Spain Mob Waves is Niche Market Contender

With its accelerated gravitation towards specialized or otherwise more capital-intensive forms of tonnage, Spain's shipbuilding industry has become an important competitor in niche markets, rather than the high-volume European producer it was some years ago.

But the inevitability of an eventual reduction in public ownership of a sector considerably within the state domain, coupled with the pure intensity of global competition, make for uncertainties as to the future size and influence of the industry, despite the improvements secured by the state-controlled organizations and the resilience demonstrated by the private sector.

The 1990s have seen Astilleros Espanoles (AESA), one of the two premier state-owned shipyard organizations in western Europe, achieve major advances in productivity and quality and gain ground in the high-technology vessel market. However, it is facing one of its sternest-ever tests in its bid to achieve full financial viability after years in deficit.

The far-reaching, three-year restructuring plan formulated in 1995 set a break-even objective for 1998. On the road to financial equilibrium, the enterprise is aiming to cut losses for 1997 to below Ptas 20 billion, compared to the Ptas 40 billion shortfall recorded last year.

Considering that losses in recent years have hit Ptas 60 billion, the trend is positive. But the fact that the three-year strategy had originally sought a trimming in losses to Ptas 20 billion in 1996 and Ptas 7 billion in 1997 denotes a tracking- off which compounds the task The latest (order) intake variously reflects the Spanish group's successful development of generic niche markets, and its cultivation of strong links with Scandinavians in the shipowning world.

of reaching break-even by next year.

Management is confident, though, that it will move out of the red on target. In the meantime, it has been instructed by the European Commission to cut shipbuilding capacity from 240,000 cgt (compensated gross tons) to 210,000 cgt.

Whether the process of rationalization and capacity diminution will entail divestment of facilities or yard closures remains to be seen. Certain state-owned yards have been eyed by Norwegian companies in the past, and new interest has recently been expressed from that quarter. Takeovers could also be fostered from within the industry in Spain itself.

The high technological level of current production at AESA is mirrored in the sales growth of recent years. Sales volume amounted to a record Ptas 130 billion in 1996. If the target of Ptas 150 billion is realized for the current year, annual income will have grown by 50 percent since 1994.

Highlights of new business transacted to date in 1997 have included contracts with Norwegian state energy group Statoil for 126,650- Pictured is Astilleros Espanoles Puerto Real shipyard. dwt diesel-electric shuttle tankers, plus a 97,500-dwt multi-purpose shuttle tanker (MST), an additional two 22,460-dwt parcel tankers for Stolt-Nielsen, and a combi ferry for New Zealand. As of mid- September, Statoil had contracted for a fifth shuttle tanker, with a scheduled delivery set for the autumn of 1999. The contract with Statoil for an MST was especially significant in that orders for the first three ships of the highly versatile class had been entrusted to South Korean shipbuilder Samsung.

The latest intake variously reflects the Spanish group's successful development of generic niche markets, and its cultivation of strong links with Scandinavians in the shipowning world.

Indicative of the elevated unit work values associated with modern- day Spanish shipbuilding endeavors, the AESA orderbook at the time of writing included nine stainless steel chemical tankers, six shuttle tankers, and six large RoRo ferries.

Encapsulating the latest thinking in RoPax technology, two 30,500-gt newbuildings at the showcase Puerto Real yard outside Cadiz have been the subject of one of the more remarkable deals of the year. Both vessels, conceived around a freight-carrying role complemented by cabin accommodation for 440 passengers, were sold by the Stena Group to Finnlines while still under construction. The fact that the design was developed from the outset to allow ready modification for future needs may have facilitated the change in specification called for by Finnlines.

Thus, whereas Stena had originally stipulated 2,500-lane meters of garage space and ice class IB compatibility, the vessels will emerge in Finnlines colors next year with a 3,000-lane meter capacity, strengthened and equipped to ice class 1A standard. The increase in the work value at AESA is also a factor of its raised stake in the offshore industry. The recent $128 million deal with Petrobras has helped strengthen its business position in that market. The latest project from Brazil calls for the delivery of a floating storage unit (FSU) with a 1.5 million- barrel oil capacity, intended for connection with a Petrobras floating production unit (FPU) in 1,200-m water depth. AESA has purchased a 1970s-built VLCC for reconstruction as the requisite FSU at its Cadiz shipyard.

In June, the Cadiz repair and conversion complex redelivered a former Petrobras VLCC to the Brazilian organization as a 150,000-bpd floating production, storage and offloading (FPSO) vessel, Petrobras 32.

Most recently, a further reconstruction job was completed at Petrobras' behest in Cadiz, entailing the adaptation of a Russianbuilt semi-submersible into an FPU. As Petrobras 26, the unit is to be stationed in nearly 1,000-m water depth in the Campos Basin off Brazil.

Fast Ferry Breakthrough Drawing on the technical expertise honed from years of constructing sophisticated naval vessels, Empresa Nacional Bazan has made an impressive entry into the fast ferry field.

Its range of aluminum monohull designs provided the initial springboard for a return by the defense contractor to the commercial vessel market.

Following its completion of three 43-knot Mestral-class ferries for South American and Spanish operators, Bazan's San Fernando yard delivered the first of the larger Alhambra series, the 126-m Silvia Ana.

Circumspect owner Buquebus has assigned the 38-knot RoRo passenger ship to a new River Plate route during the southern hemisphere summer season, chartering her out for Scandinavian duties over the rest of the year. The Alhambra-type employs a multiple diesel engine plant, consisting of six Caterpillar units yielding a total propulsive effect of October, 1997 51 more than 46,000-bhp through five waterjets.

Project scope is enhanced by the in-house engine manufacturing division, Bazan Motores, which in turn has broadened its potential through a technical alliance with Caterpillar in the U.S.

Recent shipbuilding production at San Fernando includes work on a 77-m catamaran RoRo passenger ferry type, developed in conjunction with AMD of Australia.

Private Sector Champion Long regarded as one of the jewels in the crown of Spanish shipWe have to satisfy our customers right to the very end." New building update Astilleros Espanoles Sestao Yard is currently building two IMO Class 2 DP, BLS shuttle tankers for Statoil for worldwide trading and operations, principally intended for loading and transporting oil from an offshore oil field on the Norwegian Continental Shelf. The loading of crude oil can take place from an offshore loading facility such as a subsurface loading station, floating storage and offloading unit, floating production and storage offloading unit, articulated loading platforms and conventional oil terminals through the midship manifold.

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