Jacques Hardelay is the current general manager of STX France, a major player in the complex shipbuilding sector. Since November 2008, he has been a member of the management team of STX Europe, the largest shipbuilding group in Europe and the fourth-largest in the world. He is responsible for all the activities of the group in France, including work at the company’s two shipyards in Saint-Nazaire and Lorient, and STX Solutions and STX Cabins, specialists in engineering and cabin manufacturing. Hardelay is also vice-president of GICAN, the French Naval Industry Group, and vice-president of CESA, the Community of European Shipyards Association.

In May 2012, STX Europe is scheduled to deliver a new cruise ship to MSC Cruises. The 140,000GT MSC Divina will be a sister ship to the MSC Fantasia and MSC Splendida, and it will be the ninth MSC vessel to be built at the Saint-Nazaire shipyard.

“Customer expectations are higher than before and we have to change the way we work and what we offer to the customer.”

Christopher Kanal: How is the project for MSC doing?

Jacques Hardelay: Everything is on track. There are no problems at all. It is a repeat order for one of our biggest customers.

CK: There has been a big dip in orders in the last few years. When do you see the situation improving?

JH: The situation is better. We will have to manage between five and seven cruise orders a year now for the next two to three years compared with double that at our peak in 2006. Then, we completed 12 ships. The ships are bigger now and customers will order fewer than before, but we see some movement.

CK: You laid off a number of personnel at the Saint-Nazaire yard in 2008. Will there be future redundancies there or elsewhere across your shipbuilding operations?

JH: No. We are stable with these orders. We will keep the people as they are. We are not intending to cut our labour force. We need to increase the work only, not decrease the people.

CK: What is your strategy for bringing in more orders? Do you intend to open new markets outside Europe?

JH: We are working harder than ever. In the past the customers came to us. Now we are a lot more proactive and it’s a strategy that has led to positive movement. We have a good relationship with our customers that is leading to new orders and customers.

CK: Can you describe the current customer trends for ordering new ships?

JH: We see a global trend for ordering ships of 140,000 UMS. Luxury operators, like Hapag Lloyd, are looking for 50,000UMS. There is a potential market for new designs around 100,000 UMS. STX Europe’s cruise shipbuilding has three segments divided by size: large up to 140,000UMS; medium up to 100,000UMS; and luxury at around 50,000UMS. The luxury market is where we see the most future growth.

CK: In terms of the market for newbuild cruise ships, will the market ever return to 2006 levels or has it evolved into one with fewer new orders and more refurbishment projects?

JH: Refurbishment is growing as fleets get older. All the big players will focus on refurbishments because they need to update their ships to extend their life. Modern ships on the one hand have to comply with new rules on environment, safety and emissions, but on the other, there are other very good reasons to update ships. Operators want to improve the economy of the ships and reduce the cost of operations with new engines that reduce fuel consumption. There are a lot of areas on an existing ship that you can focus on to modernise it and avoid buying a new one.

“Operators want to improve the economy of the ships and reduce the cost of operations with new engines that reduce fuel consumption.”

CK: Have you found that the slowdown has provided STX Europe with an opportunity to develop new shipbuilding concepts and new technologies?

JH: This crisis is useful but it is a pity that we needed a crisis to accelerate our plans for innovations. We realised that we were not good enough. Customer expectations are higher than before and we have to change the way we work and what we offer to the customer. It is an opportunity, but it is always the situation that when you have less money, you have to spend more money on research.

CK: What are you main areas of technological exploration at the moment?

JH: We are working a lot on new propulsion and energy-saving concepts. We see the potential reduction of operational costs as a key area and STX Europe is able to propose very good solutions.

CK: How do you keep abreast of ever-changing environmental legislation affecting the industry?

JH: We need to anticipate the changes – if we wait it is too late. The time of development of new solutions is quite long so we work on new solutions in order to offer something viable to the customer. Hypothetically, the ship that we are building now will be delivered in 2014 so we need to be ready to comply with the rules.

CK: Are you working on any new classes of ships to replace the old ones?

JH: No. We work on a platform basis so we modernise continually to try to make our platforms more effective.

CK: How has STX Europe evolved since STX Group took over Aker Yards ASA in 2008?

JH: There have been no big changes yet but that is linked to the [global] crisis. The current owner went in exactly at the moment of crisis. They had a lot of ideas but were not able to apply them because of the timing.

CK: How has the management structure changed since STX Group took over?

JH: There has been no change in terms of how we manage projects. The Koreans have no experience of cruise projects of the complexity we do. They have not been directly involved in France in the day-to-day management. They give support in other areas. As we emerge from the crisis they will be more and more involved in the business in a proactive way.

“I don’t think the market is ready to build more Oasis of the Seas-type vessels.”

CK: How is STX Europe competing in the global market as a pan-Asian/European company?

JH: We are a European company with an Asian shareholder. The takeover has had no impact on who we are. Thanks to the STX Group we have opened a new market in Asia, which is a big positive. We will also work with STX to improve our construction technology. STX have very good industrial knowledge and  we can improve our operations by learning from them.

CK: What are Europe’s strengths and weaknesses in shipbuilding compared with Asia?

JH: It is difficult to compare Europe and Asia. It is like comparing manufacturing trucks with building Rolls-Royces. What Asia produces is completely different. We can’t build Rolls-Royces like we build trucks but we can learn. Something we are doing in a very expensive way can be improved. The process can always be improved by using new methodology to reduce our construction costs.

The yard in South Korea is quite new and it is built around the process. Our yard in Saint-Nazaire is old and we have added the process to the yard, which is not very good. Our capacity for investment in South Korea is a lot greater than in Europe. This is because they have a very stable volume. In Europe it has been up and down. That is very bad for the performance of the yard.

CK: Are there any avenues in terms of the types of ships that you are building that you would like to explore further, such as larger designs?

JH: Oasis of the Seas is a fantastic ship but I don’t think we will be building a ship of this size again because the market doesn’t demand one at the moment. RCCL had a fantastic idea to order these two ships; however, the logistics are huge. In Europe, cruise operations exist around ship expeditions. In the US the ship itself is the destination. I don’t think the market is ready to build more Oasis of the Seas-type vessels. The organisation within such a big ship is so very different, creating significant logistical challenges.

We can do something similar again but the operator needs to have a solid business plan behind it. Oasis of the Seas is probably good for one market. The trend today is for ships between 140,000t-150,000t.

CK: On a wider issue, how are the cruise shipbuilding and cruise industries facing up to the challenge of a new era of tight financing?

JH: Money is the main issue. It is difficult to find people ready to finance. Now, with the situation improving, you will find greater facility to finance but the main question is the cost of financing. The cost is increasing and customers are reluctant to pay it. This has been the main reason for newbuild projects being postponed recently.