LeaderSHIP 2020 ‘Final Report’

LeaderSHIP 2020

The Sea, New Opportunities for the Future

Brussels, 8th of February 2013

Contents

1. The LeaderSHIP 2020 Initiative by the European Maritime Technology

Industry ................................................................................................................3
2. A Strategic Vision for the Maritime Technology Industry ..............................4
3. Fostering Conditions for Business Success ...................................................10
4. Recommendations by the LeaderSHIP 2020 Coordination Group ...............21

Annexes

I PROGRAMMES AND FUNDS RELEVANT FOR EMPLOYMENT AND SKILLS

DIRECTLY MANAGED BYTHE EUROPEAN COMMISSION

II RELEVANT MARKET SEGMENTS FOR R&D&I

Acknowledgments:

This report reflects the dedicated work of a ‘Coordination Group’ established for the revision of the
LeaderSHIP strategy. It was composed of all the relevant stakeholder groups of the European
maritime industry. This includes representatives of the European Parliament, Member States,
European Commission Services, maritime technology manufacturers, classification societies,
shipping, dredging, the wind energy industry, trade unions, non-governmental organisations and
European maritime regions.

Definition:

The European maritime technology industry encompasses all the enterprises involved in the
design, construction, maintenance and repair of all types of ships and other relevant
maritime structures, including the complete supply chain of systems, equipment, services
and supported by research and educational institutions.

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 1. The LeaderSHIP 2020 Initiative by the European Maritime Technology Industry

1.1. LeaderSHIP 2015

In 2002 the European shipbuilding industry developed a vision and a robust strategy for 2015
to ensure its “long term prosperity in a dynamic growth market”. Its vision was based on five
key strategic elements:

1. Improving leadership in selected maritime market segments;

2. Continuing to drive and protect innovation;
3. Strengthening customer focus;
4. Improving industry structure and implementing a network driven operating model;
5. Emphasising production optimisation and shift towards a knowledge based
production;
The LeaderSHIP 20151 strategy was subsequently developed with the European Commission
in close collaboration with the industry. It was successful at becoming a role model for a
modern industrial policy.

In the period from 2002 to 2008 the European maritime technology industry recorded
substantial growth, and the sector was able to orientate itself as a competitive and
innovative world leader in highly-specialised market segments. Enormous progress was made
on all five key strategic elements, and they are still as relevant today as 10 years ago.

Throughout the last decade there has been a notable shift in public perception and European
policy towards the sector. It has been acknowledged that it is a modern, high-tech and
efficient segment of European manufacturing that can drive growth and create new jobs.
1.2. Unprecedented Challenges and New Opportunities: the Need for a LeaderSHIP 2020
In 2008 the financial and economic crisis heavily impacted the global markets and
consequently the business conditions in Europe. Trade volumes dropped, freight rates
collapsed by more than 90%, affecting ordering activities by a similar order of magnitude.
Already in its sixth year, the crisis is continuing to put pressure on the European maritime
technology industry through difficult access to finance, a drop in production and low
business confidence. Aggressive expansion in Asia has led to the development of
unprecedented overcapacities. Today, the market conditions are far more challenging than a
decade ago and hence a revised and updated strategy needed to be forged by the European
maritime technology industry and European Policy makers.

At the same time, new opportunities are arising, notably in the field of harvesting offshore
resources, such as marine renewable energy (off-shore wind and ocean energy).

The revision reflects an integrated approach, seeing stronger involvement of the user
industries, trade unions, non-governmental organisations and European, national and
regional actors. The main aim is to provide a series of recommendations for the short and
medium term to support sustainable growth, high-value jobs and address the societal
challenges Europe is currently facing.

1
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2003:0717:FIN:EN:PDF

3
 1.3. Policy Context

European maritime technologies are a crucial component for Europe 2020 to succeed. The
policy’s priorities of developing an economy based on knowledge and innovation (smart
growth) and promoting a resource efficient, greener and more competitive economy
(sustainable growth) provide a perfect match for the opportunities to be found in the
maritime field. This also reflects the guidelines set out in the 'Limassol declaration2 on a
marine and maritime agenda on growth and jobs'.

The Commission communication ‘A Stronger European Industry for Growth and Economic
Recovery3’ addresses many of the issues included in LeaderSHIP, aiming for a reinforced
industrial policy, e.g. access to finance and markets; research, development and innovation;
and the importance of human capital, etc.

Given this context a specific approach to industrial policy, including crisis response is
essential, acknowledging that not all issues can be addressed by a standard set of tools. It is
true that many common challenges that affect business can be addressed with a horizontal
approach. However, in the case of the European maritime technology industry there are
sector specific challenges which need dedicated focus without forgetting the links in the
supply chain and the creation of synergies with related sectors.

2. A Strategic Vision for the Maritime Technology Industry

2.1. Strategic Importance

The European coastline is approximately 136.000km and the oceans and seas are an integral
part of the continent’s traditional maritime orientation and also a source of new
opportunities for the future.

For generations the European seas have inspired exploration and the development of
breakthrough innovations in order to harness its potential, and considered a frontier which
needed to be overcome. By 2020 Europe should reaffirm the significance of the sea as a
frontier offering immense opportunities.

Mankind’s use of the sea is broad and includes maritime transport, the enabler of global
trade; offshore oil & gas, the back-bone of energy supply in an economy which is still largely
based on hydro-carbons; aquaculture activities, an essential source of protein for a growing
world population; maritime tourism; marine renewable energy; coastal protection and land
reclamation; off-shore mining; floating structures and factories; and various aspects of
maritime and marine research.

Europe can be proud of its outstanding ability to design, manufacture and build the full
range of high-tech vessels and maritime structures which meet the most stringent safety
and technical requirements, allowing the continent to engage in global trade, exploit
resources and when the necessity has arisen, defend its strategic interests. However, with
the shift of focus from the West to the East, Europe’s maritime capabilites are being
challenged on a daily basis.

2
https://webgate.ec.europa.eu/maritimeforum/content/3060
3
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2012:0582:FIN:EN:PDF

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 Shipping and consequently the building of merchant vessels as well as maritime
manufacturing have seen cyclical and often volatile market developments. The construction
of cargo ships has largely shifted to China, Korea and Japan producing four-fifths of the
world’s vessels. European production has mainly focused on the production of specialised
high-tech ship types.

New Orders by Main Shipbuilding Areas4:

This graph reflects the volume of global new orders by main shipbuilding areas. If naval
shipbuilding is taken into consideration, then the value of the sector could be perceived as
being significantly greater5.

The global ‘added value’ of the European maritime technology industry is not truly reflected
by statistics based on tonnage and should be, by no means underestimated. Many
businesses have evolved and greatly benefited from the diversification and specialisation of
maritime markets. This specialisation has been technology intensive which has allowed
Europe to maintain a leading edge in design, innovation and servicing of the most
demanding ship types.

4
SEA Europe elaboration of data from IHS Fairplay, 2013
5
The naval shipbuilding industry is not addressed in this report.

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 Ships and Maritime Equipment Industry
The ships and maritime equipment industry employs more than 500.000 people and has an
average annual turnover of around 72bln€. Comprising of:

Shipbuilding and Ship Repair

The European shipbuilding industry and ship repair industry is made up of around 300 yards
of which more than 80% can be considered to be ‘small to medium’ (building ships of 60-
150mt). The remaining yards can be defined as ‘large’. Around 90% of the orderbook is for
export markets.

Marine Equipment Manufacturing

The European marine equipment manufacturing and industry (propulsion, cargo handling,
communication, automation, integrated systems, etc.) is made up of around 7.500
companies, the vast majority of which can be considered to be ‘small to medium’. Around
70% of production is for export markets.

2.2. The Industry in 2012

Reduction of New Orders and Overcapacity

The global maritime technology industry is facing serious challenges. New orders for ships
have virtually collapsed from a pre-crisis speculative boom of 85mln cgt to 16 mln cgt in
2009 and have remained low. The expected average order volume is 30-40m cgt annually.

At the same time the expanded global shipyard capacity reached new output records year
on year peaking in 2012 at around 60m cgt. The capacity expansion in shipbuilding has
mainly taken place in China, Korea and other emerging markets, however Europe has
refrained from taking this approach. The long production cycle in shipbuilding means that
the impact of low orders on the supply chain and on employment is only now being felt. This
is particularly concerning for Europe.

Massive Capacities Built Up6:

6
CESA Market Monitoring, elaboration of data from Lloyds List Fairplay, 2011

6
 The capacity of the existing fleet is well above the demand due to speculative ordering and
reduced growth in trade volumes. At the same time Asian shipyards are still delivering record
volumes of cargo vessels resulting in shipping freight rates sharply decling as a consequence
- in some market segments by more than 90%. Lower revenues coupled with high fuel prices
and depreciation of assests have seen a sharp decline in the profitablity of shipping and
hence new ship orders.

World Shipbuilding Supply and Demand7:

The specialised segments of shipbuilding (cruiseships, offshore support vessels, etc.) are not
directly affected by overcapacity in the cargo shipping fleet, however, the drought of
financing has meant that new orders in these segments have also diminished. The European
orderbook has shrunk to 30% of the pre-crisis level at the end of 2012. A major problem is
that Asian mass producers of steel intensive vessels are increasingly trying to enter these
relatively small niche markets in some cases supported by their governments.

More than 50.000 workplaces have been affected and in several maritime fields, Europe is
losing self-sufficiency, highlighting an overall strategic weakness. The relocation of simpler
manufacturing processes risks to be followed by the relocation of the more complex
systems and their operation.

Strong Positive Long-Term Trends Remain Intact

Given the current challenging conditions in the industry, there are several trends which have
been identified and offer substantial opportunities.

The high expectations of society with regard to the impact of human activity on the
environment and safety can be perceived as a driving force for the sector. The substantial
increase in the price of oil has led to a dramatic shift in the cost structure in the operation of

7
SEA Europe, elaboration of data IHS Fairplay, 2013

7
 ships. Regulatory changes addressing climate change, energy efficiency and air quality will
accelerate this trend and should therefore stimulate a gradual ‘green’ fleet renewal.

Furthermore there is a growing awareness of the vast potential that the sea has to offer
which can translate into new growth opportunities. Marine renewable energy and raw
materials are prominent examples of this.

Long term global demographic and economic growth will act as a stimulant. Despite the
negative situation of the industry today, the economic drivers of the globalisation process
remain in existence and the longer term demand for maritime goods and services will see
solid growth. It is expected that this will restore balance of supply and demand in the
shipping and shipbuilding markets.

The Way Ahead

Despite long term favourable prospects the present economic situation needs to be taken
into account. The fleet/shipbuilding overcapcity, economic recession and chronic lack of
financing need to be dealt with effectively. in order to avoid structural damage to
competitive companies and the loss of critical mass which safeguards that competitiveness
once the downward trend reverses.

2.3. Strategic Vision for 2020

The industry stakeholders have identified the following characteristics of a strong,

sustainable and competitive European maritime industry in 2020:

 Strategic: An evolved public perception and the acknowledgement that the maritime
technology industry is of strategic importance for the EU and provides quality
employment for large global companies, SMEs, in defence and security in Europe;
 Innovative: A sector which delivers cost-effective, innovative and technologically
advanced products and services through effective use of RDI and high productivity;
 Competitive: A successfully restructured sector offering attractive long term
employment opportunities for a highly skilled workforce, including younger workers. A
workforce in manufacturing, R&D and servicing that is trained and prepared to work
with a multitude of technologies;
 Specialised and Green: An industry producing specialised products integrating
‘green’, innovative and safe high-tech technologies, ranging from ships for conventional
markets (transport, leisure, oil & gas, etc.) to vessels, structures and systems,devoted
to a safe and sustainable exploitation of the oceans and of marine renewable energies;
 Life Cycle Oriented: An industry taking care of the environmental footprint of their
products from design, through production and operation up to dismantling and
recycling;
 Export Oriented A sector exporting a significant share of ships, maritime structures
and systems, characterised by high-quality and high performance in specialised market
segments;
 Energy Efficient: Special emphasis on design, product development and the cost-
effective exploitation of technological solutions aimed at energy efficiency and
emissions reduction;
 Global: A strong European manufacturing base for ships and components sold on the
EU and global markets which offer a genuine level playing field to all players in the
sector, based on the principles of safety, sustainability and fair competition following
balanced trade deals which include sector specific provisions where necessary.

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In order to realise this strategic vision, two essential conditions need to be met. Firstly, the
private sector and policy actions by authorities at EU, Member State and regional level
should complement each other. Secondly, all policy areas having an impact on the maritime
technology industry and its customers must be well coordinated among the relevant
authorities in charge.

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 3. Fostering Conditions for Business Success

3.1. Four Pillars for Action

To achieve the aims of the ‘strategic vision’ for 2020 an integrated approach is needed. The
European maritime stakeholders have narrowed down the areas of policy action to four
main themes of focus:

 Employment and skills

 Improving market access and fair market conditions
 Access to finance
 Research, development and innovation

In order to bring about the sectoral change needed and create a truly competitive and
sustainable industry, policy recommendations under these four main headings shall be
explored.

3.1.1. Employment and Skills

The global crisis has a twofold impact on employment and skills in the European
maritime technology industry.

On the one hand as a result of the global economic situation the product portfolio of
many European producers has been adjusted and shifted. The increased complexity
of the products has created additional demand for highly skilled staff. Therefore a
large part of the industry is suffering from a pronounced scarcity of skilled personnel
and this is a restriction on growth.

Conversely the current economic situation is triggering a phase of consolidation for

all the actors involved in the shipbuilding industry. It has been estimated that 9% of
world capacity will close in 2013 and a further 11% in 2014 if contracting activity
remains weak8.

It is expected that the European maritime technology industry will undergo some
further restructuring. A strong social dialogue with workers' representatives, public
authorities and the other relevant stakeholders, based on mutual trust and shared
responsibility is an effective measure by which to seek the best solutions for
predicting and managing the restructuring process.

It is proposed that the following areas are further explored to address the threats
and challenges to employment and skills:

 Restructuring (managing transition and easing the social impact of structural

adjustment on employment)

Any such restructuring should be integrated in a long term strategy aiming at

ensuring sustainability and competitiveness. Given the fact that employment in

8
http://www.shipfinance.dk/en/Publications/Download/~/media/Shipping-Market-Review/Shipping-Market-
Review-October-2012.ashx

10
 the industry has high regional concentrations and that closures and
redundancies are last resort options for companies, restructuring operations
should be well prepared involving the relevant stakeholders and following best
practices in this field9. This will maximise the likelihood of a successful
restructuring.

 Image and Career Path

For several of the ‘specialised’ maritime market sectors there is a high demand
for skilled personnel. By creating the right image and directly appealing to
talented young people (including women, who are wholly underrepresented)
with a convincing message that the sector has a high-tech future with a long-
term positive perspective will enable the industry to rejuvenate itself. In
addition measures should be taken to retain qualified personnel in the maritime
sector.

It is not all about production jobs, the maritime technology industry also
provides opportunities to build careers in financial, management and service
sectors. It is able to respond to modern challenges and offer new business and
entrepreneurial prospects. These messages have to be effectively
communicated.

 New skills and lifelong learning

There is a real risk of losing critical mass of skills and technological competences
through downsizing and closures. There needs to be better transfer of
competences between old and new generations to address the ageing
workforce and the lack of ‘new blood' in the sector.

A systematic approach at EU level to map the activities versus employment

needs in the various regions and Member States addressing current and future
skill/training needs would facilitate planning, coordination of skills, intra/inter -
sectoral mobility and the implementation of lifelong learning processes.
Workers should be encouraged to take advantage of the specialisation of the
sector into new markets by ‘up-skilling’ and acquiring new skills in order to meet
evolving skill expectations.

 Harmonisation of Certificates and Mobility

Mobility of skilled workers should be facilitated and encouraged within the

maritime sector providing for a flexible and dynamic workforce. More attention
should be given to the mutual recognition of degrees of EU graduates and to the
skills of workers (in particular from third countries) who possess crucial know-
how even if they do not have formal degrees.

Mobility could be facilltated by tailoring educational programmes to address the

diversification of the industry and the emerging knowledge requirements. The
feasability of a European maritime engineering degree could be explored.This
would meet the needs of today’s markets and strengthen the employability of
graduates.

9
‘Checklist for Restructuring Processes’ - www.ec.europa.eu/social/BlobServlet?docId=2741&langId=en

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 3.1.2. Improving Market Access and Fair Market Conditions

Promoting a free, fair and open market is one of the founding principles of the
European Union. Globally a level playing field, open markets and non-distortion of
trade and competition rules are vital for the interests of the EU and more specifically
of the European maritime technology industry.

In many countries the maritime industry has often been considered strategic.
Although this is also true for the EU10 the political will to provide active support is
mainly recorded outside Europe. Various forms of support have been observed,
ranging from subsidies to build up the industry to protectionist measures defending
it in times of crisis. Such distortions in fair market conditions threaten the interests of
the European maritime technology industry especially if support measures are linked
to domestic production or capacities are increased. The sector thrives when global
markets are open and when domestic and foreign actors are on an equal footing.

European trade policy should promote proactively free and fair markets to the
benefit of the European maritime technology industry. Emphasis has to be placed on
pragmatic and well coordinated action at EU level when the European maritime
technology industry is facing unfair trade and market practices.

It is proposed that the following areas are further explored to address the threats to
market access and fair market conditions:

 OECD Working Party on Shipbuilding

The OECD Working Party on Shipbuilding (“WP6”) is the only international forum
for governments to discuss shipbuilding matters. Since its inauguration in 1966
many important discussions have taken place in this forum, working towards
establishing fair competitive conditions in the global shipbuilding market.

The OECD shipbuiding agreement achieved in 1992 was an important milestone.

Unfortunately it could not enter into force as the USA failed to ratify it.

A renewed effort to negotiate a new agreement was promising particularly as

China was part of the Special Negotiation Group established for this purpose.
The EU insisted that both market distorting subsidies as well as injurious pricing
practise would need to be adressed as was the case in the 1992 agreement.
Unfortunately, the renewed negotiations were unable to be concluded
sucessfully and finally abandoned in 2010. There remained a dispute on pricing
provisions until the end and the problem of over-capacity was not even
addressed due to opposition from Asian members. The OECD continued further
analysis and delivered an expert evaluation which concluded that pricing
provision would in practise be very difficult to implement. Equally, experience of
the WTO shows that anti-subsidy provisions are on the whole rather ineffective.

The role of the OECD Working Party on shipbuilding needs to be redefined. Its
two principal ways of addressing market distortions, i.e. subsidy and pricing
provisions are dysfunctional. New ways to regulate unsustainable market
practises need to be considered. These could include monitoring activities, both

10
http://ec.europa.eu/enterprise/sectors/maritime/shipbuilding/index_en.htm

12
 on government intervention as already undertaken as well as on price
developments. Furthermore, ways to address capacity should be explored.

The OECD’s Sector Understanding on Export Credits for Ships (SSU) has provided
means of reducing differences in state financing instruments. The SSU had a
positive impact on the behaviour of governments despite the fact that it is
unlikely to provide ‘safe haven’ protection at the WTO if challenged. With the
rise of the non-OECD member China to the largest provider of export credits,
multilateral negotiations to overhaul these common rules are absolutely
necessary.

 World Trade Organisation

In the absence of an International Shipbuilding Agreement the WTO dispute

settlement system needs to be used as a last resort for action on subsidies.
Although past attempts were not fully successful, the WTO ruled in favour of the
EU with regard to illegal export subsidies granted by the Republic of Korea to a
number of its shipyards11. Parties are often hesitant to launch a procedure
because of the risks involved in jeopardising international relations. It is
acknowledged that this is a difficult route to go down given the limited success
of anti-subsidy procedures. However case law has further evolved in recent
years and might offer new ways to address subsidies in shipbuilding.

 International Labour Organisation

The ILO is the international organisation responsible for drawing up and

overseeing international labour standards. It is the only tripartite United Nations
agency that brings together representatives of governments, employers and
workers to jointly shape policies and programmes promoting decent work for
all. This unique arrangement gives the ILO an edge in incorporating 'real world'
knowledge about employment and work.

The WTO has provided a “Consensus on core standards, to be deferred to the

ILO: There is a clear consensus: all WTO member governments are committed to
a narrower set of internationally recognized “core” standards — freedom of
association, no forced labour, no child labour, and no discrimination at work
(including gender discrimination)12.

 Public Procurement

Public values should be taken into consideration when looking at public

procurement or when public money is involved especially in the fields of
defence, environment, energy, mobility and for labour conditions. According to
an EC proposal on public procurement13 a contracting authority can exclude
economic operators from the procedure, if it identifies infringements of
obligations established by Union legislation in the field of social, labour or
environmental law or of international labour law provisions.

11
WTO case DS 273
12
http://www.wto.org/english/thewto_e/whatis_e/tif_e/bey5_e.htm
13
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:52011PC0896:EN:NOT

13
 Furthermore the EU is advocating opening the international public procurement
markets. Some €352bln of EU public procurement is open to bidders from
member countries of the WTO agreement on government procurement.
However, many third countries are reluctant to open their procurement markets
further to international competition and some have adopted protectionist
measures in response to the economic crisis.

The European maritime technology sector is disadvantaged by this system with

European government shipbuilding contracts heading abroad and European
suppliers unable to trade in ‘protected’ markets. The proposals14 of the
European Commission on public procurement procedures and the inclusion of
public values are supported by the sector.

 Intellectual Property Rights

New ideas and developments should be safeguarded to ensure that innovative

companies remain competitive and see a (fair) return on investment. In principle
IPR protection and enforcement regimes are established at international,
national and regional levels, however weaknesses in the systems and their
implementation in practice remain. In some cases preference is given to
protecting ‘national interests’ and this can cause distortions in fair treatment of
foreign business in the case of IPR.

Furthermore, regulatory requirements in the context of IMO rule development

have created new challenges in IP protection. Safety, environmental protection
and design transparency are regarded by many parties as overriding, to some
extent, the confidentiality of proprietary information. For instance, the ship
construction file (SCF) requirement requires shipyards to provide very detailed
and broad technical information covering product solutions. The verification of
the energy efficiency design index (EEDI) as well as the new IMO regulation on
technology transfer and technical cooperation requirements for IMO Member
States have created new challenges in this respect.

Given the importance of innovation and technological development within the

European maritime technology industry, IPR has to be sufficiently respected and
its protection has to be strengthend.

3.1.3. Access to Finance

The economic and financial crisis has put an end to the boom in global shipping and
shipbuilding markets and affects Europe far more than competitors in Asia. Large
over-capacity in many segments of the fleet has lead to low freight rates and
decreasing ship prices. As a result the maritime technology industry is seeing
declining profitability on many newbuilding projects. The protracted duration of the
bad market conditions impair the solvency ratio of many enterprises and makes this
sector less attractive for external investments compared with other manufacturing
industries. This increased risk aversion is hampering the maritime technology
industry from entering the financing market and substantially increases the costs of
equity and lending.

14
http://trade.ec.europa.eu/doclib/docs/2012/march/tradoc_149243.pdf

14
Funds for new projects are therefore scarce and expensive. State supported export
credits have gained importance all over the world, sometimes combined with
currency interventions and the use of macro-economic 'crisis response' instruments.
However, their availability in Europe is limited due to budgetary constraints of
Member States. This leads to increasing market distortions on a global level.

Traditionally European banks have played a dominant role in world ship financing.
The crisis has meant that many European banks have reduced their exposure to the
European maritime industry or terminated shipfinancing altogether. It is expected
that this will not change in the near future. In particular European banks have
difficulties to finance loans in US Dollars for long maturities even when there is a
state export credit insurance in place. Under Basel III export and trade finance is
being treated as any other financing structure and therefore the specific
characteristics of export loans are not taken into account.

As a consequence, access to finance has become the single most important factor in
competing for international shipbuilding contracts. Sometimes contracts are being
placed on the availability of finance over the technical competencies of the bidder.
This is related to the characteristics of financing a new ship such as the high upfront
capital costs of a vessel and long tenors needed. The situation is particularly critical
in the first phase of ship construction when large parts of the loan are drawn down
but not even the hull is available as collateral.

Furthermore the financial constraints of ship-owners means that opportuntities

which normally would materialise as a result of say, increasing energy prices and the
drive for more efficient ships, are being lost. This is also the case when shipyards
seek to engage in new maritime activities such as off-shore wind energy. In many
such cases economically and environmentally desirable moves require substantial
start up investments which are difficult to raise, in particular for smaller shipbuilding
enterprises, where the capital base has been affected by the crisis.

The combination of general economic trends and industry specific business practice
demonstrates the need for a coordinated series of recommendations at European,
national and regional level which address the shortcomings and foster a financial
environment which can be used to the benefit of European maritime technology
industry as a whole. This in turn will enhance its technological output.

It is proposed that the following areas are further explored to address the threats to
access to finance, financing environmental improvements and diversification into
new markets:

 Improving Liquidity in the Market

The European credit system faces difficult conditions in finding liquidity through
its own traditional channels. The situation is particularly difficult in the financing
of the construction of new ships, given the exceptionally capital intensive order
books and the relatively long periods between contract and delivery – a niche
where few banks are available to operate. However, end financing of the ships is
not easy either in periods of scarce availability of long term capital and more
demanding solvency requirements.

15
 Measures such as the European Investment Bank (EIB) new transport lending
policy have been well received, however, not enough experience has been
obtained with the application of the guidelines on concrete project proposals.
The expansion of the scope of lending by the EIB should be further explored by
the industry to take EIB financing into consideration for projects related to
‘green’ shipping and retrofitting. Notwithstanding the practice of financing no
more than 50% of the project cost this instrument could be seen as the most
effective short term source to alleviate the ship financing situation in some
cases.

Additional long term financing of the sector needs however to be addressed

given the capital intensity and long tenors needed. This could be justified for two
reasons:

 The strategy of easing the financing conditions and boosting the credit
market for specific industries is coherent with the upcoming focus on
sectors within the new direction of EU industrial policy.

 Targeting a specific credit end market would promise a broader impact

on refinancing operations, reducing the risk that most of the public
economic effort remains on the balance sheets of the financial system
without bringing any benefit to the manufacturing world.

In the eventual extension of availibility and scope of the ‘Europe 2020 Project
Bond Initiative’ to enhance the credit standing of private entities that need to
raise private funds for projects, the maritime transport sector should be given
due consideration.

 Providing Suitable Guarantees

With the significant time lapse from contract to delivery in the building of a
particular vessel or series of vessels, not only is substantial liquidity needed for
working capital purposes, but also shipbuilders and/or ship-owners need to
issue guarantees to banks to finance such operations (refund guarantees).

In the current economic climate given the difficulties in financing new orders,
refund gurantees are a very important tool in protecting the purchaser and the
lender’s interests. An EU Guarantee Scheme has been extensively examined and
discussed over the last decade but no consensus could be reached on whether
such a scheme would be feasible or desirable. However, the current lack of
available guarantee capacity from commercial sources due to the deterioration
of the banking markets and limited availability of guarantees from public sources
in some Member States may give some new impetus to explore market based
accessible guarantees.

Financing Environmental Improvements

Greening and diversification of the European maritime technology industry have

been recognised as ‘game-changers’ in the short term. Unfortunately, there are
many barriers to the financing of environmental improvements for ships. All the
investment obstacles discussed above hamper financing of environmental
projects as well, whilst other issues specifically affect environment-friendly

16
 innovation15. Generally, overcapacity, inadequate profitability, and lack of
capital in the shipping sector, limit the available resources for investments
urgently needed to improve energy efficiency and to implement imminent new
regulation for the reduction of emissions16. In particular there are specific
barriers which need to be explored:

 Lacking or insufficient financial return on investment

Mandatory rules at international level are preferable to support the

‘greening’ of shipping as they maintain a global level playing field.
However, while necessary for environmental reasons, certain ‘green’
investments lack any positive impact on efficiency gains and are viewed
as pure ‘add-on’ cost by ship-owners. Technology which does have a
positive commercial effect for the ship-owner is often not taken into
consideration.

 Lack of investment certainty

Mandatory rules should provide sufficient clarity regarding

implementation, conditions, etc. Ongoing discussions on eventual rule
changes hamper the necessary investment in technologies.

Uncertainty surrounding the performance of some innovative green

technologies is also hampering investments. In some cases there is a lack
of convincing performance data and in others the full scope of costs is
difficult to assess (e.g. alternative fuel) compounded by the lack of
necessary infrastructure to support the technologies in question.

 ‘Blue’ Public Private Partnership

In addition to improving the regulatory environment and full use of existing

instruments for shipping finance a ‘Blue’ Public Private Partnership (PPP) could
be an innovative model for encouraging the financing of environmental
improvements.

A “Blue PPP” model consists of a joint venture between a private enterprise and
a public entity which engage for a defined period of time into the acquisition of
maritime hardware (vessels, systems, infrastructure elements etc.). Such a
concept has been successfully used in Japan (JRTT scheme17) for many years. The
core element in the Japanese model is the availability of a state entity, which
has capital and technical competence at its disposal.

In Europe any element of public support needs to be compatible with the rules
on State Aid. Therefore, any scheme will need to be clearly and rather narrowly
defined in scope and functioning. In principle, a “Blue PPP” could be applied to
two different kinds of investments:

15
The analysis takes into consideration also the main findings of a study conducted by Maddox Consultants for
DG CLIMA on market barriers to cost effective GHG emission reductions in the maritime transport sector. It
must be noted that the study’s finding related only to existing ships
16
E.g. ballast water treatment, reduction of SO2 and NOX
17
http://www.jrtt.go.jp/11English/pdf/AboutJrtt06.pdf

17
 1. Non-commercial (non-profitable) projects, i.e. projects which require
public support (e.g. certain state-run local ferry connections with a public
service obligation, basic infrastructure etc.)
2. Potentially profitable investments, which the private sector does not or
only insufficiently support and carry a significant objective of common
EU interest (e.g. energy efficiency, emission reduction, demonstrator of
innovative solutions, etc.) which could make them compliant with State
Aid rules.

 Use of Funds from Market Based Measures (MBM)18

MBM to reduce Greenhouse gas (GHG) emissions from ships are discussed at
international as well as at European level. They are often considered as an
effective measure to complement the implementation of the already adopted
energy efficiency design index (EEDI), which addresses new ships and will
therefore only gradually impact GHG emissions. Funds generated by eventual
MBMs could be used to give an incentive to finance the greening of ships.

3.1.4. Research, Development and Innovation (RDI)

The competitiveness of the European maritime technology industry relies on its

capacity for strong research, development and innovation. RDI efforts are needed to
foster not only innovation in products, but also for process and non-technological
innovation which are key factors for the competitiveness of the sector.

A ship by definition is the perfect integration environment for new and innovative
technologies given the fact that at least 70% of a complex ship’s value is made up of
marine equipment.

The maritime sector is a complex sector which has its own specificities when it comes
to RDI. Ships are tailor-made to the request of a client. The high-tech nature of the
industry in Europe dictates that ships are typically one-of-a-kind (prototypes) and by
definition, large sophisticated end-products conceived by shipbuilders and marine
equipment manufacturers in close cooperation with the ship-owner. It is also
confronted by regulatory pressures and has to cope with inevitable uncertainty in
this regard.

At the concept design phase ships can be designed to specification and the
involvement of the maritime technology providers, at this stage, can ensure that
innovative solutions can be adopted for specific business requirements. This
establishes a crucial European competitive advantage.

It is exactly at this design stage that the maximum implementation of novel

technologies can be realised taking into account the whole life-cycle of a ship.
Technical solutions often need to be developed to ensure the highest degree of
integration and to minimise the technological risk of early uptake for assemblers and
the end client.

18
http://www.imo.org/ourwork/environment/pollutionprevention/airpollution/pages/market-based-
measures.aspx

18
Given the right conditions and regulatory certainty, RDI within Europe can be
fostered to such a degree that the European maritime technology industry can keep
its technological lead and remain competitive in a global market, enshrining its high-
tech enabling credentials for the future.

It is proposed that the following areas are further explored to further stimulate
research, development and innovation within the European maritime technology
industry:

 Exploiting New Market Opportunities

Today there are many developments within the industry towards new market
segments such as offshore wind; ocean energy (tidal and waves); arctic shipping;
off-shore energy exploration; and deep-sea mining. These are specialised
markets that should be given the opportunity to be developed and given
Europe’s strength in harnessing economic potential through advanced
engineering, significant growth potential through effective RDI could be realised.
New emerging markets such as marine renewable energy also come with
challenges that need to be addressed with significant RDI investments.

It has been further identified that one of the main drivers of research and
innovation in the midterm is focussing on the energy efficiency of vessels
meeting the upcoming regulatory requirements. Equally, maritime safety
remains a key challenge and solutions that make ships and their operation safer
can offer new business opportunities with or without regulatory instigation.

 Stimulating Research, Development and Demonstration

The 7th Framework Programme (FP7) has been successful at stimulating research
opportunities through an efficient dialogue between the EC and the industry by
means of the Waterborne Technology Platform. Industry identified research
priorities have often been translated into the annual research Work
Programmes.

The broad spectrum of European goals (Europe 2020, Transport White Paper
with its strong focus on emission reduction, etc.) and international regulations
are particularly challenging for the maritime technology industry. It has to meet
very ambitious environmental and safety targets which require coordinated
efforts and massive investment for breakthrough solutions.

The new and more ambitious research and innovation framework programme
Horizon 2020 will be launched in 2014. The industry believes that a public
private partnership (PPP) with clearly defined objectives and a long-term
commitment from the industry together with EU, national and regional
institutions is an effective tool to meet these demanding targets.

Industry considers that a PPP would ensure the industrial transferability of

research results, in terms of cost / benefit or cost / performance, through
demonstration projects. An integration layer or meta-demonstrator of the
research outcomes could be realised, where all the project results could be
integrated as a ‘system of systems’. This would be a definitive tool for vessel

19
 design and operational assessment and it merits further consideration once the
industry has developed the idea in full detail.

More generally investment in innovative technologies and corresponding

infrastructure especially related to new or emerging markets (e.g. use of LNG)
are often associated with high levels of risk. Independent demonstration of
these technologies, infrastructures and processes with the support of Horizon
2020, national and regional funds can mitigate this risk, bridging the gap
between research and market-uptake and encouraging diversification. The
results derived from demonstration activities can serve as a source of
information for political decisions, international rule and legislation
development. The European maritime technology industry should play an active
role in future EU RDI projects on marine renewable energy.

 Stimulating Innovation

While a strong commitment to the research agenda will be needed in order to

meet the overarching objectives of a public private partnership, in the shorter
term, the sustained competitiveness of the European industry will rely on the
proper stimulation of innovation on the shop-floor.

State aid for innovation aid has proven to be instrumental in this regard. In view
of the expiry of the existing Shipbuilding Framework at the end of 2013, the
Commission envisages for the shipbuilding industry including the provisions on
innovation aid in the Community Framework for State aid for research and
development and innovation.

 Strengthening Relations throughout the Innovation and Supply Chain and Linking
Maritime RDI through Instruments of EU Cohesion Policy

The policy framework proposed by the European Commission for 2014-2020

allows for Structural Funds to be used in different ways, such as for research and
innovation, which can also contribute to stimulating diversification of the sector.

European Regions are currently developing their regional innovation strategies

for smart specialisation, which will provide a basis for focused measures to
create regional innovation environments. These will promote cross-fertilisation
with other regional sectors and promote synergies of different EU funds.
Structural funds could primarily maintain and foster the knowledge base on
which the competitive positioning of the regional maritime technology industry
is based. The strategy could include different objectives, in order to complete the
available value chain or find synergies between the local infrastructures and
competences in other regions:

 Increasing the regional capability for research, innovation and

technology transfer, using ERDF to finance and attract private
investments on projects (e.g. demonstration, prototyping) and centres of
competence in key technologies and applications.
 Encouraging open innovation in clusters to enhance participation of
maritime technology SMEs in RDI projects and access to RDI results.
 Enhancing the regional internal linkages among the players (yards,
engineering companies, specialized suppliers) and the connections with
other regional innovation systems, using structural funds for trans-

20
 regional projects that aim to get the necessary critical mass. The
objective should be to build a consistent and integrated value chain able
to take full advantage of the future innovation in the industry.

The Waterborne Technology Platform demonstrated that it is an effective forum

for collecting the R&D needs of the European maritime industry. With the
emphasis being placed on innovation within Horizon 2020 the platform has to
broaden its scope to close the gap between R&D and Innovation and to increase
its collaboration with other relevant technology platforms.

Through an increased focus on synergies with Horizon2020, cohesion policy can

be an effective instrument for the promotion of technological and non-
technological innovation in the maritime industries.

4. Recommendations by the LeaderSHIP 2020 Coordination Group

Having taken these four main areas of focus into consideration the LeaderSHIP 2020
Coordination Group recommends the following measures in order to bring about the sectoral
change needed and create a truly competitive and sustainable industry for 2020.

4.1. Employment and Skills

 The industry with the European Commission should undertake a skills mapping exercise
on the basis of a study conducted by the regional clusters and provide input to the
available EU programmes and projects aiming at improving the skills and competences.
 Anticipation and management of change, systematic consultation and coordination at
EU, national and local level should become common practice in order to soften the
social impact of adjustment of employment and unemployment.
 Member States and Regions should explore with the European Commission how the
‘Poles of Exellence’ initiative could foster regional networks.
 EU programmes should be used effectively for funding individual projects with a focus
on life long learning19.
 Existing tools provided by these programmes and initiatives (eg. Shipbuilding Week,
European Maritime Day, etc.)20 should be harnessed and effectively utilised to promote
the European maritime technology industry and communicate the image of a high-tech
enabling industry.
 A study should be considered at EU level on the issue and creation of secondary
accreditation system in order to give recognition to informal learning.
 The ESCO (European Skills, Competencies and Occupations Taxonomy) system describes
the most relevant skills, competences and qualifications needed for several thousand
occupations and is developed with stakeholders from various public and private
organizations. Today there is no subgroup for the maritime sector. The possibility of
including this sector should be explored by the EC and the maritime technology
stakeholders.

19
See Annex I
20
See Annex I

21
4.2. Improving Market Access and Fair Market Conditions

 The role of the OECD Working Party on shipbuilding needs to be redefined with
consideration of new ways to regulate unfair and unsustainable market practices. This
should include monitoring activities, on both government interventions as already
undertaken, and on price developments. Furthermore, ways to reduce capacity and the
best ways to overhaul common rules under the SSU should be explored.
 Make full use of all existing trade policy instruments: mulitlateral, bilateral, etc.
 The European maritime technology industry supports the continuation of work on
bilateral and multilateral free trade agreements and the inclusion of sector specific
references where relevant.
 In the area of public procurement the following should be taken into consideration by
the EC:
 Design a broad framework and strategy to include ‘public values targets’
in European public tenders as well as higher levels of innovation;
 Introduce the criteria of the ILO with regard to trade union rights, safety at
work, forced labour in the opening of the public tenders, and to appreciate
competitiveness not only with economic criteria but also with values that
are promoted by Europe;
 Promote a wider acceptance at global level of public values and introduce
international reciprocity on public procurement;
 Approve the exclusion from public procurement of those third countries
maintaining restrictive procurement measures which lead to a lack of
substantial reciprocity in market opening between the EU and the
countries concerned.
 The European maritime technology industry supports the EU patent. Measures should
be explored for easier or cheaper use.
 The European maritime technology industry, European Commission and Member
States should make full use of all existing IPR protection instruments.
 The European maritime technology industry should explore the need for a pan-
European monitoring system (or black listing) to deal with counterfeited products and
ship design IP infringement cases.
 The industry and the European Commission should work closer together to address
issues concerning the protection of intellectual property which may come up in the
context of the IMO rule development.

4.3. Access to Finance

 EIB funding opportunities and possibilities for broadening its lending activities should be
promoted and explored, primarily for projects related to green shipping, offshore
renewable energy, and retrofitting. It is proposed that as an immediate action a
workshop should be held to further explore these opportunities.
 In the context of eventual EU action on long-term financing, the opportunity of a
potential measure for long term ship financing should be explored by the European
Commission, the Member States, financial operators and the maritime technology
industry.
 All relevant stakeholders should explore the accessibility of market based guarantees.
 The industry, where necessary in cooperation with the European Commission, Member
States or Regions should fully explore the possibility of a ‘blue’ PPP in the light of the
European industry structure and respecting state aid rules.

22
4.4. Research Development and Innovation

 As soon as possible the European maritime technology industry will develop a

comprehensive roadmap, setting ambitious targets providing the justification for a PPP
at EU level with the aim of focussing maritime research towards zero emission and
energy efficient vessels and towards zero technical accident vessels and emerging
market opportunities.
 The PPP should include a ‘META Demonstrator’ verifying the improvements coming
from the introduction of single novel appliances on-board, whose industrial
transferability has been demonstrated – at the overall/integrated level of the ship or
product – and before market implementation.
 The feasibility of a PPP on marine renewable energy could be explored by the relevant
stakeholders with the European Commission.
 In view of the expiry of the existing Shipbuilding Framework at the end of 2013, the
European Commission envisages for the shipbuilding industry including the provisions
on innovation aid in the Community Framework for State aid for research and
development and innovation.
 Member States and coastal regions should investigate the possibiliity of allocating
structural funds for the diversification of the maritime technology industry into new
market sectors. This should accompany the change the sector is currently undergoing,
especially in the context of regional strategies for smart specialisation.

23
 Annex I

PROGRAMMES AND FUNDS RELEVANT FOR EMPLOYMENT AND SKILLS DIRECTLY

MANAGED BYTHE EUROPEAN COMMISSION

LIFE LONG Eligibility:

LEARNING- The Lifelong Learning Programme applies to all types and levels of education and vocational education and training and it is
PROGRAMME accessible to all the entities listed in Article 4 of the Decision.
Subprogrammes:
2007-2013
-Comenius, Grundvig: In- service training
-Comenius: Assistantships
-Comenius, Erasmus, Leonardo da Vinci, Grundtvig: Multilateral projects, networks and accompanying measures
-Comenius, Leonardo da Vinci, Grundtvig: Partnerships; Comenius: Comenius Regio partnerships; Grundtvig: Workshops
-Grundtvig: Assistantships, senior volunteering projects
-Transversal programme: Key activity 1 — Study visits
-Transversal programme: all other activities
Targets:
Leonardo da Vinci should increase placements in enterprises to 80 000 a year by the end of the programme;
Grundtvig should support the mobility of 7 000 individuals involved in adult education a year by 2013.

CALL FOR PROPOSAL 2013 - EAC/S07/12 - Published on 03/08/2012 - LIFELONG LEARNING PROGRAMME
Budget and duration of projects:
The total budget of the call is EUR 1 276 million
Duration and deadlines of projects:
The level of grants awarded as well as the duration of projects vary depending on factors such as the type of project and
the number of countries involved.
Deadlines of the call: between January and October 2013
ERASMUS FOR
ALL 2014-2020 LINK

Commission proposal for Erasmus for All 2014-2020 brings together all the current EU and international schemes for
education, training, youth and sport, replacing seven existing programmes with one.
The new programme will focus on EU added value and systemic impact, with support for three types of action: learning
opportunities for individuals, both within the EU and beyond; institutional cooperation between educational institutions,
youth organisations, businesses, local and regional authorities and NGOs; and support for reforms in Member States to
modernise education and training systems and promote innovation, entrepreneurship and employability. Two-thirds of the
funding would be spent on mobility grants to enhance knowledge and skills.
New elements will be the creation of 400 'knowledge alliances' and 'sector skills alliances'. Knowledge alliances are large-
scale partnerships between higher education institutions and businesses to promote creativity, innovation and
entrepreneurship by offering new learning opportunities and qualifications. Sector skills alliances are partnerships between
education and training providers and businesses to promote employability by forming new sector-specific curricula and
innovative forms of vocational teaching and training.
link: http://ec.europa.eu/education/erasmus-for-all/

PROGRESS The PROGRESS programme is a financial instrument supporting the development and coordination of EU policy in the
2007-2013 following five areas: Employment, Social inclusion and social protection, Working conditions, Anti-discrimination and
Gender equality

Objectives
PROGRESS's ultimate objective is to help achieve the goals of the Europe 2020 Strategy.
3 intermediate objectives – milestones towards this goal:
-Effective application of EU rules on worker protection and equality
-Shared understanding and ownership of EU objectives
-Effective partnerships
5 immediate objectives – met throughout the process:
Effective information sharing and learning

24
 Evidence-based EU policies and legislation
Integration of cross-cutting issues and consistency
Greater capacity of national and EU networks
High-quality and participatory policy debate
PROGRAMME
The European Union Programme for Social Change and Innovation is based on three existing instruments:
FOR SOCIAL – the PROGRESS Programme: fostering co-operation between Member States in the employment and social affairs field
CHANGE AND – EURES: Free movement of workers, contributes to economic development and social cohesion in the Union.
INNOVATION – the European Progress Microfinance Facility for employment and social inclusion: there is a clear need to strengthen
2014-2020 institutional capacity-building (especially of non-banking microfinance institutions) in order to cover start-up costs and
funding for lending to high-risk target groups.

The strengthened policy framework under the new Europe 2020 strategy implies an even stronger need for evidence-
based policy-making so that Union policies and legislation are responsive to the socio-economic challenges.
The EU Programme for Social Change and Innovation aims to increase coherence of EU action in the employment and
social areas by bringing together and building on the implementation of the Progress Programme, EURES and the
European Progress Microfinance facility.

The Programme will seek to achieve the following general objectives:

- Strengthen ownership of the Union objectives in the employment, social and working conditions fields;
- Support the development of adequate, accessible and efficient social protection systems and labour markets and
facilitate policy reform, by promoting good governance, mutual learning and social innovation;
Modernise Union law in line with the Smart Regulation principles and ensure that Union law on matters relating to working
conditions is effectively applied;
-Promote workers’ geographical mobility and boost employment opportunities by developing Union labour markets that
are open and accessible to all;
-Promote employment and social inclusion by increasing the availability and accessibility of microfinance for vulnerable
groups and micro-enterprises and by increasing access to finance for social enterprises.

CALL FOR PROPOSAL VP/2012/008 Published on 07/06/2012 - Supporting a partnership for enhancing Europe's Capacity
to tackle demographic and societal change
Budget: 500.000 €
Deadline: 11/09/2012
--------------------------------------------------------------------------------------------------------------------------------------------------------------

EUROPEAN GLOBALISATION ADJUSTMENT FUND

European globalization adjustment fund funds up to € 500 million each year workers to find new jobs and develop new
skills when they have lost their jobs as a result of:

 changing global trade patterns, e.g. when a large company shuts down or a factory is moved to outside the EU or
 global financial and economic crisis – EGF funding has been available for this since 1 May 2009 and is due to end
on 30 December 2011. However, the Commission has proposed extending this provision until 31 December 2013
(when the whole EGF Regulation must be reviewed).

By financing measures such as:

 job-search assistance
 careers advice
 tailor-made training and re-training
 mentoring
 promoting entrepreneurship.

By providing one-off, time-limited individual support, such as:

 job-search allowances
 mobility allowances
 allowances for participating in lifelong learning and training activities.

The EGF will not fund social protection measures such as pensions or unemployment benefits. These are the responsibility

25
of EU national governments.

Individual workers made redundant can benefit from schemes set up by national governments to help them. EGF funding
cannot be used to keep enterprises in business or to help them with modernisation or structural adjustment.

Link: http://ec.europa.eu/social/main.jsp?catId=326&langId=en

26
 Annex II
Relevant Market Segments for R&D&I

Market Groups Topics EX/MT/LT Market Description and Challenges Challenges of Innovation

 AHTS fleet aging, capacity demand increasing, notably for ships with higher  Extra Flexibility
Specialized vessels: power and high specs aimed at HSE, such as DP3.  Fuel efficiency
Ex
AHTS  Markets promising as long as oil prices stay high. Operationally, North Sea
market to remain stable and slowly starts decreasing, deep water markets in
Africa, Americas, Asia, Arctic, to increase significantly.
 Smaller size vessels, note building up of (over?)capacity in especially PSV fleet.  Stringent safety requirements
Support vessels and  Markets highly competitive, speculative orders and building exist  Higher comfort onboard
crew boats Ex  Several hundred crew and support boats mainly electric or hybrid, locally built
with possible EU equipment
 Design is able to be reused for the offshore wind industry
 Mostly an Asian affair in terms of shipbuilding (also conversions).  Techniques and procedures for
 Often (multi) billion dollar projects. effective maintenance during
Floating structures  Design engineering is an EU strength operation
Offshore oil and and FPSO Ex  Technology can be scaled upwards for innovation  Increased service depth and drilling
gas  Some (large) European owners, e.g. Shell, BG, BP, SBM Offshore, Exmar, capacities.
others are Petrobras, MODEC, CNOOC.
 (Drilling) equipment mostly supplied by European and American parties.
Oil or gas shuttle  Cargo transfer equipment
Ex
tankers  These types of ship are built in the Far East

Oil spill recovery  Post Macondo incident this is of increasing importance to have at site.  Working in realistic sea states
system or vessel MT  Further innovations and increased efficiency badly needed, no leading  Multipurpose capacity
technology has yet emerged.
 Northern-European (notably Scandinavian) and Russian shipbuilders and  DP in ice-going conditions
owners have leading ice class experience, but modern markets work so that  New requirements under the Polar
Polar conditions
ice breaking ships can be built anywhere – often on the basis of European Code
adaptation MT
designs.
 Polar code under development at IMO deserves EU attention.
 The need for finding and exploiting new sources of raw materials leads to the
Market Groups Topics EX/MT/LT Market Description and Challenges Challenges of Innovation

exploitation of resources in difficult places

 New materials for deep sea
autonomous systems
 Oil and mining activities need to be exploited in very deep water.  New ROV to be developed with
Operation in very  The equipment needs to be powerful and free of maintenance. A complete
increased control precision and
deep water LT industry for install, repair, protect and safe the installation and the
more power capability.
environment has to be developed.
 Europe has a strong experience in this field with a large potentiality  Development of totally new
autonomous underwater systems
providing multi-role functions
Offshore Drilling The need for finding and exploiting new sources of raw materials leads to the  New drilling systems for deep sea
LT
Technology exploitation of resources in difficult places locations.
 New class of offshore vessels
 Search for new fields of valuable raw materials  New hull forms
 HFO restrictions  Development of ice resistant
Arctic Vessels MT
 Additional safety / environmental requirements arising from the polar code technologies
including for non-ice class ships operating in polar waters  New safety and rescue appliances
for arctic conditions
Foundations or  Deep water systems
 Experienced (western) offshore and dredging companies are tech leaders, but
cable laying MT  Larger diameter
technology maturing in Asia. Building of these vessels anywhere.
systems

 So far a small market dominated by European innovations but increasingly  More efficient manner of working
threatened by Asian competition when it comes to shipbuilding. OFWC under offshore: larger decks, efficient
discussion at IMO, clear European interests. component handling systems
 Increasingly specialised vessels. Jack up designs still to dominate  Development of deep water
Offshore wind  Some evidence of strategic investment by developers to secure vessels technologies which make use of
Installation Vessels MT
energy  Supply chain strong up to 2015. Through the latter half of the decade, floating vessels for staying beyond
pressure might return if we do not have new investments. the operational limits of jack-up
 Some units are under construction, others are just entering into service. vessels.
Performance will be monitored on the basis for further investment decision.  Streamlining of installation process
 Large crane capacities
 Capacity of handling different

28
Market Groups Topics EX/MT/LT Market Description and Challenges Challenges of Innovation

foundation types
 Major opportunities for domestic manufacturing due to low technical barriers  Capacity of handling different
for entry, for example by using shipyards or tower manufacturers foundation types
 High elasticity of supply, lowering bottleneck risk. They present an attractive  More lift capacity
diversification opportunity for substantial existing marine oil and gas  Underwater noise reduction
production capacity in Europe.  Facilities for full scale testing and
Foundations MT  Move into deeper water: increased market share from space-frame structures pilot installations.
as well as novel fixed and floating structures further into the future.
 New deep foundation concepts will help unlock the Atlantic and
Mediterranean potential
 40 GW offshore installed by 2020 and 150 GW by 2030 – meaning between
25,000 and 30.000 turbines to be installed with similar number of
substructures to manufacture and install by 2030.
 Smaller size vessels, focus on HSE. Many smaller players involved in  Adaption of safety regulations
shipbuilding, building to customer specs (but also educating the customer  Regulatory certainty, IMO, etc.
with respect to sea behavior).  Innovations needed, focusing at HSE
Service,  Off-shore wind farm support vessels under discussion at IMO, clear European and costs.
maintenance MT
interests. EC directive needs to be adapted.  Working in higher sea states
 Smaller size vessels. Not many players building this type yet.  Year round access
vessels
 Shallow water installations could
perhaps do without ships, serviced
by divers or (semi) autonomous
vehicles / robots.

 Current, tides and thermal devices have the equipment between sea surface  Innovations needed for new
and sea bed. The mooring equipment, the connecting cable between devices, equipment and associated control
Underwater remote and so on, could need autonomous vehicles with new systems for mounting, system.
control system or dismounting and maintenance operations.
MT  Impact on marine life
autonomous  For tidal power generation a high percentage of the global potential is located
vehicles within the EU.
 New requirement from rules and regulation to be developed.
EU objectives of renewable energy policy (80-95% emissions reduction in
2050).

29
Market Groups Topics EX/MT/LT Market Description and Challenges Challenges of Innovation

 New underwater or floating devices

Extraction,  Some pioneers (relying heavily on innovative shipbuilders and ship owners) for energy conversion and its
Energies from and some experienced offshore / dredging companies eyeing this market, but transport to shore installations.
transport and MT
the Sea so far industry in infancy.  Reliability
logistics  Promising, but environmental concerns and technological challenges key  Proof of concept
issues.
(Waves, current,
tides, thermal)  Proof of concept
Situ exploration  Some pioneers (relying heavily on innovative shipbuilders and ship owners)
ànd some experienced offshore / dredging companies eyeing this market, but
technologies and MT
so far industry in infancy.
systems  Promising, but environmental concerns and technological challenges key
issues
 Concerning currents and tidal devices, there are some current devices from  Development of devices for marine
New Prototypes 10kW to 100kW in testing renewable energies.
 Drivers of this market would be to meet the objectives of renewable energy  Maintenance during the devices life
designed and built MT
policy in Europe cycle.
by shipyards  New requirements from rules and regulations to be developed.
 Impact of legislation on different phases. Offshore renewable energy
development.
Methane-  Methane hydrates are the largest resource of hydrocarbons in the crust of the  Avoiding methane emissions
Specialized open
LT planet  A cost-effective method to extract
hydrates oceans platforms,
 There is currently no process devised to economically harvest this vast natural gas from solid hydrates
resource
Situ exploration  Large vessels for exploration and exploitation of mining with new  New systems for subsea process.
technologies for the exploration and exploitation of raw materials  New ships and systems for
Ocean mining technologies and LT
 (Future) access to rare earths/ minerals, fossils, etc. increasingly of national operation in deep water.
systems importance, also for EU – in that sense a critical field of R&D.  Controlled work ensuring minimal
 New requirements from rules and regulations to be developed. impact on the sea bed.
Low cost mari-  Value of production equal to that of fisheries, stagnation due to space limits  Improved concept that can be
Ex and low innovation levels. offered to an international market,
culture plants,
 The demand for auality and sustainable fish consumption. creating new business
systems and service
 New EU aquaculture strategy (including funding under the furutre EMFF). opportunities.

30
Market Groups Topics EX/MT/LT Market Description and Challenges Challenges of Innovation

vessels  Growing demand for fish combined with declining catches of wild fish  Ships for the transport of live fish.
 Sustainable fisheries market.  Innovative equipment to improve
product quality, floating offshore
aquaculture tanks.
Aquaculture +
Fisheries  Fishing quota policy make overcapacity in many ship types evident.  Substantial improvement of fishing
 Current fleet in many cases overpowered and using fishing techniques in need vessels needed, to be more
of revision with an eye on environmental aspects. selective, energy efficient and safe.
Productive,
 Financing of new builds / new equipment a bottleneck for ship owners fishing  Ships and systems needed to
sustainable and Ex
on common species which are not (so) profitable. support sustainable fisheries.
safe fishing vessels  Central EU (financial) institutions could help here.  Development of factory ships
 The continuous increase on demand for fish consumption and declining needed to maintain a high level of
catches product quality
 High fuel prices – transition to more sustainable fishing
 Role for EU institutions could be to
monitor world fleet development
Specialized  EU countries amongst largest owners of large factory vessels, Asian
and initiate and support
competition growing. Fleets are active across the globe, in principle abundant
factories and Ex rationalizations and ‘greening’ of
fleet capacity, fishing (quota) licenses vital for fishing companies.
support vessels fleets
 No major fleet expansions foreseen for European fishers, fleet growth
centered on Asia and S-Americas.

 Ensuring minimal environmental

Algae Cultivation LT  Cultivation of algae as a mineral and fuel. impact
 Already research being undertaken in Europe.  Efficient refineries and cultivation
methods.

31
Market Groups Topics EX/MT/LT Market Description and Challenges Challenges of Innovation

 Many cargo ship types increasingly larger in size, ULCC and post-panamax  Much technology in Europe
most striking examples. available, but funding (uptake) an
 This development puts smaller size vessels under some pressure, as issue
transshipment starts to take place using larger vessels or as cargo is being  Emphasis on regulations (emissions,
Cargo for Inland,
shifted to rail or road. bwt, etc.)
Short Sea and
 Within Europe (and N-America), ECA’s put pressure on owners to ‘green their  Towards zero incident shipping
Ocean going
act’, but due to low margins many ship owners do not have funds for fleet
Cargo Vessels Ex
renewal.
(from small cargo
 Road transport sector leading over maritime in terms of development of
to post-panamax cleaner engines (also as truck fleet replacement much shorter time cycle than
ships) ships), shipping needs to innovate to stay at forefront in terms of footprint /
emissions per ton-kilometer.
 The size of ships in short routes are changing due to the cascade effect
created but the ULCC
 Market strongly impaired by current crisis
 Large size LNG tanker market dominated by Korea, China upcoming.  Emphasis on Sox and NOx
 After a couple of years in which ordering virtually disappeared (building up of regulations
ship overcapacity as a result of speculative ordering), recently (especially
LNG Tankers / post-Fukushima and with development of shale gas) larger size vessels more
in demand.
Ex
Short Sea Shuttle  For European companies, the small size LNG tanker market can be a viable
Product Tankers
Tanker niche, especially as the LNG supply chain in Europe / N-America is being
established.
 Gas containment technology used to be a western dominated market, but
Korea has its own system and also would like to buy France’s GTT.
 Preservation of LNG knowledge base (newbuild and repair) vital for Europe.
Chemical tankers Ex
 Small / medium size chemical tankers for short sea shipping.
Ro Pax Ex
 Stable market with only a dozen ships ordered and delivered each year,
Large Ferries Ex  More stringent safety and emissions standards needed to overhaul the large  Improved design safety
ferry market.  Harmonization of safety rules

32
Market Groups Topics EX/MT/LT Market Description and Challenges Challenges of Innovation

globally
 Increase accessibility of passenger
vessels for disabled travelers
 Increase ship sizes and passenger
Passenger capacity // assessment of risks.
vessels  Fulfillment of stricter regulations
(e.g. environment, safety, …)
through cost competitive
technologies
 Innovative technologies could be
 Markets so far dominated by European shipbuilders (Germany, France, Italy, better integrated onboard these
Finland). Deliveries historically and projected to be around 8-10 ships per vessels by including the suppliers in
year. the design process of such vessels.
 Korea’s STX owns big yards in France and Finland, but orders lacking. Both  Fulfillment of stricter regulations
Japanese and Chinese will build cruise vessels the next couple of years, Japan (e.g. environment, safety, …)
Cruise liners Ex will build two ships for German owner AIDA and China a couple for national through cost competitive
cruise companies. technologies
 China also has a cruise ship on the cards for an Australian customer (Titanic  cost efficiency of innovative
rebuild for Clive Palmer). solutions for improved product
 Cruise ship companies, facing saturation in US and some EU markets (notably competitiveness
UK), focus growth strategies predominantly on Asian markets, ships might Increase of energy efficiency to
need adaptation to (cultural) preferences of these new customers. compensate higher fuel oil prices

 Fleet approx. 4,400 vessels (>25m), Russian, European, Middle Eastern,  Fulfillment of stricter regulations
Australian and American owners dominate. (e.g. environment, safety, …)
 Deliveries per year approx. 400. Super yacht market caters to the world’s high through cost competitive
Super-yachts net worth individuals, spending on new yachts since crisis much reduced but technologies
(Inland and Ex leading quality builders AND cost fighters do continue to receive orders.  Miniaturization of innovative
Seagoing)  Operationally, cost control and (part) standardization vital for yards. technology solutions
 Consolidation in terms of ownership of shipyards, with European yards  Security of vessel and passengers
bought out by Middle-East or Asian companies. during navigation
 Growth must come more and more from new client markets such as Asia  Standardization of luxury solutions
(notably China) or South-America. Ultimately, localising the yachts to specific Increase of energy efficiency to

33
Market Groups Topics EX/MT/LT Market Description and Challenges Challenges of Innovation

cultural tastes and cleaning up the ship’s environmental performance compensate higher fuel oil prices
(lightweight materials, lower fuel consumption, etc.) may become key issues
for the future.
Leisure crafts above
24m
Ex See above

Dredgers,  Research vessels and scientific

Workboats, Tugs,  With projected continuous growth in world trade, global communications and systems capable of operating safely
Research vessels, industrial infrastructure, the market for these vessels offers considerable and effectively unrestricted
potential for new demand. worldwide and in heavy weather
Complex Special Offshore service Ex
 Replacement demand also ensured, as ships in all fleets mentioned (except conditions
Vessels, Cable and for offshore service vessels) are, on average, generally of a high age.
Pipe-laying  New ships often required to be versatile (combining various functions),
systems… comfortable for crew, standardized (saving costs).

 Low complexity repairs shifted much to low wage areas, western yards  Skills set of workers will need
increasingly rely on complex conversions / retrofits. refocusing on these areas.
 Retrofit markets could become very valuable, as new equipment required by  Developing eco-innovative tools and
IMO and other regulators (e.g. BWTS, scrubbers) will in the next decade need processes with a neutral
Retrofitting / to be retrofitted to many ships. environmental impact
Yards/Equipment MT
Ship Repair  Increasing international competition, ongoing consolidation.  To consider the environmental
 More environmental friendly process for retrofitting and ship repair activities. impact throughout the ship’s life
cycle // Coordination holistic retrofit
solutions (e.g. BWT, Scrubber, LNG
SCR)

Scrubbing or gas  Given the EU legislation an EU market for this technology is already in  Incentives for ship-owners to
Equipment Ex
existence retrofit vessels with scrubbers and
emission treatment
 Technology is also already there and requires market uptake by ship-owners to see a real return on investment.

34
Market Groups Topics EX/MT/LT Market Description and Challenges Challenges of Innovation

to install the products onto vessels  Integration of after treatment with

vessel (mechanically but also
related to control strategy)
 Size and cost of equipment
 Innovation in this field concerns the electric rotating machinery (motors or  Application of the super-
generators) and the associated electric converters. The acceptance of electric conductivity or permanent magnets
concepts will create a real green and environmentally friendly vessel technology.
Electric ship  The main market drivers are the overall size and weight reduction of the total  Development of intelligent and
MT
concept adaptation electric chain, the increase of the overall efficiency increase combined with modular electronic converters.
acceptable acquisition costs.  Novel power architectures
 The alternative to a green and environmentally friendly ship design to according to the ship types and its
complement efficient power generation supplied by LNG sailing profile
 Possible integration on board of medium size vessels.  Development of hybrid solutions
 Will probably continue to equip all the vessels for supplying the essential part  Reduced emission and energy
of the energy onboard. This equipment needs to be adapted to the various consumption
fuels which could be available in the near future. (LNG, Biofuel, etc.)  More integral design so the overall
 Market drivers could be fuel efficiency standards system works better
 Gas emission regulations (NOx)  Smart solutions for optimum use
Engines adapted to  Future GHG emission regulations during service life
Ex  Potential future PM/BC emission limits.  Increased efficiency by optimum
various fuels
 Fuel flexibility energy management and awareness
 Methane emission reduction  Sensors and new computing tools as
well as continuous emissions
monitoring equipment in
combination with good system
integration for a better overall
performance.
 LNG-driven vessels is likely to be a potential market for both retro-fit and new  Design challenge to match LNG
building concept with minimum impact on
LNG Fuel
MT  Test cases will be mainly operating in ECAs or influenced by local markets. vessel operations
Adaptation
 Availability of LNG infrastructure (bunker, etc.) and pricing will be a decisive  Development of LNG bunkering
driver. infrastructure.
 Potential NOx and Sox regulations

35
Market Groups Topics EX/MT/LT Market Description and Challenges Challenges of Innovation

 The key factor for the success of the mixture of various energy production  Ensuring minimal energy leakage
devices on ships (the so called HYBRID systems) rely on effective storage from storage devices.
capabilities  Price of stored energy per cycle
 Reduced cost of equipment and storage efficiency will be a driver to boost (degradation of storage device per
Energy Storage Ex this market. cycle!)
 Safety (lots of stored energy, high
power levels in and out of storage.
In case of batteries: combination of
Li-based chemistries and water /
high temperature etc.)
 Fuel Cells  Provide maritime fuel cells solutions
Alternative
LT (Power, dimensions, weight,
Propulsion
integration)

 Large number of equipment suppliers worldwide distributed  Optimization of the configuration of

Propellers Ex
 Focus on the propulsion’s efficiency propulsion’s systems achieving
 Different systems available: blades, PODs, thrusters, etc… higher efficiency rates
 Large number of equipment suppliers worldwide distributed  Definition of correct operational
 Chillers and compressors as main technical component to be further profile
HVAC Ex developed for competitiveness  Optimization of thermal balance
(load and production)
 Reduction on any possible thermal
dissipation
 Large number of equipment suppliers worldwide distributed  Black / Gray / technical Water
Auxiliaries Ex
 Technical auxiliaries services treatments
 Other purification treatments
Lightning Ex  Large number of equipment suppliers worldwide distributed  Energy saving lighting systems
 Main lightning systems, emergency lightning, public area lightning  High efficiency lighting systems
 Large number of equipment suppliers worldwide distributed  Technology transfer from ground to
 Fast pace evolving market with introduction of new technologies ship environment with particular
Entertainment Ex
reference to marine conditions
 Energy saving / high efficiency
entertainment systems

36
Market Groups Topics EX/MT/LT Market Description and Challenges Challenges of Innovation

 Vibration control and insulation

 Development of greener coast guard vessels  Able to incorporate modular

 Vessels capable of modular mission packages covering illegal traffic control, mission package for supporting
Patrol Vessels Ex disaster relief to oil spill recovery. diverse roles with an optimized
 Vessels which can easily be adapted by the requirements of the client efficiency of the energy
consumption and minimum
emissions
 Unmanned vehicles (surface/air) are being developed for over the horizon  Containerization of the offered
detection and/or self-protection. solution integrating the control /
Integration of  The integration of such vehicles on civilian ships could be used for detecting communication systems and the
MT fisheries or other type of resources as a substitute of incorporating manned unmanned vehicle for being easily
Unmanned vehicles
helicopters. deployed on different vessels.
 Deployment and recovery systems
Security of the unmanned vehicle in the
mother ship.
 It’s essential to prepare the maritime industry to take in consideration the  Invention of new ship equipment
consequences of the accidents occurred during sailing and to pre-equip the for saving the ship integrity or
Passive safety ships for cancelling or limiting these consequences in term of human safety limiting the pollution risk in case of
MT
concept and environmental impacts. accident.
 Invention of new systems assuring
the crew and passengers safety in
case of accidents
 Development of an integrated system composed by sensors (mainly EO / IR)  Adaptation of more complex self-
Anti-Piracy
MT and non-lethal weapons that can be installed on civilian vessel as a measure protecting systems used onboard
Integrated Systems
of protection against piracy attacks. naval vessels for a civilian
 Protection needs for vessels operating in danger areas. application.
Design and New materials and  Greener and more efficient processes and materials.  Eco-innovative processes.
construction MT  Reduced pollution limits of processes. Environmental regulations (local,
Production
processes regional, EU, national, etc).
Process
 Potential future PM/BC emissions limits.

37
Market Groups Topics EX/MT/LT Market Description and Challenges Challenges of Innovation

Efficiency Engineering  IT systems for calculation, simulation, modeling and optimization  Integration between IT systems and
Ex production processes
processes
 Production Engineering

38