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Back to SSG 06
Aker Yards is, together with its competitor Fincantieri, the world leader in building large cruise vessels. The Liberty of the Seas was on sea trials in December 2006 and is due for delivery in spring 2007. Photo: Pär-Henrik Sjöström
The Formula One class within shipbuilding
The market situation is extremely good for shipyards building passenger vessels. If the market continues to grow, Aker Yards might have to increase their capacity to build cruise vessels.
The order backlog for large cruise vessels is all time high with deliveries until year 2012. During the years 2007 to 2009 nine large cruise vessels will be delivered each year in the world and thereafter six in 2010, two in 2011 and one in 2012, including letters of intent. All these vessels are built on European shipyards and nine of them on shipyards belonging to Aker Yards.
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Yrjö Julin, President of Aker Yards, Cruise & Ferries business area. Photo: Aker Yards |
President Yrjö Julin of Aker Yards, Cruise & Ferries business area, thinks that building cruise ships is the most prestigious sector within shipbuilding.
“It is like Formula One in racing, the most demanding class, and Aker Yards is a main player in this class”, he says.
“There are thousands of shipyard enterprises in the world, but only three of them are today capable of building large cruise vessels. They are all situated in Europe. Aker Yards and Fincantieri are the clearly largest while Meyer Werft is a little bit smaller.”
According to Mr Julin the competitive situation between these shipyards draws parallels to the “balance of terror” during the cold war.
“It is virtually impossible for any of us three to grow by acquiring another one. A takeover is out of question not at least due to competition legislation. The situation with just two players, of which one would be considerable larger than the other one, is not an option for any competition authorities”, Mr Julin states.
In today’s situation he sees that the only condition for expansion for the cruise vessel builders is that the market continues to grow, and the three shipyards compete to get their share of this growth.
Finland and France
Aker Yards is divided into three business areas: Cruise & Ferries, Merchant Vessels and Offshore & Specialized Vessels.
Cruise & Ferries count for the largest revenues, but also the other two areas are important. Aker Yards is for example a market leader regarding the types of ships included in Offshore & Specialized Vessels.
Passenger vessels are mainly built at Aker Yards’ shipyards in Finland and France. Some smaller ferries are also built in Norway, mainly for local traffic. Another exception is the two ultra-large ro-pax ferries ordered by Stena. Cruise & Ferries organisation in Finland closed the deal with Stena, but still the vessels are going to be built in Germany.
“This is a typical way to handle things in Aker Yards. The unit, which is responsible for the business area makes the deal and then we look at the optimal place to build the ships regarding to the actual situation with capacity. We are indeed able to build vessels across our administrative borders”, Mr Julin states.
“We optimize expressly the whole Aker Yards, not the individual shipyards within the group. There is no option, as Aker Yards is a true global player with activities at 17 shipyards in seven countries, soon 18 in eight.”
Successful integration
According to Mr Julin, the integration of the former Alstom-owned shipyard Chantiers de l’Atlantique with plants in Saint-Nazaire and Lorient, France, has so far succeeded extremely well. The large shipyard at Saint-Nazaire has built a row of excellent cruise vessels, such as the Queen Mary 2.
“Acquired last year, the French shipyards have been a positive experience for us. There have been no strikes due to the change of ownership. The French feel that they have now come into a group where ship building is the core business.”
Mr Julin stresses that when they still were a part of the gigantic Alstom group, they were far away from the core business. As a matter of fact, the owner stated that it wanted to get rid of the shipbuilding activities.
“When we come to France we made it clear that we love shipbuilding and that the French yards form a central part of our group”, clarifies Mr Julin.
Soon after the deal was closed on May 31, 2006, an ambitious programme was launched to streamline the organisation. Aker Yards aiming at a annual saving of EUR 100 million until the end of 2011.
“We established 12 workgroups containing some 300 people and chartered a private jet to fly them between Turku and Saint-Nazaire. They set up the plans that we now are starting to implement”, Mr Julin informs.
So far there has not been any clash between the different cultures, when integrating the French shipyards into the organisation.
“Regarding health, safety and environment Aker Yards have stipulated six basic values, that are most important to us and must be followed in the whole group. But still we respect local cultures and habits and provide space for them on top of these common values”.
New customers
When looking at the order books, it becomes obvious that the different cruise shipping companies prefer certain shipyards. For example Carnival Corporation is clearly oriented towards Fincantieri while Norwegian Cruise Line for a long time has ordered their newbuildings from Meyer Werft.
“It is true that there are quite long relationships between customers and shipyards. In Finland we have been co-operating with Royal Caribbean for 38 years”, says Mr Julin.
“Before the acquisition of the French shipyard group we had only one main customer in the cruise segment. Now we are in the lucky position that three of the world’s four largest cruise shipping companies have ships in order at Aker Yards. An important reason for the acquisition of the French shipyard was to strengthen our strategic position as a cruise ship builder”, Mr Julin continues.
This strategy has already paid off, as Norwegian Cruise Line last autumn ordered two very large vessels from Aker Yards in France.
“We hope that this will lead to a long customer relationship”, says Mr Julin.
The other main new customer with Aker Yards is MSC, which for several years have placed their orders at Chantiers de l’Atlantique.
More capacity needed
The future development of the shipyards within Aker Yards, Cruise & Ferries Mr Julin thinks is very closely connected to the development of the cruise market. The acquisition of the French shipyards was a remarkable addition of capacity for Aker Yards. However, it did not bring any new capacity to the market, as it already was an existing facility.
“If the market continues to grow like today, we have to take into consideration the possibility to increase our newbuilding capacity for cruise vessels. A solution might be to expand the activities in one of our Finnish shipyards, another to convert one of our existing shipyards outside Finland for building passenger vessels. No doubt the management has to work intensely with these strategic questions in the future”, says Mr Julin.
Within a short time perspective Mr Julin does not foresee an addition of cruise ship building capacity coming from shipyards outside Europe. He thinks that the competition from Asian shipyards is still many years away in the cruise ship sector.
“Today there exists not even the basic know-how for handling a large cruise vessel project neither in South Korea nor in China.”
He also stresses that it is not just enough with shipyards building the vessels. The shipyards need a network of hundreds of subcontractors, building the vessel together with the shipyard, like it is made in Europe.
“Simple ferries are already built in both Korea and China, but still most of the ferries are built in Europe. In a long term perspective it is possible that the skills of the shipyards in South Korea and China increase gradually, allowing them to build more sophisticated ferries. The next step would be small cruise vessels, which again leads to large cruise vessels. This is likely going to happen in the future, but it is by no means reality today”, Mr Julin points out.
//Pär-Henrik Sjöström
Latest update 19-03-2007 16:28
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