People are once again saying, ‘We have to order ships, we have to expand the fleet. It’s just a case of one following the other; when the first goes, others will follow.”
These optimistic sentiments of Lloyd Werft Managing Director Werner Luken were echoed by other German shipbuilding executives as well, the majority believing new cruise orders are right around the comer.
German yards currently have seven firm cruise contracts for the period 20022004, with two additional options for 2005-2006. Assuming those options are turned into contracts, German yards will have $2.9 billion in cruise work for the period, or 18 percent of the world orderbook in terms of revenue. The nine ships on order or option total 639,500 gross tons and 15,640 berths, with a price per berth of $185,742.
On a yard-by-yard basis, Meyer Werft accounts for six ships during the period, Aker MTW Werft two ships, and Blohm+Voss one ship. Other yards such as Howaldtswerke-Deutsche Werft (HDW) and Lloyd Werft have no orders on the books, but continue to be in discussions with cruise lines regarding potential contracts. In addition, small yacht-like cruise vessels carrying 96 to 128 passengers are being constructed by Cassens-Werft.
And at press time, there were also unconfirmed reports that Meyer Werft was in negotiations for a two-ship order from the Star Group.
Given the dearth of new orders throughout 2001 and early 2002, German yards have turned to cruise repair and refurbishment, as well as the construction of passenger ferries, cargo vessels and naval ships.
Yet it appears other newbuilding sectors are faring no better than the cruise market. According to the German shipbuilding association, Verband fur Schiffbau und Meerestechnik (VSM), orders have shrunk in 2001 across the board. During the year, German yards delivered a total of 53 oceangoing ships worth three billion euros, with ferries and passenger ships accounting for 50 percent of the tonnage. In comparison, just 17 newbuilding orders were received countrywide during 2001, none for cruise vessels.
The VSM blamed the unfair competitive practices of Asian builders – particularly Korea’s – for the current poor performance. “German and European shipbuilding companies have almost no chance on the world market without government assistance,” asserted VSM in its annual report. “Given the rapidly dwindling orders on hand, time is running short for policymakers. It is already becoming apparent that not all shipyards, particularly in Europe, will survive this ruinous competition.”
According to VSM Managing Director Volkhard Meier, economic conditions and Korean competition spurred German yards in recent years “to try to win orders for more sophisticated ships in the ferry and passenger ship sector.” He explained, “German yards are well known for their high wages and for their high level of technological experience. As a result, our yards are trying to reach the upper (high-cost) sector of the market.”
“German shipyards are known for being precise and on time, and for being able to build highly sophisticated vessels,” added a spokesperson for HDW.
Unfortunately, the EU decision on shipbuilding subsidies has further complicated Germany’s efforts in all market sectors, cruise included. Subsidies have been banned for any orders signed after 2001, while all subsidies to that point must be fully expended by year-end 2003. As Luken said on this contentious issue: “Of course it has the effect of making ships built in Europe at least seven percent more expensive. That means the hurdle for South Korea to get into the cruise market is now seven percent lower.”
Meier said that the VSM is pushing the EU to introduce limited countermeasures to protect European yards against Korean price dumping, and to bring an action against Korea before the World Trade Organization.
The subsidy debate came into play in the German cruise-building sector following Sept. 11, when the delivery date for Royal Caribbean International’s (RCI) 2,000-passenger Jewel of the Seas was pushed back from Q4 2003 to Q1 2004. Initially, EU Competition Commissioner Mario Monti threatened to block $28 million in subsidies for the vessel because the timing of the delivery now fell beyond 2003. Monti since relented, and allowed the extension due to extenuating circumstances.
Meanwhile, Meier noted that German yards were peripherally involved in yet another issue this year, a rare labor dispute that has further increased construction costs. Germany’s second largest union, IG Metall, mounted its first strike in seven years in May, ultimately resulting in a four percent salary increase for 2002 and a 3.1 percent rise the following year for German metalworkers. “If you consider this increase with the background of a depressed market,” said Meier, “it is yet another burden for the shipyards.”
Aker MTW
Aker MTW built cruise ships for Russian operators in the 1970s, as well as combined container/passenger vessels for China. Then, between 1995 and 1998, the yard constructed a fully covered building facility, 1,296 feet long and 508 feet wide, complete with modern welding and cutting equipment.
That investment has since paid off. The yard successfully targeted cruise owners in Germany, first building the 420-passenger Columbus in 1997, chartered by Hapag-Lloyd Kreuzfahrten, then landing a more significant order for two 1,270- passenger vessels for Seetours’ AIDA brand.
According to Sales Manager Jurgen Vierling, “The first AIDA ship was delivered fully on schedule on the second of May, and we’re already up to the eighth or ninth deck of the second ship, which will be delivered next year.” The yard hopes to continue discussions with AIDA regarding future ships, although there are no options for additional new-builds, said Vierling.
Overall, Aker MTW is pursuing a mixed program of container and passenger ship construction, split roughly 50/50 in 2002. “But I believe we can earn more money from cruise ships,” said Vierling, although he admitted, “It is very difficult to get an order from the big cruise operators.” Success in the cruise sector, he said, “requires very good organization and very good subcontractors.”
Looking forward, Vierling noted that Aker has entered a partnership on the corporate level with the Kvaemer Group. “In the future, there will be more cooperation between Kvaemer Masa-Yards and Aker MTW,” he explained.
Blohm+Voss
Known for its unique Fast Monohull design, Blohm+Voss (B+V) finally delivered the second of two high-speed cruise newbuilds for Royal Olympic Cruises (ROC) in May. Delivery of the ship was put off for a year after ROC claimed the ship had significant technical problems, while others speculated that the delay was ROC’s fault and was financial in nature. Neither side would disclose details of the agreement that ultimately ended the standoff. However, ROC publicly declared its satisfaction with the vessel’s condition, despite its earlier avowals to the contrary.
When asked whether any major repairs were required to finalize the deal, a B+V spokesperson said that the yard had performed nothing other than “regular guarantee work on the Olympia Explorer prior to delivery.”
According to the spokesperson, “The novel B+V Fast Monohull design has proven its performance and reliability, with two years now of continuous operation of the Olympia Voyager. With a service speed of 28 knots, the vessel is one knot faster than contracted, and up to now the ship has not experienced a single delay due to technical reasons.
“The confidence in this new concept is now established, and B+V is seeing a growing interest in this technology,” said the spokesperson. “B+V is actively interested in cruise new-buildings, focusing on especially fast units and compact sizes.
“In general,” the spokesperson continued, “the cruise market has stabilized after the turmoil of Sept. 11, and is returning to the very positive growth projections it had before. In the wake of this stabilization, potential cruise line operators are revitalizing their newbuilding projects.”
Beyond its interest in new construction, B+V is also heavily involved in the cruise repair and refurbishment sector. “Cruise ships made up over 20 percent of our repairs in the last 18 months,” said the spokesperson, adding, “We believe cruise repairs will become more important, not only because of the rising number of ships that are sailing, but also because we continue to gain customers who visit us regularly after they’ve seen proof of our work.”
In the past 18 months, B+V has performed extensive conversions lasting from 20-30 days on Transocean’s Astoria (converted from Seetours’ Arkona); Fred. Olsen’s Braemar (converted from Crown Cruise Line’s Crown Dynasty); and the ferry Pearl of Scandinavia (converted from Star Cruises’ Superstar Aquarius). Other ships recently visiting the repair yard include Phoenix Reisen’s Maxim Gorki, Fred. Olsen’s Black Prince and Black Watch, RCI’s Radiance of the Seas, Celebrity Cruises’ Galaxy, and Saga Cruises’ Saga Rose.
HDW
A smaller player in the German cruise sector, HDW delivered the 630-passenger Deutschland for Peter Deilmann Reederie in 1998. According to a spokesperson, “We’re now talking about building another ship the size of the Deutschland” for an undisclosed operator. He characterized those talks as in the middle versus early stages of negotiation, and was hopeful the order would be placed.
HDW enacted a major yard improvement program in the mid-1990s, spending a total of 400 million DM, plus ongoing investments since then to keep the yard modernized. After ending its repair program six years ago due to low-priced competition from Poland and Russia, HDW has focused on an orderbook that includes ferries, merchant ships and naval vessels. The yard delivered six fast ferries for Superfast following the completion of the Deutschland, and has won military orders for 19 subs and a frigate.
Asked for his opinion on the current cruise-building market, the HDW spokesperson explained, “Directly after Sept. 11, the market totally broke down. Passengers didn’t want to go on ships and potential clients didn’t want to build them. But things have now gotten better.”
Lloyd Werft
Last year, Lloyd Werft delivered the 2,000-passenger Norwegian Sun for NCL, building the vessel from a hull constructed at Meyer Werft. Also last year, there were two potential new orders pending at the yard – the first for luxury startup Longships, the second for an unidentified operator. Luken maintained that despite the silence ever since on those projects, “We are still in negotiations.”
Post Sept. 11, said Luken, “We’re confident our strategy has been correct: we focus on a mix of ship repair, conversions and newbuildings. If one is not performing, the other two keep us busy. So since the delivery of the Sun, we’ve had to go full force into conversions and repairs.”
The yard’s most recent project has been the conversion of Princess Cruises’ 1,590-passenger Crown Princess into the A’Rosa Blu for German sister brand A’Rosa. “For that we built a new spa and awareness center at the top of the ship, and we refurbished all the cabins,” said Luken. “We also rearranged the public rooms for the new purpose of the vessel.”
Prior to the A’Rosa Blu, Lloyd Werft converted the two Seaboum Goddess vessels into the SeaDream I and II for newcomer SeaDream Yacht Club. “Those were major conversions allowing the ships to meet their new purpose as vessels operating primarily in the luxury-yacht charter market. We added more open deck space to cater to the yachting lifestyle of the passengers, we put in an additional spa and gymnasium, and refurbished all the cabins.”
Other cruise projects handled by Lloyd Werft included refurbishment work aboard the Norway and the QE2, while projects in other marine sectors included the addition of new accommodation blocks aboard two Mediterranean ferries (following work on two British ferries last year), and the conversion of a bulk carrier into an orange juice tanker. The yard also has a frigate on order for the Navy.
Finally, Luken confirmed that he and other Lloyd Werft personnel recently surveyed the half-completed Project America hull at Ingalls Shipbuilding in Mississippi. He explained, “We believe the hull is in good condition and that we could finish the hull for a fixed price in a fixed period of time if we found an owner who is willing to buy it.”
Luken also confirmed that there are plans for an ownership change at Lloyd Werft. “Our major shareholder, Bridgeport Capital, holds a 70 percent share, with management holding the remaining 30 percent. When they (Bridgeport) came in after the Bremer Vulkan collapse, their strategy was to get out after a maximum of five years, so they are now looking for an exit.”
Meyer Werft
By far the most dominant cruise builder in the German market, Meyer Werft was rumored to be on the verge of yet another order at press time.
According to sources, Meyer was in negotiations to build two vessels for the Star Group. The ships would reportedly be of similar hull size and passenger capacity to the 2,200-passenger Norwegian Star and Dawn, but would have a different internal arrangement. Sources familiar with early concepts for the ships said Star admired the horizontal atrium of RCI’s Voyager class, and wanted to develop a similar albeit smaller concept aboard their own new-builds.
Meyer Werft had firm orders for four cruise vessels at press time: the Norwegian Dawn to be delivered to NCL this fall; the 2,000-passenger Brilliance of the Seas scheduled for delivery to RCI this July, and two sister ships, the Serenade and Jewel of the Seas, for delivery in 2003 and 2004 respectively. RCI was expected to decide this summer whether it would exercise options for two additional Radiance-class vessels for delivery in 2005 and 2006.
While Meyer Werft said its building reputation is “above all for cruise liners,” the yard also constructs car and passenger ferries, ro-ros, gas tankers, and livestock carriers. This February the yard delivered a 2,170-passenger vessel for the government of Indonesia, marking the twenty- second passenger ship delivery to that client.
To accommodate further growth, Meyer Werft has constructed a second covered drydock, larger than the original and featuring an extensive panel-production line with four laser-hybrid welding plants. NCL’s Norwegian Dawn will be the first cruise ship to be constructed in the new dock. According to a Meyer Werft spokesperson, investment in this facility “shows we believe in the growing cruise and passenger-ship market in the long term.”
Blohm+Voss Celebrates 125 Years
On April 5, 1877, two young engineers – Hermann Blohm and Ernst Voss-founded Blohm+Voss on Steinwerder Island on the River Elbe, with the aim of building iron steamships.
Each partner had his own particular strengths: one was a businessman, the other more technically minded. Together, they built a company that had the largest enclosed shipyard site and dock capacity in Europe by the start of the 20th century.
But it was not smooth sailing from the beginning. Unable to find their first customer, Blohm and Voss decided to build their first ship at their own cost, a sailing vessel it later sold to a shipping company at a large net loss.
Work started to pick up, however, and the yard eventually secured commercial customers like Hamburg-America Line, and a large military client in Germany’s Imperial Navy.
World War I forced B+V to make fundamental changes, leading to the com-mencement of large-scale submarine construction. The yard continued to build passenger vessels in between the world wars, including the Europa, which won the Blue Riband for its maiden transatlantic crossing in 1930.
After World War II, British occupation forces shut down the yard, and regular work was not restarted until the mid-1950s. Realizing the firm could not rebuild without a financially strong partner, B+V turned to Thyssen, which eventually took the yard over completely.
In the decades to follow, the builder would once again regain its commercial and navy business, and in the past decade, B+V has entered the cruise-construc- tion sector. The yard’s unique “Fast Monohull” design, featuring a very slender bow and a semi-tunneled stern, allows very low wave resistance, stability, and propulsion efficiency roughly 20 percent greater than conventional ships, according to B+V. Since developing the Fast Monohull design, the firm has built two such vessels for Royal Olympic Cruises, with the second ship delivered within a month of the yard’s 125th anniversary.
One Network for All
Siemens Marine Solutions is now offering a “one network for all” system allowing cruise operators to handle all onboard functions and information services with a single hardware/software platform.
The Service-Integrated Network can handle all onboard safety and monitoring functions, as well as all vessel information services, said Siemens. Both crew and owner are offered easy access to all key data, enhancing the safety and reliability of the vessel, while passengers are provided a greater sophistication of information and entertainment services.
Crew can call up any item of operating data from any workstation onboard, while a high-speed satellite link allows access for shoreside staff. Passengers are provided up-to-the-minute information regarding onboard activities and upcoming shore excursions, as well as easy access to video-on-demand, multi-media games and the Internet, according to Siemens.
A high-speed network of fiberoptic conductors links all onboard subsystems together – security cameras, ship management, public address system, and tele-phones. System redundancy ensures security and services are maintained under all conditions, said Siemens. In addition, the network has continuous self-monitoring so any defective components or subsystems can be identified quickly and changed without interfering with the system’s operation.
Siemens’ Service-Integrated Network can be tailored to individual operator requirements and is specifically designed to allow easy upgrading and the integration of additional components and subsystems. Once installed aboard the vessel, it requires no additional cabling, wiring or infrastructure.
According to Siemens, the network system is available for both new-buildings as well as for retrofitting into existing vessels.
