Today, in Rome, under the chairmanship of Ambassador Vincenzo Petrone, the Assemble of Associates and Aggregates of ASSONAVE, the Association, which represents a large part of the Italian naval engineering industry, was held today. There has emerged a picture of the world-class shipbuilding industry now split into two, with the cruise sector in extreme health, the military and nautical sectors that record promising prospects, and the rest of the market (standard, high-tech and offshore) in vertical collapse. This situation arises not only from the price of oil, which is constantly below the average break-even levels for the offshore market and the slowdown in the Chinese economy, but above all from the effects of shipowners' speculation recorded in recent years and fueled From a huge over-supply situation, predominantly from Asian shipyards. The Italian shipbuilding industry and its supply chain, thanks to their strategic capability, came from the right side of the market as a whole, after having suffered in recent years due to the disruption of competition from many of the Asian shipyards , who now find themselves in a position, in some cases, before the bankruptcy, and forced a major restructuring, unfortunately, once again, supported by robust aid or government bailouts. The above has led ASSONAVE to define the 2016 as the "Year of Accounts".
In particular, the 2016 registered one Total demand of 11 million Tslc (Tonnes of gross registered gross tonnage), with a decrease of over 73% compared to 2015 (41 millions of Tslc), with some sectors in even greater collapse, such as the standard transport ships (-82%) and Offshore, practically zero, having zero orders for drilling equipment in the 2016 and only 15 orders for OSV. The High-Tech segment drops "only" of 67%, exclusively thanks to an important recovery of the Ferry segment, which with 11 new orders for vehicles greater than 150 meters in length, and 22 orders for vehicles less than 150 meters, sees 31% its own tonnage.
Il Cruise sectorOn the contrary, it records a new record, with orders perfected in 2016 for 25 ships, plus 7 units deriving from agreements in progress (MOA / LOI), with a cruise order portfolio at the end of 2016 of 69 ships, a value that, in the light of the very recent 2017 orders, it rises to 75 units. The Military segment sees orders for Euro 12,2 Mld (equal to 60 units), not counting the EUR 34 Mld of the Australian Navy program related to 12 submarines (SEA 1000). In segmentYacht, UCINA (National Union of Shipyards and Nautical Industries) estimates growth of 18% in 2016 and the continuation of a double-digit trend in 2017, although the mega-yacht segment registers, with only 15 orders of vessels over 60 meters long, a decline for the second consecutive year. The Repair marketFinally, it was also in the 2016, which was negatively influenced by the modest resources for fleet maintenance by the shipowners, as a consequence of the unfavorable economy affecting the shipping industry.
Analyzing the market now below the geographical aspect (in terms of tonnage), China, despite orders down by volume of 75% vs 2015, remains, with its 3,4 Mil. Tslc, the world leader, with a share of 31% (-2 points vs 2015), surprisingly followed by Europe, something that hasn't really happened for many years. The old continent in fact, with orders of approximately 3,0 Mil. Tslc, consisting mainly of cruise ships, follows with a 27% share (+ 21 share points vs 2015). Korea records its historical low with 2,0 Mil. Tslc (-80% vs 2015) which brings its share to 18% (- 6 points vs 2015), and is followed by Japan, also in free fall, with acquisitions equal to 1,5 Mil. Tslc. (-85% Vs. 2015), which bring the country to a share of 15% (-11 points vs 2015). European builders therefore only partially suffered from the decline in the Standard, High Tech and Offshore markets, as this collapse was largely offset by the explosion of the passenger ship market, a sector still fully controlled by Europe.
Il first quarter 2017 sees a substantial continuation of the trends highlighted in terms of product segments and geographical shares, with Fincantieri, by now firmly the first construction site in the Western world, which is recording a record backlog of 20,8 billion (to which we could add a further soft backlog of 5,8 billion), equal to about 6 years of work, if compared to the revenues of 2016, with 103 ships in the portfolio, and deliveries that extend to 2025 for cruise ships (22 ships that belong to Fincantieri and 6 to VARD) and to 2026 for military ships (38 units in portfolio). The above without counting the effects that would derive from the completion of the STX France transaction that could bring the backlog of the Fincantieri group to touch the 40 billions of Euros at the end of 2017.
In light of this, Italian naval engineering, like the European one, comes out very well from a long period of crisis and is stronger than before, thanks to the fact that the segments on which it had decided to focus turned out to be those in the best health. . If this happened, it is because the practice of state aid by Asian shipyards, China and Korea in the first place, have generated an unsustainable level of overcapacity in all the segments in which these countries were able to compete, with the consequence of having contributed to "Drug" the market first, and then bring it to implosion. All this was possible because China was able to allow itself to consider perhaps even "beneficial", at a general economic level, the losses recorded in its shipbuilding sector, as these losses contributed to lowering the level of world freight rates, a fundamental dynamic to favor the implementation of the Chinese strategic plan to make its manufacturing economy the first in the world, an objective whose realization could not ignore the limitation of the transport costs of goods imported or exported from the country, which transit by sea for over 70% (for all the details are referred to the complete reading of the “President's Report to the Assembly of Associates and Aggregates” of Assonave). In this scenario, European shipyards, which do not benefit from state aid, continued to compete, strengthening themselves, only on segments inaccessible to Asian competitors, namely those with a high technological level, where a very high level of know-how was required to compete. - how, moreover widespread throughout the supply chain, and where large economies of scale were not possible, due to the lack of willingness of owners to accept great levels of repetition in the means acquired: yachts and passenger ships as well as military ships of course.
However, economic systems do not allow them to be altered in the long term, and the knots are now coming to the comb, in the "Year of Accounts". In fact, China and Korea have been obliged to start a profound restructuring of their production system; Korea is trying to limit the damage by spending public money estimated at at least $ 27 billion that, together with some 30.000 redundancies, should be able to keep up the heavy infrastructure investment made in the past; China, in addition to restructuring itself, is instead demonstrating a far more fine and aggressive strategy, declaring the target of achieving a market share of 40% in high-value-added and technological vessels, of the 35% of the offshore market Global, and 35-40% of the components, and this, and here is the problem, also through the stated use of credit and finance policies (not always transparent), which are quite favorable, as well as various Forms of subsidies and incentives in the field of innovation or export support. It will therefore be essential for Italy and for Europe to put in place, today, all the necessary actions, including through the European Commission, to limit the forms of unfair competition in the Navalmeccanico sector, activities that ASSONAVE has done with great There are a number of specific activities, details of which are described in the Report.
At the same time, this battle can only be won through the capacity of the navalmeccanico as a whole to put all the efforts necessary today to ensure the maximization of our competitive strength tomorrow, and this is the activity on which ASSONAVE has given the mission, Not always characteristic of an Association, to affect as much as possible, to the benefit of its Associates. To this end, ASSONAVE has carried out and will continue to take all the necessary steps to stimulate the Government to support the development of the competitiveness of the national naval sector and, on the other, has decided to engage in specific projects that can foster the Increase the competitiveness of its Associates.
In this sense, ad hoc projects have been conceived and developed in recent months, described in detail in the Report, including the "COP" project, whose goal is to select specific areas of products or services on which to create potential purchasing centers between Assonave Associates and Aggregates (where this allows for effective economies of scale), or the EUROFIN Project, whose objectives are multiple. In particular, it intends to map the world of subsidized or non-repayable credit loans, too often underestimated, especially in the European area, identifying what is potentially attackable by Assonave Members and how to attack them, as well as perfecting the lobbying activity aimed at customizing the tools financials to be issued to support the sub-fund. The Association has therefore selected a technical project capable of satisfying the criteria of utility and innovativeness for the Italian shipbuilding industry, to be supported through a subsidized finance pilot project, in which Assonave will support all activities related to participation in a funding call, to then draw the most appropriate process lessons to be transferred to all of its Associates. The winning technical project of the tender launched by Assonave was the “Hermes” Project proposed by CNT Technologies which will be used to implement the above.
At the end of the work, which in addition to the approval of the 2016 Budget and the 2017 Budget, have also seen the renewal of the Arbitrators and the Board of Auditors of the Association, Amb. Vincenzo Petrone, President of Assonave, said"
The extraordinary relaunch in 2016 of the European shipbuilding industry, and in particular the Italian one, is the result of the intelligent industrial strategies that our companies have been implementing for years, investing in research, innovation, increasingly challenging prototypes, all-round commercial promotion, particularly in the cruise sector, in the military sector and in the increasingly promising market for high and medium range yachts. In Italy, even in the most difficult years of the dramatic crisis that began in 2008 and lasted until 2014, naval engineering entrepreneurs managed to safeguard their production infrastructures and jobs, making themselves find equipped and competitive, to become the undisputed protagonists of the resumption of orders globally in the market segments covered by the European shipbuilding industry, with Fincantieri confirming its undisputed leadership.
In our Report we note that the industrial and commercial policy of China, South Korea and Japan in the shipbuilding sector has proved to be a loser all along the line. The generous and unfair government subsidies to large Asian manufacturers and the artificial excess of production capacity in Asia have unfortunately not found adequate and necessary defensive responses in terms of anti-dumping policies in Europe. And nevertheless, China, Korea and Japan lost market share in 2016, with a smaller drop for China and much more pronounced for Korea and Japan, while European manufacturers increased their market share by as much as 21 % ".
Petrone then adds: “The challenge of the future, for European producers and for us Italians, is played on two tables: on the one hand, the creation of new and increasingly advanced prototypes in the cruise and military sectors. On the other hand, the consolidation of European naval engineering around a few great industrial champions of the Old Continent, active above all in Italy, Germany and France. In advanced naval engineering, "small is not beautiful": large investments are needed for research, development, innovation and construction of prototypes and for this, support policies are needed by the European states and the European Union, safeguarding the free competition of companies that are now “Global players” across the board.
The available funds are limited and need to be better coordinated between the various institutional subjects that have them in the budget. Assonave is making every effort to ensure that public funds are made structural for the development of product and process innovation, together with forms of investment aid, such as "hyper depreciation", "super depreciation" and credit tax for research and development activities that are having important and positive results for our companies.
Assonave has asked the Italian Government several times and with a loud voice to establish a Secretariat of the Sea that will finally coordinate the policies to support technological innovation that still today belong to too many and separate institutional subjects. Unfortunately, we must note that we have not yet received any answers. In addition, Assonave renewed the invitation to Confitarma, the Confindustria Association that brings together Italian shipowners and to Nautica Italiana, which represents an important slice of yacht builders, to create together a single Federation of the Sea adhering to Confindustria, in which to convey then also Ucina, with the intention of better defending, each in no particular order, the interests and perspectives of the shipbuilding industry and that of services linked to the sea and its extraordinary potential for development."
Petrone then concluded: "The Assonave Assembly has renewed my mandate so that this unitary design will continue to be one of the central points of the Association's initiatives.