A legacy of success15 August 2018
Despite a bulging order book, it’s been a bittersweet summer for Italian shipbuilder Fincantieri, as its influential former CEO, Corrado Antonini, died in July. Ross Davies takes a look at his legacy as the company looks to retain its market dominance.
Always sharp-suited, and with the cool demeanour of a statesman, Corrado Antonini rarely struggled to command a room. Under his custodianship, first as managing director, and then CEO from 1988–2012, Antonini oversaw the transformation of Fincantieri from a small Italian state-holding company to a European champion of shipbuilding.
It was therefore somewhat fitting that Antonini’s death, at the age of 84, was announced on July 20 – the same day that Fincantieri welcomed Virgin Voyages to its Sestri Ponente shipyard in Genoa to celebrate the steel cutting of the second of three ships to be built for the cruise line.
Antonini had parted company with Fincantieri almost six years earlier – by which point he had attained the position of executive chairman – but his influence remains indelibly stamped on a company that is now listed on the Milan stock exchange.
Fincantieri CEO Guiseppe Bono broke the news in front of delegates in Genoa, at the time alluding to “a wealth of wisdom, moral rigour and honesty” left by Antonini in his wake.
Micky Arison, chairman of Carnival Corporation, Fincantieri’s biggest client, also paid his respects, describing Antonini as “not just a business colleague, but also a close personal friend”.
But, as a thoroughbred shipbuilding man, Antonini would surely be heartened by the fine health his old company’s order book currently finds itself in. As summers go, it’s been a busy one for Fincantieri.
As mentioned, the group is set to build three new ships for Virgin. At the steelcutting ceremony, it was revealed that the first of which will go by the name of Scarlet Lady – named after one of the first aircraft to fly under sister company Virgin Atlantic. It is expected to be out on the water by 2020.
The second ship – yet to be named – will be in the region of 110,000t, measuring a length of 278m and a width of 38m. Delivery of the vessel is scheduled for 2021.
The deal with Virgin, a relative newcomer to the cruise industry – initially launching as Virgin Cruises in 2014 – serves as further evidence of Fincantieri’s growing status as one of the world’s premier shipbuilders. Virgin is purported to have set its sights on the Trieste-based group.
The Italian Royals
Only days after Virgin’s visit to Sestri Ponente, it was announced that Princess Cruises had also confirmed two new ‘next-generation’ vessels to be built by Fincantieri, complementing three Royalclass ships already in the order book.
Each ship will weigh approximately 175,000gt and will be able to hold up to 4,300 passengers – a record capacity for Princess. Delivery of the ships is set for late 2023 and early 2025.
The new orders consolidate strong relations between the two companies, dating back to Antonini’s time at the tiller, when Fincantieri built its first for Princess, the 77,499gt Sun Princess, in 1995.
Coinciding with the cruise industry’s pledge to clean up its environmental act, the brief this time around also includes the construction of Princess’s most eco-friendly ships to date, powered predominantly by liquefied natural gas (LNG).
“After so many years, we are ready to enter a new era of this industry, increasingly aimed at reducing our environmental impact. We do this with an all-time record project, in terms of size,” said Bono.
In the meantime, Fincantieri is expected to finish work on the Sky Princess, its vessel for the Royal-class ships, in October next year; the other two will follow in 2020 and 2022. Not to be outdone, July also saw Norwegian Cruise Line and TUI Cruises order two new ships apiece from Fincantieri.
Norwegian confirmed orders for its fifth and sixth vessels belonging to its Project Leonardo class. With delivery set for 2026 and 2027 respectively, the ships will weigh in at 140,000gt and be able to accommodate around 3,300 guests. Similar to Princess, these new orders are notable for prototype designs with a focus on energy efficiency.
As of this summer, Germany-based TUI Cruises has also placed its first orders with Fincantieri for the construction of two new LNG-powered ships. The vessels, set to weigh 160,000gt, will be built at the group’s Monfalcone shipyard, located close to its headquarters. Moreover, they will, when completed – in 2024 and 2026 respectively – hold the distinction of being the largest ships ever built in Italy.
It’s fair to say that Fincantieri, a state-controlled company, has been aggressively growing for some time now. In addition to having completed 85 cruise ships since 1990, 47 ships are currently in the design stages.
This modern tale of dominance has not been without its controversy, however. In February this year, the group finalised the acquisition of French shipyard STX in a deal reported to be worth €59.7 million. The shipyard, based in Saint-Nazaire, in western France, has traditionally specialised in cruise ships.
During heated talks last summer between Italian and French ministers, newly appointed French President Emmanuel Macron angered Rome by ordering a “temporary nationalisation” of STX in a bid to protect national and commercial interests.
This initially appeared to put an end to the deal. However, a compromise was finally reached earlier this year in which Fincantieri agreed to buy a 51% share in STX, contingent on the loan of one percentage point by the government. Fincantieri, in a public statement, hailed the deal as “an important step towards an alliance in cruise and also military naval sectors”.
As it has gone about fattening its order book, Fincantieri has also been keeping an eye on developments further afield. Despite a reported slowdown, the Chinese Ministry of Transport expects the country’s passengers to surpass 4.5 million by 2020 – representing growth of an unprecedented 100%.
Such gaps for exploitation are not lost on Fincantieri, which recently agreed to an order from fellow Italian player Costa Cruises – Carnival is its parent company – to build the operator’s first ship specifically with the growing Chinese market in mind and look to the future of the industy.
Work on the vessel, christened Costa Venezia is progressing well. On 25 July, an official float-out ceremony was held in Monfalcone, with the 135,500gt vessel expected to set sail early next year. Fincantieri has also begun cutting steel on a sister ship, which is pencilled in to launch in 2020.
For all the opportunities that might arise out of China, there are also challenges for European shipbuilders. As part of Beijing’s ‘Made in China 2025’ initiative, the country is currently on a drive to ramp up domestic manufacturing at its shipyards and infiltrate the marketplace.
Rather than let itself be cowed by such developments, Fincantieri has done the opposite and embraced Chinese progress. Last year, at the behest of Carnival, it was reported that the group had sent a team of advisers to China State Shipbuilding – one of the country’s largest shipping conglomerates – to help teach the company how to plan and execute the building of a better standard of cruise ship.
In his latter years, serving as chief of the Euroyards consortium, Corrado Antonini often spoke of China’s potential to get ahead in the international shipbuilding market, with it having the requisite materials and a large market size to capitalise on.
In an address to the International Union of Marine Insurance in 2016, the ex-Fincantieri chief forecasted that “at the end of the decade, China will be the most important market in the world. There are plans to move the construction of certain ships to China. It is such a huge market, that they might well think of producing ships for their own market.”
As Fincantieri looks to the future, in what now appears to be changed, challenging and ultimately more competitive marketplace, the company will do well to heed the words of the man who played such a sizeable role in its success.