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A question of ownership

Finnish shipbuilding has made headlines during the last months. Unfortunately the interest of the press has not concerned the excellent ships delivered – it has mainly focused on the newbuildings not handed over in time. Aker Yards presented a poor result for 2007 and states that the losses have mainly been generated by ferries built in Finland. Many of the deliveries have been seriously delayed due to different problems. According to Aker Yards the operations in Finland are suffering from a high pressure on subcontractors: “A stretched suppliers’ market causes delays, and a number of deliveries from suppliers are still suffering from unacceptable quality,” they state. Building a technically advanced ship is a complex chain of subprojects, which are managed by a large number of different companies. The trick is to manage such a conglomerate of projects. In the end, the shipyard alone is responsible for the ship owner receiving exactly the ship ordered at the right time. Integrating external workforce in the shipbuilding process is indeed an extremely demanding task to administrate, and in this field the Finnish shipyards have probably come further than anybody else in the world.

Today panicking is the typical reaction if there is even a slight disturbance in the financial performance of a company. Losses are simply unacceptable to the share holders in all branches. The losses generated by Aker Yards Finnish shipyards will not be the last of their kind in shipbuilding. Investors in shipbuilding simply have to live with the fact that the market goes up and down and that the fierce competition sometimes makes it necessary to take orders at small margins. Aker Yards is one of the leading builders of large cruise vessels in the world – perhaps the best of the best. Regarding both hardware and human resources, Aker Yards’ Finnish shipyards form the core of the most advanced shipbuilding cluster in the world regarding large cruise vessels. The shipyard in Turku specializes in building Post-Panamax cruise vessels. The project management and building of such gigantic ships is the ultimate challenge within shipbuilding and Aker Yards has done excellent so far. As the builder of the largest cruise vessels, the Turku shipyard is one of the most efficient and modern plants in the whole world. Finland also has a unique network of suppliers of the most prestigious components and systems. Finally, Finland has probably the leading know-how not only in building, but also in designing ultra-large cruise ships. Still, something has of course to be done about the losses. Perhaps it is not optimal to maintain three separately located shipbuilding sites? Perhaps the shipyards and the subcontractors should have even closer relations, leading to creative ideas how to mutually master the increasing costs? Perhaps they do not really understand the simple fact that they both need each other to exist in the long run? A crucial question is if the current situation is related to the shipbuilding process at all. What if this is an ownership-related issue? Maybe the current ownership structure is not at all ideal for a shipyard?

In October last year, the Korean shipbuilding group STX acquired a 39.2 per cent ownership stake in Aker Yards. The EU competition authorities are told to be currently evaluating the acquisition of the shares. The Koreans have still not revealed their intentions with this deal. However, it has been interpreted as a shortcut into the cruise ship market and this has created concern on high levels in Europe. Is this the final countdown for the crown jewel of European shipbuilding, the building of cruise ships? Indeed, it is alarming if the Korean shipbuilding industry slips into the last European bastion of shipbuilding through the back door. But what are their real intentions? Either they believe that it is possible to continue with shipbuilding in Finland or they want to drain the know-how and move it to their own country. Mr Martin Saarikangas, the man who soon twenty years ago saved the Finnish shipbuilding industry, has declared to the press that there would now be a golden opportunity for Finnish investors to regain control over the shipyards in Finland. However, the interest for shipbuilding seems to be non-existent among Finnish investors. Why do we not believe in Finnish shipbuilding in Finland if the investors in Korea believe in it?

Pär-Henrik Sjöström Editor, Finland par-henrik@shipgaz.com

It is possible that the most serious threat to Finnish shipbuilding is not at all the Koreans, but the lack of a genuine interest in building ships among its owners. It is of utmost importance that the building of high-tech vessels like cruise ships stays in Finland. But it cannot be achieved by government decrees about forced marriages between the shipyards in Finland, France and Italy. The current shipyards of Aker Yards Cruise & Ferries unit have the critical mass and they definitively have the know-how needed to continue to stand upon their own feet. They also have a world-wide reputation as reliable and safe partners to cooperate with. The recent difficulties regarding ferries have changed nothing of this. The delivery times of the cruise vessels have not been delayed at all. The attitude of the Finnish shipbuilders is still the same – the goal is always to deliver a ship fulfilling all specifications, including the delivery time. There will be a stable demand for new cruise ships also in the future. A significant part of these vessels will be built in Finland. Hopefully the owners of Aker Yards understand the true value of their Finnish assets instead of just focusing at the latest financial report.

Latest update 16-04-2008 11:30

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