It was a big summer for what has become the pivotal yard-line relationship in cruising. Carnival group took two ships from Fincantieri, and the handovers of Carnival Cruises? Carnival Glory (built at Monfalcone, near Trieste) and Oosterdam (Marghera, at Venice) for Carnival?s Holland America Line highlighted just how dominant the Italian shipbuilding group has become in the cruise ship business, and how important Carnival is as a ship buyer, especially now that P&O-Princess falls under its umbrella.
Taking a late July snapshot of the cruise order book, Carnival Group ? including also Costa and Cunard ? accounted for 13 of the 17 ships on order or due for imminent delivery. Fincantieri ? which took the only two orders placed since 9-11 ? has got nine of those (with the other three Carnival group ships being Diamond Princess and Sapphire Princess, under construction at Mitsubishi?s Nagasaki yard, and Cunard?s QM2, which will be delivered next year by Chantiers de L?Atlantique). When the value of the ships is taken into account, Fincantieri reasonably claims 50 per cent plus of the market.
The Fincantieri-Carnival connection will underscore its dominance with the delivery of three ships within five months when Costa Fortuna passes to Carnival in November.
During the past decade, Fincantieri has built 25 ships for what is now Carnival group, and with the 10 still to come that business relationship will have been worth $12 billion.
Carnival Glory says a lot about the delicate state of the cruise business ? and hence of cruiseship building ? today. A few statistics and a tour of the ship explain why Fincantieri has been able to forge the relationship it has with Carnival. The second ship in the Conquest Class ? a slightly bigger version of the three-ship Destiny Class, 109,500g/290.2m versus 101,353g/270.6m ? Glory was built in what Fincantieri describes as the record time of 24 months, including seven in the workshop, nine in the drydock and eight at the wharf for fitting out. On accepting the ship, Carnival Group chairman and chief executive Micky Arison told some 1,500 guests seated in Glory?s main theatre: "The way a ship is delivered is critical to the success of the ship. This ship has been uniquely delivered in perfect condition. We could sail today with all of you as guests. It really is 100 per cent complete."
Some might describe the ship?s decor as a violent collision between Disneyland and Las Vegas; there are as many colour schemes and design themes as there are directions to turn the eyes. Not everybody?s style, but Carnival knows how to cater to its mass American market and however gauche a pastiche it may be, it works for the simple reason that it is absolutely beautifully crafted. The fitting out of this ship is so perfect, the quality so high, that it is easy to see why Carnival comes back to Fincantieri again and again.
And there are dreams of more. Carnival Group is studying designs ? begun by P&O-Princess and Fincantieri before last year?s takeover by Carnival ? for a 180,000g ship. Increasing the size of ships should mean lower operating costs per berth and, if the capital cost can be got right, higher margins. Technically such ships are possible, but the capital cost of acquiring them is a critical factor. Hence the recent announcement by Royal Caribbean that its own plans, with Kvaerner Masa-Yards, for a 160,000g-plus Voyager Class-based ship will only go forward if the US dollar-euro exchange rate improves in the Americans? favour.
Arison says Carnival Group might decide to build two or even three of its mega-ships for delivery in 2006 or 2007. The dollar-euro rate may be less of an overriding factor for Carnival, as the ships could be acquired by its European arms, whose revenue is in euros or sterling. Cruising has plenty of potential to grow in Europe, and P&O-Princess is accounting for 80 per cent of Carnival group growth this year.
But despite a sharp bookings upturn in recent weeks, Arison is making no forecasts; business, he says, could drop off again just as fast. These post 9-11 months are tough times for a leisure industry, and the reality is that in today?s economic climate cruise prices are being driven down.
Hence Arison made a point of directing some of his remarks to Fincantieri?s workforce, which happened to be on strike as Carnival and its guests ? all turned out in their party togs to celebrate the big day ? arrived at the Monfalcone yard to greet Carnival Glory. A well-mannered strike it was, with no chanting, slogans, burning piles of tyres or blocked gangways. But a strike all the same, designed to alert the visitors to the fact that, as reported by the strikers, they were paid only 81,000 a month.
Said Arison, the whole business is about vacations, not about ships and shipbuilding. In Italy, he said, things are not like they are in France, Germany or Finland, and if ever there was a time to work with the company and its management to keep the order book full, now was it: "I would encourage [this] rather than marching outside the yard. Or, you?ll be marching out of the yard as they are in France."n
