Wärtsilä Corporation Annual report 2014

Ship Power’s operating environment

Ship Power serves the marine and oil & gas industries. The main vessel segments covered in the marine industry are traditional merchant vessels, gas carriers, cruise & ferry, navy and special vessels. In the oil & gas industry we are active in offshore installations and vessels, and in land-based gas installations.

General shipbuilding and shipping market drivers

Demand in the shipbuilding and shipping industries is mainly driven by developments within the global economy and the resulting impact on trade and transportation capacity requirements. The global economy also influences fuel prices, which in turn has both a direct and an indirect impact on the marine and oil & gas industries. The price, availability and demand for fuel drives development in the oil & gas industry, while in the general shipping industry, it increases the demand for efficient vessels. Other factors, such as shipyard capacity, newbuild prices, decommissioning and scrapping, and interest and freight rates, also affect these industries. Global demand for new vessels drives Wärtsilä Ship Power’s business, in particular ships built for seaborne cargo transportation, offshore oil drilling, production and support, cruise and ferry services, and for naval use. Another important driver is the development of environmental regulations and their impact on the demand for optimised vessel efficiency, environmental solutions and gas as a marine fuel.

Main drivers for Wärtsilä's Ship Power business

  • Developments in the global economy
  • Development of world trade and needed transportation capacity
  • Development of gas as an energy source
  • Development of oil and gas prices
  • Development of new offshore oil & gas fields and infrastructures
  • Environmental regulations

Competitors and market position

Wärtsilä Ship Power has continuously broadened its portfolio, which today ranges from engines and propulsion equipment to electrical equipment, automation, ship design, environmental solutions, gas systems, and pumps and valves. This is backed by the capability to build environmentally sound solutions, and by superior service support throughout the lifecycle of the product. Our competitive advantage lies in having the industry’s broadest marine focused offering comprised of leading, innovative products, integrated systems and engineering, which is supported by a unique sales and service network in touch with our customers globally.

Our field of competitors is broad. It includes engine companies, such as MAN D&T, Caterpillar, and Chinese licensee manufacturers, propeller makers such as Schottel and Thrustmaster, and environmental and auxiliary equipment providers like Alfa Laval. It also includes electrical and automation houses, notably Siemens, ABB and Kongsberg, pump and gas system providers, such as Colfax and Cryostar, and companies with broad offerings like Rolls-Royce or Hyundai Heavy Industries. Wärtsilä is recognised as a proven supplier of innovative and sustainable technologies across our portfolio serving the marine and oil & gas markets.

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Wärtsilä's offering Main application* Main competition** Wärtsilä's market position
4-stroke main engines Small merchant vessels, offshore, special vessels MAN D&T, MAK (CAT), Rolls-Royce, HiMSEN. Approximately half of the market (in kW) is controlled by Wärtsilä.
4-stroke auxiliary generating sets All vessel types The market is highly fragmented, price sensitive and with heavy competition. The main competitors are MAN D&T and its local license manufacturers, Yanmar and HiMSEN. High-speed engines also compete in the auxiliary engine market. Wärtsilä is a market challenger, having around 3% of the total market.
2-stroke engines sold through the WinGD joint venture Large and medium size merchant vessels MAN D&T, Mitsubishi Heavy Industries Market challenger, approximately 10% of the market (in kW) is controlled by Wärtsilä branded engines

Propulsion

• Controllable Pitch Propellers (CPP)
• Fixed Pitch Propellers (FPP)
• Steerable thrusters
• Tunnel thrusters

All vessel types Rolls-Royce, Schottel, Hyundai Heavy Industries, Mitsubishi Heavy Industries, Mecklenburger Metallguss, Thrustmaster, Brunvoll, Kawasaki, Caterpillar (Berg Propulsion)

CPP & FPP: fragmented market, Wärtsilä among the top players.

Steerable thrusters: Wärtsilä among the top players.

Tunnel thrusters: highly fragmented market, Wärtsilä is a market challenger.

Electrical & Automation

• Low loss concept (LLC)
• LV & MV switchboards
• Variable speed drive
• Flowline heating
• Ship automation systems
• Power management systems
• Integrated bridge solutions

Offshore, special vessels ABB, Siemens, Kongsberg, Rolls-Royce, General Electrics Established position in offshore, otherwise market challenger.
Ship design OSVs, merchant vessels, specialised vessels, fishing vessels Skipsteknik, Marinteknik, MMC, Rolls-Royce, Ulstein Amongst the leading independent ship design houses.

Oil & Gas systems

• Regasification systems
• Gas reliquefaction systems
• Onshore gas liquefaction systems
• Gas recovery systems
• Oil separation systems
• Fuel gas systems

Offshore gas processing & storage vessels, LNG/LEG/LPG carriers, floating production systems, industry applications, fuel gas systems for all vessel types TGE Marine, Cryostar, Linde GAS - AGA, Kobelco, Moss Maritime, Daewoo Shipbuilding & Marine Engineering, Weir LGE, Cryonorm, John Zink, Black & Veatch, Air Liquid, Aker Solutions, FMC/CDS, Cameron/Concept Wärtsilä Hamworthy among the top players.

Pumps and valves

• Deepwell cargo pumps
• Pump room systems
• Engine room pumps
• Fire-fighting systems
• Valves

All vessel types, on- and offshore oil & gas facilities Niigata, Marflex, Framo, Hyundai Heavy Industries, Shinko, Colfax, Ellehammer Wärtsilä Hamworthy among the top players.

Environmental solutions

• Exhaust gas cleaning
Ballast water management systems
• Inert gas systems
• Water production systems
• Water treatment systems

All vessel types Alfa Laval, Green Tech Marine, Techcross, Panasia, Evac, Scanship GEA Westfalia, Marinfloc Wärtsilä among the top players.

* Only main applications mentioned.
** Only main competitors mentioned.

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