Challenges and Developments in Global Shipbuilding Industry -Brief Overview of the Current Situation

Bezirk Küste

Challenges and Developments in Global Shipbuilding Industry -brief overview of the current situation-

AgS Monitoring Shipbuilding Thorsten Ludwig, Heino Bade, Heiko Messerschmidt

industriALL Global Union Shipbuilding-Shipbreaking Action Group Meeting 31 October - 1 November 2017, Rotterdam, Netherlands Bezirk Küste Some call it „adjustment“… Global Newbuilding Orders (vessels over 20.000 dwt) 3,500

3,000 2,905

2,500 2,255 2,047 2,000 1,874 1,833

1,500 1,378 No. of Shipsof No. 1,337 1,197 1,140 1,043 1,107 1,000 795 667 707 580 480 545 547 546 500 411 217 267

Source: Clarksons (2017): Results Presentation, 14.08.2017

2 Bezirk Küste Some call it „concentration“ … … in 2007 … in 2017

32 Number of yards accounting for 50% of the global orderbook 24

101 Number of yards accounting for 75% of the global orderbook 59

Share of the TOP-TEN-YARDS on the national orderbook:

34% 43%

49% 60%

60% 76%

70% 92% Source: Shipbuilding News, 14.09.2017

3 Bezirk Küste Some call it „consolidation“ … Number of active shipyards* worldwide

860 357

2007 2017

Active shipyards are those with at least one ship of 1,000+ GT on order; Updated 1.9.2017 Source: Clarkson, 14.09.2017

4 Bezirk Küste Shipping lending: Shift to Asia-Pacific

100%

90%

80%

70%

60% Asia-Pacific 2010 2011 2012 2013 2014 2015 2016 50% USA Total bn 418.4 400.3 388.5 379.1 391.5 343.8 315.0 Europe 40% US$ Europe 83,1 79,3 75,1 72,9 70,5 63,9 62,2 Total bn US$ 30% USA 2,1 1,7 2,8 2,7 2,6 3,9 4,8 Asia- 14,8 19,0 22,0 24,4 26,8 32,2 33,0 20% Pacific 100 100 99,9 100 99,9 100 100 10%

0% 2010 2011 2012 2013 2014 2015 2016 Source: Clarksons (2017): Results Presentation, 14.08.2017

5 WE call it a severe global shipbuilding crisis – Bezirk Küste especially for the employees!

 Reduction of „white lsit“ down to 59  Mass lay-offs in shipyards: appr. > yards 70.000 direct employees in  40 of these yards without any order in shipbuilding industriy lost since 2016 2016  Lowest orderbook since 2003  Important steps to enter the  State intervention to avoid closures cruiseship market (f.e. DSME)

 Reduction in new orders in 2016 of 83,3%  Kooperation betwen yards to overwheln the crisi: : MHI, Imabari, Oshima, Namura

 Mor ethan 33.000 jobs lost in shipbuilding (Jan. 2015  >18.000 jobs lost in bis Sept. 2016) offshore-industry since  Reduction from 71.554 to 2012 38.452 employees in  No new orders since 2015 shipbuilding  Capacity utilization: 50%  Huge newbuilding program for Australian Navy  More than. 100 bln.. A$ für appr. ca. 60 ships Source: AgS-Schiffbau-Monitoring  Newbuilding program provides work for the next 30 years 6 Despite the crisis: Bezirk Küste Booming markets for cruiseships and superyachts

Length: 228.20m Length: 362.12m Width: 28.70m Width: 66m Crew: 776 Crew: 2,384 Tonnage: 39,674 Tonnage: 226,963 BRT BRT Passengers: 1,400 Passengers: 6,780

SS Rotterdam Harmony of the Seas 1956 2016

7 Bezirk Küste Orderbooks for cruiseships (>= 200 lower berths)

80 9,000,000 8,088,620 70 7,691,220 8,000,000 7,163,650 6,797,800 69 7,000,000 60 64 57 6,000,000 50 55 4,932,750 5,000,000 4,392,300 gt

cruiseships Mio.

of 40 4,000,000

No 30 36 2,434,155 3,000,000 20 22 2,000,000

10 1,000,000

0 0 2010 2014/08/21 2015/04/10 2015/08/10 2016/02/01 2016/12/21 2017/09/11 gt No of cruiseships (>=200 lower berths) Sources: cruiseindustynews.com; Seatrade Cruise News; own calulations

8 Bezirk Küste Orderbooks for cruiseships (>= 200 lower berths)

Average %-share of No. of Sum reported Average Sum Country Lower orderbook ships Price ($) GT GT Berths by GT China 2 1.500.000.000 4.000 133.500 267.000 3,3% Croatia 2 252.000.000 264 12.635 25.270 0,3% Finland 6 5.230.000.000 4.380 157.167 943.000 11,7% France 11 11.179.000.000 4.336 167.873 1.846.600 22,8% Germany 18 14.414.000.000 3.078 133.361 2.400.500 29,7% Italy 27 15.328.000.000 2.354 94.635 2.555.150 31,6% Norway 2 260.000.000 530 21.000 42.000 0,5% Portugal 1 80.000.000 200 9.300 9.300 0,1%

Total 69 48.243.000.000 2.938 117.229 8.088.820 100%

Sources: cruiseindustynews.com; Seatrade Cruise News; own calulations

9 Bezirk Küste It`s still an European market … Orderbook for cruiseships by region Sept. 2017 (GT)

China 3%

Europe 97%

Sources: cruiseindustynews.com; Seatrade Cruise News; own calulations

10 Bezirk Küste … dominated by two/three shipbuilders … Orderbook for cruiseships by Orderbook for cruiseships by country/yard (GT) country/yard (GT) Norway Portugal Norway Portugal Croatia 0.5% 0.1% Croatia 0.5% 0.1% China 0.3% China 0.3% MV MV 3.3% 3.3% Werften Werften 7.2% 7.2% Meyer Meyer Werft Werft GmbH / GmbH / STX France GER/FIN 22.8% GER/FIN 34,1% Fincantieri 34,1% /STX France 54.4%

Fincantieri /Italy 31.6%

Sources: cruiseindustynews.com; Seatrade Cruise News; own calulations

11 … building new ships for additional 203.000 Bezirk Küste new passengers.

Average reported price (Mio. US$) Average lower berths

4500

4000 Average lower berths 2.938 3500

3000

2500

2000 Average reported price 1500 699 Mio. US$

1000

500

0 Portugal Croatia Norway Italy China Germany Finland France Sources: cruiseindustynews.com; Seatrade Cruise News; own calulations

12 China: Bezirk Küste Getting prepared for the future cruise market

• Carnival, CSSC and Fincantieri announced the delivery of a first 133,500t ship from CSSC’s Waigaoqiao yard in Shanghai due in 2023 with a second to follow plus four more options. • $4bn investment by Carnival and CIC Capital • Developing a supply chain with logistics companies, design and shipfitting specialists and cruise staff/crew training facilities and cruise port infrastructure projects. • Chinese cruise companies ordering a newbuild from outside the country would have to pay a prohibitive 30% tax on the cost price • More than 40% of Chinese passengers are under 40 years old (Europe: end 40s – end 50s) • 51% of Chinese adults in their 20s say they are planning to take a cruise. • 300 million peaople - the equivalent of the total population of North America or Western Europe - of the population are genuine potential cruise prospects.

Source: Seatrade Cruise (2017): Cruise Shipbuilding in Asia 2017; August 2017

13 Looking at the Chinese ambitions in the case of Bezirk Küste cruisehip industry…

… we suggest an intense and continuous exchange between works councils and trade unions representing the European cruise ship industry!

14 Bezirk Küste Superyachts: a growing (Asia-Pacific) market

„ultra high net worth“ „ultra high net worth“ population assets 350000 50 300000 91150 Asia-Pacific 40 14.2 Asia-Pacific 250000 200000 30 51515 7.8 122600 The Americas 17.6 The Americas

150000 20 Personen

91375 Trillion US$ 100000 12.7 Europe, Middele East 10 Europe, Middele East 50000 104650 14.5 69725 ans Africa 9.5 ans Africa 0 0 2015 2020 2015 2020 „The superrich“ - overview

Source: World Ultra Wealth Report 2015-2016 -Highlights

15 Bezirk Küste Superyachts: Orderbook in detail (Jan. 2017)

Orderbook for superyachts (=> 50m) Orderbook for superyachts (=> 50m) by No. of yachts by total length

ChinaCroatiaFinlandGreece FinlandGreeceChinaCroatia AustraliaNorway QatarAustralia 1%1%1%1% Qatar 1%1%1%1% Norway 1%1% 1%2% 2% 2% Germany Italy Italy Turkey 13% 29% 33% 15% 125 9,2 km total superyachts Turkey length 16% Germany The 19% The Nether- Nether- lands lands 28% 30%

16 Bezirk Küste IG Metall activities in shipbuilding industry

• Collective bargaining 2017/2018: • Voluntary reduction of working times to 28h/week • Increase of wages by 6% • New labour law to regulate temporary work & sub-contractors (2017): • Equal pay after nine months • Time limitation: max. 18 months • Temporary workers are not allowed to work as “strike breakers” • Reinforcement of information rights for works councils • Fight for new instruments for codetermination (for shipyard-groups) • Preservation of all shipbuilding production facilities since 2007 • Network of shipyard`s works councils (AG Schiffbau) • National conferences and national LeaderShip 2020-Process