis Impact
• Global (not only European) shipbuilding is among Global (not only European) shipbuilding is among the worst hit industriesthe worst hit industries
• Late-cycle sector is a political challengeLate-cycle sector is a political challenge• Paradoxically, Europe is more affected despite the Paradoxically, Europe is more affected despite the
superior markets (balance of supply & demand)superior markets (balance of supply & demand)• Critical mass is a major concern for allCritical mass is a major concern for all• Europe could lose the capability to construct Europe could lose the capability to construct
complex maritime hardwarecomplex maritime hardware
Crisis ImpactCrisis Impact
• Role model; also for European Crisis response?Role model; also for European Crisis response?• Oriented towards future competitiveness (not Oriented towards future competitiveness (not
structural conservation) structural conservation) • Action package in line with other policy objectivesAction package in line with other policy objectives• Short term & medium-long term measures: Short term & medium-long term measures:
1.1. Access to pre- and post delivery Access to pre- and post delivery financingfinancing for viable and for viable and feasible projectsfeasible projects
2.2. Active stimulation of Active stimulation of demanddemand - replacement of aging and - replacement of aging and environmentally unfriendly vesselsenvironmentally unfriendly vessels
3.3. New ways to restore and defend a New ways to restore and defend a level playing fieldlevel playing field
4.4. New forms of innovation collaboration for New forms of innovation collaboration for green green technologytechnology
LeaderSHIPLeaderSHIP
Shipbuilding Price EvolutionShipbuilding Price Evolution
Source: Clarkson
Monthly Newbuilding Price Index
80
100
120
140
160
180
200
220
Jan-00
May-00
Sep-00
Jan-01
May-01
Sep-01
Jan-02
May-02
Sep-02
Jan-03
May-03
Sep-03
Jan-04
May-04
Sep-04
Jan-05
May-05
Sep-05
Jan-06
May-06
Sep-06
Jan-07
May-07
Sep-07
Jan-08
May-08
Sep-08
Jan-09
May-09
Sep-09
Jan
2000
=100
in $ in € in Won in Yen in Yuan
5
Steel and Ship and Prices EvolutionSteel and Ship and Prices Evolution
Source: MEPS, Clarkson's
Steel and Ship Price Indexes
0
50
100
150
200
250
300
350
2003 2004 2005 2006 2007 2008 Sep* 2009
2003=100 Steel Clarkson s Prices
Newbuilding price war startsBrokers say some of the smaller yards are aggressively marketing capesize contracts at low price
Asiasis, October 2009
Price war? Price war?
“Shipbuilders may be drawn
into a global price war next
year triggered by South Korean
discounting”
Bloomberg 28.08.2009
« Recent order-intake for the construction
of 50,400-dwt tanker octet (options for
four units included), worth $340m
($42.5m per ship), has caused price
controversy » Asiasis June 2009
« At their peak in 2008, Capesize prices
went up to a record-high $110 million in a
deal made by a major Korean builder for
delivery in 2010. Just over a year from then,
the prices have come closer to half
their peak levels » Kaiji Press, October 2009
“newbuilding price in line with current Clarkson
Newbuilding Price Index not being accepted
by South Korean large shipbuilders”
New Ships, June 2009
“shipping ministry surprised by
offer to build two dredgers at half
the price“
New Ships, November 2009
WTO rules have shown to be ineffectiveWTO rules have shown to be ineffective
OECD process doubtfulOECD process doubtful
Council Regulation on Injurious Prices from 1996Council Regulation on Injurious Prices from 1996
Support action in many countries:Support action in many countries:
• China – estimated at ~ 30bn $China – estimated at ~ 30bn $
• Korea – estimated at ~ 20 bn $Korea – estimated at ~ 20 bn $
• Domestic support programmes in Russia, India, Brasil etc.Domestic support programmes in Russia, India, Brasil etc.
• Member states provide funding to construction in Asia!Member states provide funding to construction in Asia!
EU must ensure not to lose orders to less EU must ensure not to lose orders to less competitive builders due to government supportcompetitive builders due to government support
Level Playing FieldLevel Playing Field
Aging vessel replacement programme:Aging vessel replacement programme:300 Ships – 30% more energy efficient – 3 years300 Ships – 30% more energy efficient – 3 years
New markets: off-shore wind, ocean energy, artic New markets: off-shore wind, ocean energy, artic conditions, low carbon…conditions, low carbon…
International collaboration with Russia, Brazil, International collaboration with Russia, Brazil, Canada etc.Canada etc.
Public procurement of naval and other government Public procurement of naval and other government vesselsvessels
Demand StimulationDemand Stimulation
Very challenging to acquire long-term facilitiesVery challenging to acquire long-term facilities
Member States are active – additional transparency Member States are active – additional transparency would be helpfulwould be helpful
EIB very reluctant to support the sector...EIB very reluctant to support the sector...
...existing EIB facilities could be applied, such as ...existing EIB facilities could be applied, such as Clean Transport Facility (4,5 bn € allocated to Clean Transport Facility (4,5 bn € allocated to automotive since Dec. 2008!)automotive since Dec. 2008!)
Financing Financing
The only way to succeed!The only way to succeed!
Shipbuilding Framework to be reviewed and Shipbuilding Framework to be reviewed and application to be streamlinedapplication to be streamlined
Prolongation after 2011 essentialProlongation after 2011 essential
New forms for Community funding structures (FP8)New forms for Community funding structures (FP8)
Innovation Innovation
Safeguard employment and capabilities are the key Safeguard employment and capabilities are the key objectiveobjective
Employment measures are mainly at national levelEmployment measures are mainly at national level
Member States to be encouraged to provide full Member States to be encouraged to provide full supportsupport
Social Dialogue committee will work with the EC to Social Dialogue committee will work with the EC to explore possible application of Community explore possible application of Community instrumentsinstruments
Employment Employment
+++ Thank you for your attention ++++++ Thank you for your attention +++
more info atmore info at
http://www.cesa.euhttp://www.cesa.eu
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