Fincantieri: financial statements of 2019 and the budget for 2020
Rome, 24 September 2020. The General Meeting of the associated and affiliated members of Assonave, the Italian shipbuilding industry association, was held in Rome, chaired by Ambassador Vincenzo Petrone, to adopt the financial statements of 2019 and the budget for 2020. In the overview of the global shipbuilding industry - already disappointing in 2019 with a 20% drop in orders in terms of volume over the previous year - orders in the first semester 2020 plunged by 40% and deliveries decreased by 17% as a result of the global Covid-19 crisis. In this framework, trends in Europe have been totally disrupted, as, with the explosion of the cruise sector, orders and workloads were growing in contrast with the opposite trend of manufacturers in other parts of the world. In Europe, in the first semester 2020, orders dropped by 62% and deliveries by 48%, much below the global average.
In particular, the annual report shows that, in the cruise sector, orders of ships exceeding 10.000 grt rose from 23 to 25 units in 2019, but there were only 2 orders for ships in the first half of 2020. In the military sector, in 2019, 165 units were ordered, with a drop of 28% over the previous year, going further down to 49 units only in the first six months of 2020. The ferry market dropped by 40% in 2019, and in 2020 orders went down to zero in a major segment, i.e. vessels exceeding 150 mt. The sector of pleasure vessels and yachts rose by 9.7% in 2019 (source: Confindustria Nautica), with 26 new orders of megayachts (vessels exceeding 60 mt) in line with the trend in recent years. Finally, the Oil & Gas Offshore segment was sluggish, with 1 new rig order only in 2019 and orders for 20 small supply vessels almost entirely allocated to Chinese and Turkish shipyards (in the past, there were hundreds of these orders); in the first half of 2020, the Oil & Gas market basically went down to zero. In 2020, new orders plunged in all market segments at global level and unfortunately this trend is likely to continue at least until the end of 2022.
The Italian shipbuilding industry, and the relevant supply chain - thanks to its strategic capacity, and its excellent order portfolio, which was built up in the past, as well as its capacity to positively interact with ship-owners, minimizing any termination, at least so far - is undoubtedly in a better position than the rest of Europe. However, in Italy, as well as in Europe, most new orders of commercial vessels are passenger ships, and this is a risk for the whole system, if the cruise market does not recover relatively fast. This risk can only be mitigated by implementing three strategic guidelines effectively: 1) Activities ensuring the survival and the competitive reinforcement of the Italian and European shipbuilding industry in the short term; 2) Activities aimed to create the conditions to enable the Italian and European shipbuilding sectors to thrive in the long term; 3) Activities to maximize the competitive capacity of members.
The first guideline includes activities on financial incentives in view of the 2021-2028 financial planning and the opportunities resulting from the Recovery Fund. This area also includes a certain number of draft temporary actions that have been implemented in coordination with Europe, such as: EU fleet renewal programmes; public procurement programmes (both in the civil and the military areas); tax relief schemes for shipyards and maritime suppliers that are able to implement virtuous activities and in line with the strategic directives of the European Commission (environment, digitalization, safety of manufacturing processes, competitiveness, etc.); financial incentives for ship-owners to preserve the current workload; solutions to ease access to financial incentives for SMEs with maritime technology; solutions to retain and train the current workforce; activities to leverage on the opportunities resulting from the co-planned industrial partnership, “Zero Emission Waterborne Transport”, as the sector has been selected for this major partnership with a requested budget for the shipbuilding sector amounting to about 1 billion euro.
The second strategic guideline includes the activities on the protection of the European shipbuilding industry from unfair competition practices in East Asia, so that, when the adverse trend is over, any conditions that, in the past, enabled the Asian industry to replace the European industry in most shipbuilding market segments, will be removed in the meantime. This has been caused by structural dumping practices, supported by continuous State subsidies, and no action could be taken, as unfortunately WTO competition rules do not apply to this sector. In this respect, a regulatory gap has been identified and it has to be filled as soon as possible, starting, most likely, from unilateral actions; after that, it will be easier to start negotiating from a strong standpoint with Asian countries which so far have been very far from working seriously to find a mutually satisfactory solution.
The third strategic guideline includes training, information, networking and cooperation to achieve scale economies that Assonave has been promoting for a long time for its members: these activities, which are fundamental, would turn out to be useless if the other two guidelines, which are under the political and government responsibility, are not implemented successfully. In this context, associations must work effectively and create any appropriate condition for national political and governmental stakeholders to understand how the sector works and the relevant issues with a view to identifying effective and long-term solutions. In the past, the lack of support for these strategic guidelines, which is part of the Associations’ role, unfortunately generated an extremely adverse impact, such as the loss of entire market segments and the relevant competences. These activities - now more than ever - cannot be pursued by a single company only, irrespective of its size, competitiveness and efficiency: this is the role of an Association that must be strong enough, organized and supported by its members. Assonave aims at performing these activities in the next few years, at a decisive time, when segments that are still in Europe actually risk to be left to Asian competitors. This is why Assonave has defined this phase as “Now or Never”.
On the occasion of the General Meeting, the Chairman of Assonave, Ambassador Vincenzo Petrone stated: “Our sector is bravely coping with the difficult industrial and market outlook and it’s asking the European Commission and the Government to take into due account the vital role of the shipbuilding industry in the Italian and European economic context. We are not asking for State aids, we are asking for support for technology innovation and green transition to zero-emission vessels. We are also asking our Government, together with Confindustria, of which Assonave is an integral part, to provide one institutional reference point for the Maritime Economy, as this sector is currently divided into four different ministries, and this division results into coordination and planning issues”. Mr Petrone finally added: “We are asking Brussels to defend the European shipbuilding sector from unfair competition, which is heavily subsidised, as Asian manufacturers implement dumping practices to the detriment of European manufacturers”.