Recession hurting cruise ship builders

The Jakarta Post, Associated Press , Miami | Fri, 03/19/2010 6:12 PM

The cruise industry is rebounding, but not for the companies who build the increasingly elaborate ships.

Executives from the major European shipyards say they're not getting enough orders to keep busy and profitable. Though cruise bookings and prices are up, a flood of new ships is crowding the market, and operators have shown little willingness to buy more ships.

Only one new order was placed in 2009, and only four so far in 2010. That's down from 21 in 2006, before the economic downturn began in December 2007.

"The cruise ship-building industry has slower reaction time and suffers from deeper distress in comparison with cruise lines," said Corrado Antonini, chairman of the Italian state-owned Fincantieri Cantieri Navali Italiani S.p.A.

If things don't improve, shipbuilding officials and observers said at an industry conference this week, the yards could lose key skilled workers, suppliers and subcontractors - if they can stay afloat at all. And that means trouble when operators do finally want new ships, with ever-increasing amenities like skating rinks, bowling alleys and climbing walls.

Fincantieri is one of just three companies in the world that dominate the specialty niche of cruise ship-building. Antonini warned that if new orders don't pick up soon, cruise ships will become more expensive to build and less efficiently made.

"The shipbuilding industry has an intrinsic inflexibility deriving from plant assets and specialized skilled resources, which cannot be simply frozen, moved or fired," Antonini said.

Fincantieri is the only of the three major builders with work on the books past 2012 - and they didn't have it until Carnival ordered two new ships last month. That's an uncomfortable prospect in an industry where a single order requires years of labor and planning, plus more than 10,000-gross tons of steel and other material.

The other major builders are privately owned Meyer Werft GmbH, based in Papenburg, Germany, and STX Europe AS, a unit of South Korean conglomerate STX Corp. that operates cruise ship yards in France and Finland.