Value added (3) (million euros) 720 841 688 907 912 869 834
Employment (4) 15272 14831 13004 13119 12159 11945 11995
Level of exports 84% 67% 24% na 19% 13% 17%
Number of companies 10 9 8 na na na na
(1) Ifremer estimations based on data from branches 35.1A, B, C, E and E11 (NAF codes 2003). Enterprises with 20 or more employees.
(2) Amount of DCN turnover and tax-excl. sales of the branch, not including DCN in 2001-2002. Sales excl. tax of the branch from 2003.
(3) VA rates used for the estimation: sector 35.1A not including DCN and DCN enterprise for 2001-2002; VA rate for sector 35.1A in 2006 (39%) extrapolated to the 2003-2007 period.
(4) Mean workforce employed in the branch 35.1A not including DCN and in DCN enterprise in 2001-2002; in branch 35.1A from 2003 on.
na: not available.
2.1.Situation of the activity
In France, and even more so in other European countries, enterprises work on both civilian and military shipbuilding markets. In Europe, as in the United States, they also work on the naval electronics and IT equipment. The differences between the civilian and naval markets are more due to the characteristics and purposes of the equipment and facilities, as well as the obvious weight of national interests in shipbuilding for Defence, which makes these markets special.
2.2.Trends and investments
In France, the Defence White Paper in 2008, recommended that the Armed Forces tighten their formats and specifically for the Naval component recommended modernisation which would promote underwater equipment. This scheme has already entailed some disarmament without replacements, to the benefit of maintenance operations: this may impact the way the largest firms in the sector will adapt their offer.
In Europe, a slow reduction of Defence budgets expressed in GDP points is being observed in several countries, including France. Military investments are dropping, particularly in the current context of recession, as in the United States. Emerging countries (China, India, Brazil) display ambitious investment programmes, but the national offers are at various stages of competitiveness with respect to the big exporters (United States, Russia, United Kingdom and France); in Europe, Italy and Spain are maintaining large new build programmes.
3. Marine equipment industry
The marine equipment industry gathers a highly diverse range of activities, suppliers of shipbuilding and repair yards and shipowners; which can be put into two categories:
• manufacturing technical equipment, particularly propulsion machinery, electrical and electronic equipment, shipboard handling, navigation and bridge equipment, pumps, ventilation and air conditioning,
• supplying shipbuilding yards with assembled and tested equipment as modules, either prefab or in their technical setting, and complete systems or functions like installing ventilation and air conditioning or fitting out public areas and cabin areas in passenger ships.
Key figures for marine equipment, 2007-2008 Turnover (million euros) 2300
Value added* (million euros) 600
Employment 22000
*Rate of VA for the sector in capital goods for 2007 Sources: Gican (2008 data for Gican members), Sessi.
A recent survey of marine equipment firms belonging to the Gican about the activity in 2008 indicated a turnover of 2,300 million euros, which seems to correspond to a period of high activity.
On the European scale, the EMEC (European Marine Equipment Council) estimated that there were 287,000 direct jobs that same year, with a turnover of 26 billion euros and an export rate of 46%. Therefore, this sector of activity is similar to shipbuilding in terms of turnover.
According to the profession, there was a clear downturn in 2009. Requirements for better energy performance of vessels and diversification of fuel sources, ceilings for SOx and NOx emissions imposed by the IMO, as well as the increasing sophistication of cruise vessel equipment and fittings, can open up perspectives for the innovative firms in the sector.
4. Ship repair
The ship repair activity includes:
• maintenance and repair of civilian vessels (not including pleasure boats); • conversion of ship structures;
• breaking or scrapping of declassified ships.
Maintenance and repair is mainly a service operation, incorporating supply of (replacement) equipment, whilst conversion is closer to shipbuilding, and thus mostly a manufacturing operation. Ship breaking is a service for shipowners and a supply of materials for downstream users like the steel industry. Repair services are different from construction-conversion due to the short intervention times.
The previous nomenclature (NAF 2003), used in this report, limits the scope of the activity to repair-maintenance of merchant vessels, whereas the new nomenclature (NAF 2008) includes naval vessels and pleasure boats.
Key figures for ship repair (1)
2001 2002 2003 2004 (2) 2005 2006 2007
Turnover (3) (M euros) 186 245 251 228 213 226 302
Value added (4) (M euros) 67 95 88 87 76 74 99
Employment (5) 1822 2599 2356 2194 1667 1471 1533
Level of exports (%) 36% 34% 34% na 35% 43% 49%
Number of companies (6) 45 52 49 48 44 43 36
(1) Data for branch 35.1C (NAF code 2003)
(2) Uncertain data. Large number of no-replies to the 2004 Annual Business Inquiry (3) Sales excl. tax
(4) Rates of VA by sector 35.1C used: SESSI/EAE for 2001-2004; INSEE/SUSE for 2005-2007 (5) Mean annual manpower
(6) Number of company fractions with 20 or more employees
Sources: SESSI/Annual business inquiries (data from branches, companies with 20 or more employees); INSEE/SUSE (enterprises with turnover of 0.1 M euros and more)
In France, there are about 30 to 50 firms with more than 20 staff, however there are some 500 companies with a turnover of more than 0.1 million euros as a main or secondary activity (source : INSEE).
Ship repair: regional data 2005 (1)
Regions (2) Number of companies (3) Salaried staff
Aquitaine 4 141 Brittany 10 659 Nord-Pas-de-Calais 4 298 Upper Normandy 5 120 Provence-Alps-Côte-d’Azur 14 397 Metropolitan France 48 1809
(1) Enterprises with 20 or more employees. (2) Main regions with respect to salaried manpower (3) Establishments of all sizes with the same main activity Source: Sessi (data for sector 35.1C)
4.1.Situation and trends in activity
In Europe, results for the activity rose until 2008, with some tensions appearing on the employment market. According to data from CESA-member yards, the most important countries in ship repair are Germany and the Netherlands, followed by, at a lower turnover level, Spain, the United Kingdom, Italy and Poland. In France, ship repair is small in scope; it is specialised in military vessels (Toulon), methane carriers (Brest) and offshore vessels (Dunkirk).
*CESA shipyards only Source: CESA
Maintenance, repair and conversion of vessels in Europe*
0 200 400 600 800 1000 1200 Ger man y Net herla nds Spa in Italy UK Pol and Por tuga l Den mar k Fran ce Gre ece Nor way Cro atia Rum ania m il li o n e u ro s Turnover 2003 Turnover 2008
At the end of 2008, the crisis first impacted ship conversions, an operation for which the shortage of funding quickly appeared. The sharp drop in freight prices then affected ship repair, with shipowners trying to defer the costs of this type of operation. In spite of declassifications starting up again and the growing number of unused ships during this recession period, the world fleet rose significantly in number in the recent economic context and will continue to grow in the short term. This means a significant potential customer base for ship repair yards. Dwindling markets however have led repair firms to diversify their market niches towards exports, engineering, industrial services, cruise liners and pleasure boats.
4.2.The ship-breaking issue
Demolition of merchant vessels is a marginal activity in Europe, even though the latter is the principle shipowner worldwide. The largest ship-breaking yards working in Europe are in Belgium, Italy and the Netherlands, with others in the United Kingdom, Denmark, Greece Lithuania, Poland, Spain and Bulgaria. Most of the EU countries also have demolition site for the scrapping of fishing vessels and yachts. Taken together, this represents a small capacity of some 500,000 dwt, which should be doubled following the granting of the necessary permits for the Hartlepool site (600,000 dwt) in Britain. EU sites do not have sufficient capacity to deal with large merchant vessels. And this difficulty, which is general in OECD countries, is not mitigated by the presence of yards in Turkey (1 million dwt). As for the United States, they have sites which do not take foreign vessels. The large capacities are outside of the OECD: Bangladesh, China, India and Pakistan perform nearly 90% of dismantling.
The ship demolition market runs in cycles, with ships being declassified according to their age and the cargo market, but also to the local price of the scrap metal recovered. In South Asia, this price has been tenfold that in Europe over the past few years. From 2005 to 2007, freight costs peaked, the ship-breaking rate hit historic lows and the average age of declassified ships exceeded 30 years. The overcapacities which appeared with the recession have changed the state of affairs and will affect the demolition rate.
Scrapping work done on beaches, without protection systems, of vessels containing hazardous waste substances (asbestos, paint, metal, oil residues, PVC, etc.) raise ecological and health problems which are becoming more important as the world fleet grows. Applying the environmental standards in effect in Europe and on several Chinese sites, makes scrapping yards less competitive: the additional costs of protection lead to a lower purchase price for wrecks.
The EU is the first political entity to have applied, through Regulation 1013/2006, the principles of the Basel Convention (1989), the OECD Council decision (2001) and their amendments on prohibiting shipments of hazardous waste. The first international text specifically dealing with ship dismantling is the Hong-Kong Convention, prepared by the IMO (May 2009). The text requires that the vessel be controlled and inspected throughout its life cycle (design, operational, maintenance and recycling) and control of recycling facilities. The ratification process is underway.
Source: Cnuced / RMT 2008, Fearnley Review, Lloyd's Register-Fairplay
5. Boat building 5.1. Definition
Boat building includes the construction of sail boats, motor boats, inflatable craft with flexible or semi-rigid hulls and other pleasure or sport craft like small boats, canoes, kayaks and skiffs (not including equipment for water sports and windsurf boards). The sector includes their repair, fitting-out and maintenance.
Key figures for boat building (1)
2001 2002 2003 2004 2005 2006 2007