22 April 2023 | Page 1

Industry Outlook Forum – European Cruise Council

Overview of the state of shipbuilding orders in Europe and a vision for its future

Jacques HARDELAY, General Manager, STX France and CESA Vice President

14th September 2010

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General overview

Financial crisis

Sovereign crisis

Cruise goes on but however deeply impacted :

End customers behavior

Cruise brands economy

Shipbuilders and industrial network load and health

Most probably long term changes and new configuration

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Orderbook – status

12 vessels ordered per year up to 2007

0 vessel ordered the next 2 years

Some orders were then placed from end 2009 to mid 2010:

1 Carnival Dream to Fincantieri 2 Princess vessels to Fincantieri 1 MSC vessel to STX France 1 GNMTC (Libya) vessel to STX France 1 Aida vessel to Meyer Werft 2 NCL vessels ? 1 Hapag Lloyd vessel ?

6 to 7 vessels per year are expected to be ordered in the future Clients more and more demanding in term of price: 150 K€ per LB ! Equipment prices do not necessarily follow the main trend !

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Consequences on shipbuilding industry

High outfitting load due to delivery of ordered vessels (ex: Epic mid 2010 / Allure of the Seas for end October 2010)

A steelwork underload followed by an outfitting one

Then, necessity to come back to higher load within a lower order context

Such load variations are very detrimental to:

. Management of human resources,

. Efficiency,

. Financial results

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How to deal with underload periods ?

Redeployment scheme such as: . Transfer from steelwork to outfitting work

. Less subcontracting in favor of internal staff

Training

Unemployment measures

Plan of Voluntary Departures

Lay-off plan

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How to deal with underload periods on a long term?

By diversifying . Engineering works for other industries

. Production for other segments of marine industry

. LCS (Life Cycle Services) works By reduction of capacity ?

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How to manage price drop?

By monitoring shipyards' overheads

By developing more efficient design in term of construction (ex: more compact GA and « lean » technical specifications… ). Good understanding of shipowners

By increasing productivity thanks to investments and process improvements

By proposing more efficient design in term of operation costs (ex: energy savings) Shipowners must accept to pay more considering good ROI

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Importance of prototypes

Today, new regulations (Safe Return to Port / Probabilistic Stability) is still leading to develop new prototypes

Pressure on prices may encourage our customers to order longer series and develop platforms thinking

But prototypes are necessary to maintain shipyard design resources and competences, essential to develop innovative designs in the future

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Improve productivity: some trends

Computer systems (CAD)

Quality

Logistics

« Lean » processes

Investment capacity is limited !

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Far Eastern appeal: is it a real threat?

Volumes reduction in cruise segment

Prices decrease

More and more sophisticated vessels

Higher Asian currency and standard of living

Lead to think that Far Eastern countries should wait a little bit more !

However present in some tenders

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Conclusions

Very challenging time for shipbuilding industry (load and price)

Shipyards and network adapting themselves to present situation with difficulty

Shipyards and network looking for better efficiency in the future

Shipowners have to maintain sufficient level of orders, including some prototypes

Shipowners must be open to shipyard initiatives when developing together efficient designs

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Thank you for your attention