Assonave, the Italian association of shipbuilders, ship repair yards and suppliers met today in Rome today under the chairmanship of Corrado Antonini for its annual report on the industry.
Data from the industry worldwide highlights that the volume of orders is low, even if a considerable number of deliveries continued to be made throughout 2009 and the first six months of 2010 (45 and 27 million gross compensated tons respectively). In short it would seem that it will be some time before the industry finds a sustainable balance between supply and demand, taking into account that construction capacity has also increased at the same time.
Demand for new merchant vessels has been scarce for approximately 30 months and despite some slight sign of improvement it is difficult to foresee when the whole maritime economy might recover.
The current gap between demand and production capacity is still huge: demand fell from 86 million cgt in 2007 to half the figure in 2008 and then slumped to 16 million in 2009. By the end of 2010 demand for new buildings is expected to be at around 30 million cgt: although this shows a slight recovery on the previous year it is still far too low considering that construction capacity is estimated at over 55 million cgt.

As workloads have diminished throughout the world, competition for orders have become increasingly fierce and difficulties in accessing credit, both for shipowners and for shipyards, have made the situation worse, at least in Europe whose export trade continues to suffer from the impact of a weak dollar.

Today, more than ever before, it is vital that the European Commission takes on board the need - which had already emerged last year but has not yet been translated into tangible measures - to stimulate demand with the aim of eliminating obsolete vessels (mainly ferries and ro-ros) from Europe’s seas and provide incentives for their replacement with schemes of an eco-bonus nature. This approach has met serious obstacles within Europe yet it should be borne in mind that, as the crisis deepens, if effective measures to foster recovery of the production system are not set in place, the success of the community’s industrial strategy will be jeopardized and in the longer-term this would mean allowing the Korean shipbuilding industry to break into the high profile niches where European shipbuilders have succeeded in carving out a position for themselves.

In Italy, while on the one hand the importance of the Italian shipbuilding industry has increased in Europe and its role as the principle player in the cruise ship sector (the only market in shipping which is based on “healthy” foundations) has been strengthened, on the other hand the huge drop in orders for tonnage gained in recent years and the amount which can be reasonably expected to be gained in the months to come has led to serious difficulties for the production system. Accordingly it has become even more pressing in Italy to launch a plan of orders from the state to fill the ever larger gaps in shipyard workloads and a system of support to research and innovation, such as structural support to defending the technological leadership gained by our industry. Likewise, it is essential that financial and insurance instruments bealigned to the instruments which have been in force for some time now in other European nations, our main competitors in export markets.

In the naval shipbuilding sector the transfer of technologies and know-how abroad, as for example the construction of naval vessels in the foreign ordering nation – which is now virtually a sine qua non – requires our companies to review in depth their approach to export markets. It is in this perspective that Fincantieri has entered the huge market of the US defence industry. It is not a question of relocating but rather of initiatives which take advantage of opportunities, i.e. demand which can only be satisfied by producing in loco. Increasingly frequently these opportunities arise in the wake of agreements at government level and require expertise and competences such as to mobilize the whole “nation system”. Furthermore, we should not neglect to mention the importance for Italian industry of the technological, economic and commercial spin off from a high-profile presence, with local facilities, in areas of high potential.

Speaking after the meeting the Chairman of Assonave Corrado Antonini said: “We are facing a crisis which affects, at the same time, both shipping and shipbuilding, due to the size of their respective over-capacity and financial difficulties. As market conditions change, the structure of our companies is reviewed. If we wish to reconcile social and economic aspects in a responsible manner in such a difficult period all the parties involved need to share common objectives and attitudes. I am confident –concluded Mr. Antonini - that, with the support of national and EU Institutions, the Italian shipbuilding sector will succeed in presenting a united front to reach the levels of competition required by the market.”