DUCKER WORLDWIDE - Metals Service Center Institute · PDF fileMarket size and structure Market...

Confidential © Ducker Worldwide

DUCKER WORLDWIDECRITICAL THINKING FOR CRITICAL DECISIONS.

SHIP BUILDING MARKET ATTRACTIVENESSECONOMIC SUMMIT: FORECAST CONFERENCEM SCOTT ULNICK | MANAGING PRINCIPAL | [email protected] | 2016


THE SHIP BUILDING MARKET

Confidential © Ducker Worldwide3

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?


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?


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

5


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

106


Market Definition


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

7


Market Definition

Refit

Confidential © Ducker Worldwide 8

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

8


Market Definition

Source: Ducker Analysis


MILITARY / PARAMILITARY / NAVYSHIP BUILDING SEGMENT


10

78

78

2014 2017p 2018p 2019p 2020p

Projected US New Naval Vessels Construction

Source: US Navy


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


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

11

Military / Paramilitary / Navy

Segment

http://www.nvr.navy.mil/NVRSHIPS/SBF/FLEET.HTM

http://www.nvr.navy.mil/NVRSHIPS/ACTIVE/FLEET.HTM


COMMERCIAL, CRUISE, BARGE SHIP BUILDING SEGMENT



Market DefinitionCommercial

Merchant Marine Segment



COMMERCIAL AND MILITARY GLOBAL MARKETSHIP BUILDING


MARKET ATTRACTIVENESSShip Building


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


METALLICS IN SHIP BUILDING


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



COMMERCIAL AND MILITARY SHIP BUILDINGKEY PRACTICES, TRENDS & DEMAND DRIVERS


Trends & Practices

Market DriversUSA Shipping

Jones Act

Federal Funding for Defense

US Oil & Gas Production


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.

20

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


BOAT SEGMENTPERSONAL WATERCRAFT SEGMENT


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


“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


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


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…

25

Trends & Practices

Market Drivers


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


CASE STUDY

SHIP BUILDING & BOAT BUILDING

ALUMINUM CONTENT ANALYSIS


Case Study Aluminum Valley

Aluminum Content in Ship Building & Boat Building

Case Study



Market Definition

Case Study Aluminum Valley

CRITICAL THINKING FOR CRITICAL DECISIONS

TRANSACTION ADVISORY GROWTH CONSULTINGMARKET RESEARCHDucker gathers unique market, customer and

competitive insights when others cannot. Leveraging industry expertise and research

capabilities, Ducker develops sound strategies to win in existing and new markets

Ducker’s transaction advisors assist clients with searching and researching acquisition targets, and provide best-in-class diligence to de-risk

M&A transactions. It's a natural extension of our consulting and research services

With a dynamic fact-based and advanced business analytics, Ducker works with management to

develop actionable strategies and detailed go-to-market plans that represent best-fit solutions


EXPERTISE

ACCESS

METHOD

With over five decades of expertise, our teams have in-depth knowledge of your industry, and we can pull from a wealth of databases and data sets to help you arrive at the right decision at the right time.

From your customers and prospects to competitors to global experts and thought leaders, we put our proprietary database of contacts to work for you (but no, we can’t let you see it).

Through our unique combination of proven methodologies and tools, we deliver simple solutions for complex markets that lead to higher company performance. You get practical, actionable advice that boosts your bottom line.


AUTOMOTIVE & TRANSPORTATIONManufacturers, tier suppliers and associations in the global transportation sector count on Ducker to deliver trusted insight

BUILDING & CONSTRUCTIONFrom basic materials to advanced building performance systems, Ducker understands every aspect of the construction industry

HEAVY EQUIPMENTFrom mining, road construction and work at height applications, Ducker’s global access into the equipment industry provides seamless methods to identify and capture opportunity

INDUSTRIALAs reshoring of manufacturing continues and growth of automation reaches a new level, Ducker is there to help clients optimize their product/market strategies around the world

MATERIALS & CHEMICALSDucker partners with clients in the materials and chemicals industry to build sustainable strategies and drive success, even as commodities and prices remain in constant motion

HEALTHCAREOur team helps companies navigate the changing face of healthcare, with solutions that support innovation and foster the growth of manufacturers and providers of medical equipment and provider business models

SOLUTIONS FOR GROWTH IN COMPLEX MARKETS


Using exclusive research and an expansive network of industry professionals, we offer services that help you navigate the industry and the forces that impact it

LARGE MULTINATIONAL CORPORATIONS SMALL, PRIVATE HIGH-GROWTH

ENTREPRENEURIAL ORGANIZATIONSPRIVATE EQUITY &

INVESTORS

MIDDLE-MARKET PUBLIC & PRIVATE BUSINESSES

LENDING INDUSTRY ASSOCIATIONS & GROUPS

GOVERNMENTS & PUBLIC FUNDED GROUPS

BRINGING GROWTH TO BUSINESSES OF ALL SIZES


33


GLOBAL INSIGHTS THAT OUTSMART THE COMPETITION

AmericasTroy, Michigan (Global Headquarters)

EuropeParis, FranceBerlin, GermanyLondon, United Kingdom

Asia-PacificBangalore, IndiaShanghai, China

Ducker Worldwide employs a seasoned team of 150 full-time consultants, located throughout North America, Europe, and Asia- Pacific.

Our team covers all major languages required to do business in Europe, Asia, India, Africa, and the Middle East. This ensures the best cultural fit and most accurate exchange of information needed to turn insights into effective decisions.

In addition to Ducker’s general markets served, Ducker Europe brings their considerable expertise to the emerging energy and environmental industries.

Ducker also offers operational consulting in India and critical data analytics for complex markets across the region.

6


DUCKER IS THE INDUSTRY THOUGHT LEADERDucker’s automotive and materials practice is cited in trade journals, magazines and is routinely

featured as speakers, presenters, and panelists at many global industry events

735


THANK YOU.This concludes our presentation. Today’s presentation was prepared by Ducker Worldwide LLC. Opinions and estimates constitute judgment as of the date of this material and are subject to change without notice. Any interpretations derived from this document are the sole responsibility of the client. Reproduction without the explicit consent of Ducker Worldwide LLC is strictly prohibited.

For more information regarding our Market Research, Transaction Advisory, or Growth Consulting expertise or to learn how Ducker Worldwide can help you, please contact one of our team members at 248-644-0086 or visit our website at www.ducker.com.

DETROIT | PARIS | BERLIN | SHANGHAI | BANGALORE | LONDONwww.ducker.com | [email protected]

36

Date post:	06-Feb-2018
Category:	Documents
Upload:	trinhdung
View:	218 times
Download:	1 times

DUCKER WORLDWIDE - Metals Service Center Institute · PDF fileMarket size and structure Market...

Documents