DUCKER WORLDWIDE - Metals Service Center Institute · PDF fileMarket size and structure Market...
Transcript of DUCKER WORLDWIDE - Metals Service Center Institute · PDF fileMarket size and structure Market...
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DUCKER WORLDWIDECRITICAL THINKING FOR CRITICAL DECISIONS.
SHIP BUILDING MARKET ATTRACTIVENESSECONOMIC SUMMIT: FORECAST CONFERENCEM SCOTT ULNICK | MANAGING PRINCIPAL | [email protected] | 2016
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THE SHIP BUILDING MARKET
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MARKET ATTRACTIVENESSUSA Ship Building
Market Size, Structure, Segmentation
Market Drivers Trends & Practices
Identify market drivers (trends) Customer needs Technology Metal technology, forming,
treating, cutting, slitting… Autonomous vessels
Products/materials. Services Regulation Channels Imports Production practices and dynamics
Assess sensitivities to trends: Purchasing process and criteria Switching costs/triggers/sensitivities End-use performance Product Life Cycle Stage Macro economics End-use vertical dynamics (e.g.,
Military spend/Navy spend, Oil and Gas production
Market Factors Estimate market size with drivers for growth Segment the market Navy vs. Commercial Merchant Fleet Size of vessel Material preferences
Competitive Dynamics• Integration / Specialization• Consolidation / Scale• Commoditization• Cost
Customers Sourcing strategies and processes for products Supplier requirements and market structure Supply chain
Competitors Profile leading suppliers - highlighting footprint,
product and customer dynamics
Voice of Customer – Needs, Unmet Needs…..customer perceptions of Suppliers/Vendors
Prioritize selected segments Market growth Prioritize long term profitable businesses
within ship building (materials, shapes, services)
Identify competitive purpose Source of comp. advantage Scope of comp. advantage
Select businesses under competitive criteria Materials/services Customers Geographies Positions in the value chain
Possible M&A
Building forecast models: Market size and structure Market growth Level of investment needed to
participate Drivers
Model the evolution of the value chain:• Where profit and revenue pools are
evolving towards• Determine the speed of the
movement in the chain
Entry Option considerations in order to achieve desired outcome• Business Development Targeting
within ‘best-fit’ customers/segments• Key themes and applications• Size and relative valuation• Actionability• Competitive situation• Buyer/supplier relationships• Match with MSCI Co. capabilities
How will the Market Evolve?
Where to compete? How to compete?Value of successfully competing?
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MARKET ATTRACTIVENESSUSA Ship Building
Where to compete How to compete
The value of successfully competing
Market Size, Structure, Segmentation
Market Drivers Trends & Practices
How will the Market Evolve?
Where to compete? How to compete?Value of successfully competing?
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Market Size, Structure & Segmentation
• Commercial ship building is small relative toMilitary/Paramilitary ship building. Driven bythe Navy
• Classified according to vessel use whichgenerally drives different customerrequirements
• Not Boats. Ship building that excludeswatercraft built for personal use…..oftenreferred to as boats
• New Build• Refit
• Commercial/Cruise/Barge• Military/Paramilitary/Navy
Ship Building Industry
Type of Vessel
Project Type
Market Definition
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Parameters Characteristics
Vessel Size <24m (<80ft) All sizes, but up to 24-35m (80-115ft) All sizes, but generally >35m (>115ft)
Material Fiber Reinforced Plastic Generally Fiber Reinforced Plastic, some Steel or Aluminum
Generally Steel or Aluminum, sometimes Fiber Reinforced Plastic
Description
• Boats are produced from male or female moulds with a set hull shape and up to four interior options
• Generally a lower skilled workforce is required, as the level of finish and detail is reduced
• Several hull shapes are offered, with the internal arrangement different for each individual vessel
• Vessels above 24m are commonly regarded as “superyachts”
• The internal and external design is unique
• Built as a one-off vessel• Where a material other than Fiber
Reinforced Plastic is specified, custom building is often the only option
• Vessels above 35m are rarely composite and are more likely to be aluminum or steel
Production Semi - Custom Custom
New Build
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Market Size, Structure & Segmentation
Market Definition
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Low Complexity High Complexity
Parameters General Servicing Painting & Maintenance Interior Refit Engine Replacement Conversion /
Restoration
Typical Vessel Size All All All All All but generally
>35m (>115ft)
Frequency Ongoing 1-2 years 3-5 years 3-15 years >20 years
Description
• General maintenance and repair work
• Engine and mechanical servicing
• Replacement of minor parts / consumables
• Exterior painting and antifouling
• Interior painting may be deferred longer (>2 years)
• Inspection of critical components (e.g. rigging)
• Interior repaint and redecoration
• Replacement of teak decking
• Repaint of topsides and superstructure
• May involve electronics and/or galley upgrade
• New engine and / or generator
• Performed more frequently for commercial vessels
• Complete renovation of vessel (often from commercial into pleasure craft)
• Generally involves structural alterations and complete overhaul
3 - 7% of vessel value per annum 10 - 50% of vessel value 50 - 200% ofVessel Value
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Market Size, Structure & Segmentation
Market Definition
Refit
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White
• Pleasure boats used for recreational purposes
• Can be either sailing vessels or motor yachts
Type Size Material
TrailerBoats, SmallCoastal
<9m<30ft
FRP Wood Alu.
“Mum andDad” Cruiser
9-18m30-60ft
FRP Wood Steel
Large Vessel/ CorporateCruiser
18-24m60-80ft
FRP Steel Alu.
Superyacht 24m+80ft+
FRP Steel Alu.
Racer All FRP
Black
• Commercial boats including tugs, fishing boats and barges
• All powerboats
Blue
• Comm. passenger vessels• Ferries, charter boats,
sightseeing vessels• Mainly power, some sail
Grey
• Military or paramilitary• Navy, Customs, Coastguard
applications
Type Size Material
Inshore Vessel Tug
<18m<60ft
SteelFRP
Trawler / Longliner
18-45m60-150ft Steel
Tuna Boat / Seiner
45-85m150-280ft Steel
Barges All Steel
Ships 90m+300ft+ Steel
Type Size Material
Small Charter / Sport fishing and Diving
<18m<60ft
FRP Steel Alu.
Large Charter / Sightseeing / Fast Ferry
18-35m60-115ft
FRP Steel Alu.
Small Slow Ferries / Roll on-Roll off
18-35m80-115ft Steel
Large Passenger Ferries / Liners
35m+115ft+ Steel
Type Size Material
InshorePatrol
<20m<80ft
SteelFRP
Small Offshore Capable (e.gfrigate)
20-100m80-330ft Steel
LargeOffshore
100m+330ft+ Steel
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Market Size, Structure & Segmentation
Market Definition
Source: Ducker Analysis
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MILITARY / PARAMILITARY / NAVYSHIP BUILDING SEGMENT
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10
78
78
2014 2017p 2018p 2019p 2020p
Projected US New Naval Vessels Construction
Source: US Navy
Market Size, Structure & Segmentation
Market Definition
Source: U.S. Navy
The plan will bring the fleet to a total of 308 ships by Fiscal 2021 up from the current total of 272
Military / Paramilitary / Navy Segment
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Ship Battle Forces
Active In Commission
Totals 276 231
Aircraft Carriers 10 10
Surface Combatants 93 90
Submarines 70 69
Amphibious Warfare Ships 31 31
Mine Warfare Ships 11 11
Combat Logistics Ships 30 0
Fleet Support 30 5
Auxiliary Support 1 0
Combatant Craft 0 13
Other 0 2
Note: Fleet size was last updated on 09/06/2016If real time count is required contact CNO staff.
Navy Ship Fleet
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Military / Paramilitary / Navy
Segment
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COMMERCIAL, CRUISE, BARGE SHIP BUILDING SEGMENT
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Market Size, Structure & Segmentation
Market DefinitionCommercial
Merchant Marine Segment
Source: Ducker Analysis
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COMMERCIAL AND MILITARY GLOBAL MARKETSHIP BUILDING
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MARKET ATTRACTIVENESSShip Building
Market Size, Structure & Segmentation
Market Definition
1,086 1,413 1,425 1,448
1,073 914 949
576
580 593 586
540 522 520
524
526 572 474
386 343 358
212
202 148 148
123
122 118
99
76 59 64
70 85 75
1,057
951 873 976
897 977 850
2009 2010 2011 2012 2013 2014 2015
Others
The USAEurope
South Korea
Japan
China
Global Ship Building* Completions by Country
Source: Shipbuilders Association of Japan, Ducker Analysis* Non-military, non-recreational, marine ships with size 100 gross tonnage (GT) and over
• Globally, close to 65% of completions is accounted by China, Japan and South Korea with China lone accounting fro close to 35% in 2015
• The USA is not a significant player globally with a miniscule share of 2 – 3%
• Relative to military-related shipbuilding, by value, the commercial shipbuilding industry segment is small
Most commercial shipyards are small to medium in size and are limited to producing vessels for the coastal and inland waterway shipping markets
Global Ship Building
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METALLICS IN SHIP BUILDING
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4547
1.5
2.0
2015 2020
Apparent Consumption of Aluminum & Steel in ShipbuildingMillion Metric Tons
Steel
Aluminum
Commercial & Military Ship Building in USA Market Size, Structure & Segmentation
Market Definition
• Trends in shipbuilding have become similar to those in the automobile industry in recent years and the growing demand for automobiles, heavy duty vehicles, aircrafts, trains and ships is also set to significantly spur demand for Aluminum flat rolled and extruded products
• The necessity for lowering the weight of different ships, in order to increase the payload and reduce fuel consumption, has turned shipbuilders towards aluminum due to its potential to reduce the weight of ship structures by up to 50%, compared to those made from low carbon steels
• Steel will remain the dominant material for ship building due to its price/property position
Source: Ducker Analysis
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COMMERCIAL AND MILITARY SHIP BUILDINGKEY PRACTICES, TRENDS & DEMAND DRIVERS
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Trends & Practices
Market DriversUSA Shipping
Jones Act
Federal Funding for Defense
US Oil & Gas Production
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The Merchant Marine Act of 1920, more commonly referred to as the Jones Act, is a protectionist measure that regulates domestic U.S. shipping practices. The Jones Act mandates that any goods shipped by water between two points in the United States must be transported on a U.S.-built, U.S.-flagged, and at least 75 percent U.S.-crewed vessel. Originally conceived to sustain the Merchant Marine fleet after the First World War, the Jones Act has become the support system for domestic commercial shipbuilding.
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Jones Act: The act stipulates that all ships transporting goods from one US port to another (i.e., “Coastal Shipping”) or within inland waterways must be built in the United States
Trends & Practices
Market Drivers
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BOAT SEGMENTPERSONAL WATERCRAFT SEGMENT
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2016 Powerboat Sales in the USA ~250,000+ units/6-8% growth year over year
Info-Link provided Boating Industry with analysis of sales numbers from 2010 to 2015 to measure the recovery. The numbers confirm what many would expect, with pontoons/cross overs (up 75 percent), saltwater fish (up 58 percent) and ski/wake (up 54 percent) performing the best over that period. PWC (up 36 percent) and freshwater fish (up 22 percent) have also grown since 2010
Source: Boat Owners Association of the USA.
Boat Segment
Trends & Practices
Market Drivers
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“Crossover vehicles have become popular in the automotive industry, so it is unsurprising to see this trend trickle down to the boating industry, as trends often do.”Source: BRIANNA LIESTMAN – Boating Industry Magazine
Emerging TrendPontoon Based Cross Over Boats
Trends & Practices
Market Drivers
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ROBERT WALL in London andCOSTAS PARIS in New YorkUpdated Aug. 31, 2016 9:45 p.m.
“All hands on deck” may become a thing of the past.
Ship designers, their operators and regulators are gearing up for a future in which cargo vessels sail the oceans with minimal or even no crew. Advances in automation and ample bandwidth even far offshore could herald the biggest change in shipping since diesel engines replaced steam.
Key Question: Does this create new demand for ship building?
TECHNOLOGY SHIFT –AUTONOMOUS VESSELS? Trends & Practices
Market Drivers
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A couple of weeks ago, the service said the new $13 billion Gerald R. Ford aircraft carrier (CVN 78) would be delayed by two months to November due to “first of class” problems, without elaborating. The ship is already two years behind schedule and more than $2 billion over budget.
The 1,100-foot-long ship being built by Huntington Ingalls Industries Inc. — is 98 percent complete, the first new aircraft carrier design in four decades and built to operate into the 2060s. The vessel is the first in a $41 billion program to deliver three Ford-class carriers intended to replace the Nimitz-class carriers.
Tug boats maneuver the pre-commissioning unit Gerald R. Ford (CVN 78) into the James River during the ship's "turn ship" evolution on June 11, 2016, in Newport News, Virginia. (Photo by Mae O. Campbell/U.S. Navy)
JULY 25, 2016Navy Hints at Possible Further Delay to New Aircraft CarrierThe U.S. Navy still plans to receive its most expensive warship in November, but has acknowledged that date “may need to be revised” if additional…
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Trends & Practices
Market Drivers
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SHIPYARDSNavy shipbuilding is a market segment most dominated by two large corporations: General Dynamics (GD) and Huntington Ingalls Industries (HII). When the builders of the Littoral Combat Ship (LCS) are added to the five shipyards of these two corporations, we have eight shipyards building the large majority of the Fleet. These principal Navy shipbuilders construct aircraft carriers, submarines, complex surface combatants and the large auxiliary ships of the Fleet. HII's Newport News Shipbuilding and GD's Electric Boat build our nuclear class vessels. HII's Ingalls Shipyard and GD's Bath Iron Works build the destroyer class ships, and HII's Ingalls and Avondale build the amphibious warships that transport the U.S. Marine Corps. FincantieriMarinette and Austal USA build the LCS. Finally, GD's National Steel and Shipbuilding Company (NASSCO) on the west coast, specializes in the larger, complex auxiliary and support ships as well as large commercial vessel construction.
Trends & Practices
Market Drivers
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CASE STUDY
SHIP BUILDING & BOAT BUILDING
ALUMINUM CONTENT ANALYSIS
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Case Study Aluminum Valley
Aluminum Content in Ship Building & Boat Building
Case Study
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Market Size, Structure & Segmentation
Market Definition
Case Study Aluminum Valley
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