European Shipyards Resume Work
Several of Europe’s leading shipbuilders have announced plans to slowly resume operations after more than a month of disruptions. During the peak of the coronavirus, shipbuilders in Italy, France, Spain, and Germany were each forced to suspend operations.
Chantiers de l’Atlantique, in Saint-Nazaire, France, is taking the first steps to resume its operations on Monday, April 27, 2020. Starting in mid-March, work had been suspended with the yard maintaining administrative functions working from home. Work is now expected to restart in some of the yard’s fabrication shops, including the cabin manufacturing facility, and on board ships, with the use of personal protective equipment. However, it will be voluntary and at half normal staffing levels until mid-May. Subcontractors can also resume work with reduced staffing levels. Chantiers expects all production activities and other functions such as the design office will begin operating on May 11, although some activities may continue to work from home.
The resumption of work at the French shipyard comes a week after Fincantieri, headquartered in Italy, also took the first steps to restore operations at its yards after having been closed since March 16. “We gradually re-started production in all our yards in Italy,” said a spokesperson for Fincantieri. “This process will take place spanned over several weeks in order to ensure safety to all our workers.”
Fincantieri’s yards are currently working with reduced levels of staffing as well as staggered shift schedules. Employees at the yards are also being supplied with personal protective equipment, undergoing temperature checks at the entrances, and using private buses so that they are not on public transport. While the Italian Government is targeting early May to begin relaxing restrictions, it is anticipated that it will be late May or early June before Fincantieri has returned to more complete staffing levels and resumed normal production levels.
Other European countries are also working to reopen their shipyards. In Spain, Navantia has started some activities at some yards while cleaning efforts are underway at other facilities. Shipbuilding company MV Werften, with operations in Wismar, Rostock, and Stralsund, Germany, suspended operations in late March and is now targeted early May to resume operations if supply chains are again functioning. However, Meyer Werft in Papenberg, Germany and Meyer Turku in Finland, were able to continue work at reduced levels and with added safety precautions as the virus spread across Europe.
While the return to work is a positive development for the shipyards, they nonetheless are facing high levels of uncertainty. Work on military and Government projects is expected to be unaffected by the economic repercussions of the pandemic, but there is a much higher level of uncertainty with commercial orders and especially those from the hard-hit cruise ship sector.
Combined the shipyards currently hold more than $60 billion in cruise ship orders for more than 100 ships originally scheduled for delivery over the next eight years. In 2020, the cruise lines had been expected to take delivery on more than 20 new ships. Only five of those ships had been delivered before the shutdowns, with other additional ships delivered at the beginning of the public health crisis. Chantiers de l’Atlantique delivered the 129,500-gross ton Celebrity Apex to Celebrity Cruises on March 27, and Ulstein Verft delivered the new luxury expedition ship National Geographic Endurance.
Several other large cruise ships, however, are being delayed by the shutdown. This includes P&O Cruises' Iona, which Meyer Werft was due to deliver in April for a maiden voyage in May and the Enchanted Princess, under construction at Fincantieri and due to begin her pre-inaugural activities in June. Crystal Cruises has also announced a delay for its new expedition cruise ship the Crystal Endeavor due to the work stoppage at MV Werften. Four other large cruise ships, Carnival Cruise Line’s Mardi Gras, Costa Cruises’ Costa Firenze, MSC Cruises’ MSC Virtuosa, and Royal Caribbean International’s Odyssey of the Seas, all had also been scheduled for delivery before the end of the year.
With the cruise lines facing significant financial challenges and commercial shippers dealing with greatly reduced levels of activity, new construction orders have largely ceased. There is also speculation that the cruise lines will seek to delay, cancel or possibly sell some of their current orders creating additional challenges for the shipbuilding industry as it seeks to recover from the disruptions caused by the spread of COVID-19.