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kenw

STX shipyards - Fincantieri the preferred bidder for St Nazaire but...

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(I've made this a new post since the last mention was some months ago).

 

Those following the saga closely will know that disposal of the St Nazaire shipyard is in the hands of the Korean commercial court, since STX is insolvent.

 

Damen was interested – but the Italian shipbuilding giant Fincantieri has now been named preferred bidder by the court.

 

However, the Mayor and other locals aren't entirely happy. They have two worries:

  1. that some of the French yard's technology might end up in China, where the Italian group already has a joint venture with the China State Shipbuilding Co to build cruise ships (which IIRC will be operated by a local associate of Carnival).
  2. that if the market tightens, the Chinese might combine this know-how with lower labour costs.

So the locals, the regional authorities and the French govt are all taking a hard look at the proposed deal.

 

Personally, I think that in five or so years time we could see some collaborative efforts involving Chinese yards – perhaps on the lines of the multi-yard modular block methods used for the Royal Navy carriers?

 

But the combination of Chantiers and Fincantieri would be a passenger ship building powerhouse. And as such should surely be welcome.

 

Ken

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At one stage Damen were seen as the favourite. They are a very savvy group both commercially and technically, so not sure yet why they pulled out. Maybe they were concerned that although the yard's order books are promising, the customer base is quite thin, with most of the forward orders and LOIs from MSC, whose other builder IIRC is Fincantieri in Italy. Was Genting's interest a stalking horse for Meyer? Don't they have a number links and joint projects?

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I may be missing something here, but how can a company building some of the worlds largest vessels, with a near full order book be in trouble financially?

The sums of money involved in building something like an Oasis class vessel are astronomical and variable costs kept to a minimum by securing the supply chain contracts far in advance. I just find it odd that STX are not doing much better....

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I may be missing something here, but how can a company building some of the worlds largest vessels, with a near full order book be in trouble financially?

The sums of money involved in building something like an Oasis class vessel are astronomical and variable costs kept to a minimum by securing the supply chain contracts far in advance. I just find it odd that STX are not doing much better....

 

"The sums of money involved in building something like an Oasis class vessel are astronomical"

 

This will be the issue - the Oasis Class are massive vessels, they must require quite a large workforce, they need them built in a reasonabally quick time, they can still only charge the customer so much before they will look elsewhere

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STX France is now in OK shape, though they went through some lean years. It is the Korean end which has catastrophic problems, with overcapacity and a market for many types of vessel in decline. The receivers hope to at least put a decent sum in the bank from the sale of STX France.

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STX France is now in OK shape, though they went through some lean years. It is the Korean end which has catastrophic problems, with overcapacity and a market for many types of vessel in decline. The receivers hope to at least put a decent sum in the bank from the sale of STX France.

 

I think the Korean "family " business model is beginning to show its weakness over a lot of businesses .

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Thanks, Colin. It's not just the Korean end of STX which has catastrophic probs but many, if not most of the yards over there. They invested heavily in new capacity – and then cut prices when the market slowed, squeezing cash flow and thus finding it difficult – if not impossible – to keep up payments to the banks which had funded that investment. Indeed the same day as the Fincantieri announcement came the news that the banks now own 79% of Daewoo Shipbuilding, another of the big Korean builders.

 

HF_uk:

Spot on. Yards try to keep costs under control – and in line with contract – by securing their supply chain well in advance. But the one lesson I've learned about shipbuilding is always to expect the unexpected. (Watch the Discovery Channel docu on the building of Triple-E mega-ship Emma Maersk for more of that:

)

 

Most of the yards in Korea have focused on tankers, bulkers and boxers – all markets which are very cyclical, particularly the container trade carrying N American and European consumer goods markets (supplied from China).

 

And there's a new risk to that trade on the horizon – or at least the services to Europe. Earlier this week we saw the arrival in the UK of the first "transmodal" rail container service from China. (So called because the containers have to be swapped from one set of wagons to another as rail gauges change at international borders). One attraction of the rail route is that the westbound service will take just 14-15 days rather than 22-38 by sea. Early days – but news that will not have gladdened the hearts of anyone connected with shipping and shipbuilding in Asia. One logistics planner I know thinks that within a couple of years the rail operation could ramp up to "at least" a daily service, with a mix of European calls and destinations.

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UPDATE 22 FEB: Fincantieri has signed a contract to build at least two cruise ships in China – for Carnival's Chinese operation. This will do nothing to calm the locals' fears that know-how and ultimately employment could end up "leaking" from Europe to China.

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UPDATE 6 APRIL:

Reported by Le Monde today:

The French govt and the Italians have agreed terms. Fincantieri will hold about 45-48% of STX, with an Italian investment bank also taking a stake. This will ensure that control lies in Italy. The French govt will keep its 30% stake. Full details will be announced later today at an official presser.

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Sorry to miss an update – the "third stake" after Fincantieri and the government will be held by DCNS the naval shipbuilder. (I was on a brief business trip to the UK without my full media feeds). Here's an interesting analysis of the final plan:

http://theconversation.com/la-nationalisation-evitee-des-chantiers-navals-de-saint-nazaire-76181?utm_medium=email&utm_campaign=Des%20nouvelles%20de%20The%20Conversation%20pour%2013%20avril%202017%20-%2071945446&utm_content=Des%20nouvelles%20de%20The%20Conversation%20pour%2013%20avril%202017%20-%2071945446+CID_2a88f2ec6932316f9798bd1900ec4116&utm_source=campaign_monitor_fr&utm_term=La%20nationalisation%20vite%20des%20chantiers%20navals%20de%20Saint-Nazaire

 

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Rome and Paris seem to have reached an agreement over who will run the STX shipyards in St Nazaire. Each party (Fincantieri and the French Government) will hold 50% but the French will lend the Italians 1% to give them overall control and decision-making rights. During the first 12 years they can withdraw the 1% if the other party fails to honour their commitments regarding jobs and the transfer of intellectual property rights. After 12 years the Italians will hold a full 51%. I don't know if the unions are happy with the decision. 

http://www.saint-nazaire.maville.com/actu/actudet_-chantiers-stx.-accord-paris-rome-l-italien-fincantieri-sera-majoritaire_loc-3289223_actu.Htm

Ed 

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Here's the Reuters report, which gives a bit more of the political-economic context. We're told more details will be given to the yard next week.

 

LYON, France (Reuters) - Italian shipbuilder Fincantieri (FCT.MI) will take effective control of STX France under a shared ownership agreement, the office of French President Emmanuel Macron said on Wednesday, ending a dispute that had soured bilateral ties.

France angered Italy in July by ordering a “temporary” nationalization of STX, cancelling a deal in which Fincantieri and another Italian investor had agreed to buy 55 percent of the firm, based in Saint-Nazaire in western France.

On the back of Wednesday’s deal, which will see Fincantieri effectively holding a 51 percent stake in STX France, Paris and Rome will explore the creation of a Franco-Italian naval defense group, merging French military shipyards company Naval Group with Fincantieri, Macron’s office said.

The two countries hope outlines of that deal can be struck by June 2018, creating a pan-European naval defense champion akin to the combined rail engineering group created on Tuesday via the near 50/50 tie-up between France’s Alstom (ALSO.PA) and Germany’s Siemens Mobility (SIEGn.DE).

France sees the creation of European champions as crucial to warding off the threat posed by industrial powers in China and the United States. The STX deal comes a day after Macron offered an ambitious vision for European renewal, calling on the continent to forge deeper cooperation.

While Macron, who took office barely five months ago, initially appeared determined to protect French strategic assets at all costs, the deals between Alstom and Siemens and now Fincantieri and STX suggest he is willing to see French control diluted if it opens the way for a bigger European champion.

Under the terms of Wednesday’s agreement, Fincantieri will take a 50 percent stake in STX. The French state will hold 34.34 percent, Naval Group 10 percent, STX staff 2 percent and STX local suppliers 3.66 percent.

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Sorry, finger trouble there - meant to add:

As Cabin-boy reports, we don't yet have the official response from the unions, but workers seem resigned to whatever happens over the next few years, according to the latest report in Ouest-France. Here's an extract (to save time I've used Google Translate, which looks more than good enough for our purpose).

 

Quote

"I do not see why they did not continue with the nationalization," says Sven, a welder supervisor. "That was the right solution, in my opinion. We go back into the unknown with, again, the feeling of being a box that passes from one hand to the other. I simply hope that the Italians will take care of the know-how that makes the fame of our site. And of us, as much as to do! " The negotiation has not ruled out the fact that employees can become shareholders. "I will not put my marbles in there," said Philippe, a coppersmith. Some people think that this is a good idea, but I do not think they are very numerous, because many wanted nationalization. "

The full story is here

https://www.ouest-france.fr/pays-de-la-loire/nantes-44000/stx-les-salaries-entre-inquietude-et-resignation-5277455

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A decision by the European Commission is expected mid-April as to whether the long-touted sale can go ahead.

In the meantime, MSC today placed an order worth €2 billion with the shipyard for two large cruise ships which are to be LNG-powered. Ed.  

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38 minutes ago, Cabin-boy said:

A decision by the European Commission is expected mid-April as to whether the long-touted sale can go ahead.

In the meantime, MSC today placed an order worth €2 billion with the shipyard for two large cruise ships which are to be LNG-powered. Ed.  

STX Europe has been carved up between Fincantieri & Meyer Werft for over 5 years now. The Finnish yard(s) have been wholly owned by the German ship builder since 2015 and the Italians already use the former Chantiers de l'Atlantique name too and own 50%.

I believe the remaining half was due to be purchased by both the Italians & Germans but have since learnt that it's now Fincantieri & Damen so it appears that the Dutch are getting in on the act.

The St Nazaire yard are responsible for designing the LNG refuelling system aboard Honfleur which was built originally to house Hydrogen fuel cells.

Edited by jonno

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