Industry Outlook Forum – European Cruise Council

1. Industry Outlook Forum – European Cruise Council Overview of the state of shipbuilding orders in Europe and a vision for its future Jacques HARDELAY, General Manager, STX France and CESA Vice President 14th September 2010

2. General overview • Financial crisis • Sovereign crisis • Cruise goes on but however deeply impacted : • End customers behavior • Cruise brands economy • Shipbuilders and industrial network load and health • Most probably long term changes and new configuration

3. Orderbook – status • 12 vessels ordered per year up to 2007 • 0 vessel ordered the next 2 years • Some orders were then placed from end 2009 to mid 2010: • 1 Carnival Dream to Fincantieri • 2 Princess vessels to Fincantieri • 1 MSC vessel to STX France • 1 GNMTC (Libya) vessel to STX France • 1 Aida vessel to Meyer Werft • 2 NCL vessels ? • 1 Hapag Lloyd vessel ? • 6 to 7 vessels per year are expected to be ordered in the future • Clients more and more demanding in term of price: 150 K€ per LB ! • Equipment prices do not necessarily follow the main trend !

4. Consequences on shipbuilding industry • High outfitting load due to delivery of ordered vessels (ex: Epic mid 2010 / Allure of the Seas for end October 2010) • A steelwork underload followed by an outfitting one • Then, necessity to come back to higher load within a lower order context • Such load variations are very detrimental to: . Management of human resources, . Efficiency, . Financial results

5. How to deal with underload periods ? • Redeployment scheme such as: . Transfer from steelwork to outfitting work . Less subcontracting in favor of internal staff • Training • Unemployment measures • Plan of Voluntary Departures • Lay-off plan

6. How to deal with underload periods on a long term? • By diversifying . Engineering works for other industries . Production for other segments of marine industry . LCS (Life Cycle Services) works • By reduction of capacity ?

7. How to manage price drop? • By monitoring shipyards' overheads • By increasing productivity thanks to investments and process improvements • By developing more efficient design in term of construction (ex: more compact GA and « lean » technical specifications… ). Good understanding of shipowners • By proposing more efficient design in term of operation costs (ex: energy savings) Shipowners must accept to pay more considering good ROI

8. Importance of prototypes • Today, new regulations (Safe Return to Port / Probabilistic Stability) is still leading to develop new prototypes • Pressure on prices may encourage our customers to order longer series and develop platforms thinking • But prototypes are necessary to maintain shipyard design resources and competences, essential to develop innovative designs in the future

9. Improve productivity: some trends • Computer systems (CAD) • Logistics • Quality • « Lean » processes • Investment capacity is limited !

10. Far Eastern appeal: is it a real threat? • Volumes reduction in cruise segment • Prices decrease • More and more sophisticated vessels • Higher Asian currency and standard of living • Lead to think that Far Eastern countries should wait a little bit more ! • However present in some tenders

11. Conclusions • Very challenging time for shipbuilding industry (load and price) • Shipyards and network adapting themselves to present situation with difficulty • Shipyards and network looking for better efficiency in the future • Shipowners have to maintain sufficient level of orders, including some prototypes • Shipowners must be open to shipyard initiatives when developing together efficient designs

12. Thank you for your attention