The cruise industry is keeping the world’s shipyards busy with refurbishments, upgrades and newbuilds. But shipyards cannot rest on their laurels: competition for major projects is intense, and providing mechanisms to reduce the time and cost of delivery can be the difference that cements long-term yard-client relationships.

As well as knowing the cruise business well, a successful yard has to look at innovative ways to ensure that projects are more efficiently managed, deadlines are met and customers satisfied.

“The cruise industry accounts for 60 to 90% of our lifecycle business, depending on the changes in the industry,” says Vesa Marttinen, VP of lifecycle services at Aker Finnyards. “We are seeing more customers for the services we provide, which include project management, upgrade and maintenance.”

Aker Yards is an example of a yard that has looked to develop new ways of managing projects, and its lifecycle services division is proving the merits of such innovation. Its collaborative working processes ensure that it involves all stakeholders in the planning and execution of upgrade and refurbishment projects, and Marttinen believes that this sets it apart from the competition.

“We differentiate ourselves with the project development work we do with owners and architects to get a ship designed and upgraded in line with its mission and the regulatory framework, and with a realistic time and cost projection.”

BUILDING ON SUCCESS

“Aker Yards ASA is an international group that targets sophisticated vessels.”

Aker Yards ASA is an international group that targets sophisticated vessels, and as such it often works with the cruise industry. It has a strong reputation for technology implementation and innovation for cruise, ferry, merchant and offshore industries. Sorry, there are no polls available at the moment.

Recently, it has been reorganising its assets and expanding its geographic reach, including a US office in Florida and new yards in France. The establishment of Aker Yards SA, which will take on the employees, assets and cruiseship contracts of
Chantiers de l’Atlantique, brings the yards at Saint-Nazare and Lorient into the Aker Group. Synergies from this consolidation of cruise and ferry businesses are expected to drive innovation and market presence further.

The Aker Group has 15 yards worldwide, in Brazil, Finland, Germany, Norway, France and Romania. An agreement is also planned that would establish a joint venture to take ownership of the Damen Shipyards Okean yard in Nykolayiv, Ukraine, further increasing Aker Yards’ steel section and shipbuilding capacity.

The company has never been busier, according to its recent quarterly results.
Upgrade and newbuild projects for the cruise market have featured strongly. In the first quarter of 2006, the company reported a record number of orders. In the first three months of 2006, its order intake was NOK14.3bn, of which cruise and ferries, along with offshore and specialised vessels, contributed the major share.

Across all its yards, Aker Yards has an orderbook that comprises 123 vessels, and the group is projecting sustained growth for the rest of the year. The work undertaken for the cruise and ferry sectors is handled in Finland and France.

The upgrades business is a vital part of the lifecycle services division, and it brings together three types of project – conversions, refurbishment and retrofitting. The yard is busy in all areas, with projects including a diesel retrofit for a major cruise customer to improve vessel efficiency. Conversion projects, aimed at adding capacity to existing ships, are also healthy, providing around one third of Aker’s upgrade business.

By far the busiest sector, however, is refurbishment. “Operators have a better
picture of passengers’ needs, which are changing rapidly,” says Marttinen. “Some
are branding fleets, so there’s a lot of work in refurbishing interiors. This type of work
accounts for half of our upgrade business.”

A significant proportion of the refurbishment work undertaken by Aker Yards is on ships that are being repurposed for new routes and destinations. While this may have
implications for the ship’s capacity, a refit of the interior is necessary to suit a new passenger demographic, the cultures of the countries a ship will visit and the brand of the cruise line.

CONSULTANCY AND COLLABORATION

The success of this business is in part due to Aker’s collaborative processes, upon which it relies heavily. With its expanding pool of skills and assets, Aker is now better positioned to add value to its lifecycle services through the extended project management offering.

These extra consultancy services in turn encourage stronger client relationships. “We add value by finding ways to improve the predictability of prices, schedule and quality,” says Marttinen. “Customers like this because they have to report their costs quarterly, so they need reliable estimates.

“We can do this because we have the flexible resources to be able to deliver on our promises, even though there are always surprises when working on second-hand ships. You need the right resources to meet the challenge. But more important is the close cooperation with owners and people on site.”

Such a method of working requires the buy-in of all parties involved, but cruise operators seem keen to share in the collaborative processes that Aker proposes. It also requires experience in the cruiseship upgrade market.

In addition, Aker has focused on developing access to flexible resources to accommodate the specific needs of each project. This collaborative style of working is crucial for larger upgrade projects and newbuilds. Such orders are already on Aker’s books, with Royal Caribbean Cruise Lines (RCCL)’s Genesis accounting for half of the order value for the first quarter of 2006.

Genesis is intended to be a next-generation vessel, with a handsome €900m budget, making it the most expensive commercial ship ever ordered. Aker Yards is scheduled to deliver the 220,000 tonne vessel in autumn 2009, having spent an estimated 5800 man-years of work on it. The Genesis project also includes an option for another vessel of similar size and design.

“A significant proportion of the refurbishment work undertaken is on ships that are being repurposed for new routes and destinations.”

The relationship between RCCL and Aker Yards is well established, the two having worked on cruiseship development and construction for over 35 years. If any evidence were needed of the importance of strong, long-term ties with major clients, this is it.

Aker Yards has already delivered 12 newbuilds and three lengthened vessels to RCCL and three more are on order. Furthermore, it shows that such close relationships can lead to further work on the cruise industry’s most innovative and forward-looking projects.

Genesis is not only a huge undertaking in terms of the size of the vessel and the scale of the project, but also because of its design innovation and technological sophistication. Aker Yards’ previous largest ship was the Freedom of the Seas, which was recently delivered to RCCL.

Genesis is over 40% bigger, at 360m in length, 47m wide and 65m high above the waterline. It will have accommodation and facilities to cater to 5,400 passengers.

From such projects comes invaluable experience. This in turn feeds into the project management and collaborative working processes that are key extras to the services Aker offers the cruise industry, as well as adding to an already impressive track record. A virtuous circle of experience, resource development and consultancy is created, bringing more business to the yards while cementing client relationships.

Ultimately, Aker Yards is a good example of how important it is for shipyards to remain focused and competitive, even when there is a good flow of work from the cruise market.

“For us, the important developments are the new projects, the expansion in France and Florida, and the quality of our worldwide network of suppliers, which is essential in bringing projects in on time and to cost,” says Marttinen. “The lifecycle services business has annual net sales of €50m, mostly from the cruise industry, so it is important that we keep developing our resources and our assets.”