Fincantieri aims to strengthen the relationship with Turkey / Fincantieri CEO, Giuseppe Bono

Date: Issue 14 - January 2009

Defence Turkey: First of all, Could you please tell us something about the organisation, history, expertise, mission and vision of Fincantieri, a leading world shipbuilder?
With more than 7,000 merchant and naval ships built in over 200 years of history, Fincantieri could well be called the heir to the great Italian shipbuilding tradition: nowadays we are world leaders in cruise shipbuilding and a reference operator for large ferries. Moreover we play a leading role in the naval sector both in the domestic and in the international market. Furthermore we recently entered the US market, thanks to the acquisition, in partnership with Lockheed Martin, of Manitowoc Marine Group, now named Fincantieri Marine Group, one of the leading mid-sized shipbuilders in the United States for commercial and government customers, i.e. the US Navy and US Coast Guard. Notably Fincantieri is committed in the programme for the new Littoral Combat Ship (LCS), as a member of the consortium led by Lockheed Martin.
As far as our organization is concerned, with a staff of about 10,500 people (30,000 including suppliers and subcontractors who daily co-operate at our shipyards), we are headquartered in Trieste, in the North East of Italy. We have two design centres, nine production facilities in Italy and another four in the US and a minority shareholding in a German shipyard, located on the coast of the North Sea. Furthermore we can count on a research centre specialized in shipbuilding, propulsion and maritime technologies. In the last few years we have started a series of initiatives to encourage company growth and promoted the development of activities in sectors close to our core business: ship repairs and conversions, marine components and systems and mega-yachts.

Defence Turkey: What are your goals and strategies?
In the current environment, characterized by a worldwide political and financial crisis, our strategy is to strengthen our position as leading shipbuilders and integrators in the cruise, naval and leisure markets, and to integrate our know-how and capabilities through a more active participation in merger and acquisition initiatives.

Defence Turkey: It is obvious that Fincantieri with her technological capability plays a leading role in European and world naval shipbuilding. What are Fincantieri?s lines of activity and core capabilities?
Our goal has always been the same: supply the customer with a state-of-the-art product that respects delivery schedules and is cost effective. Twenty years ago, facing growing competition from the Far East, we decided to quit the production of standard vessels in order to concentrate on the market of high-tech ships. As a result, during these years we have developed cutting-edge projects in the cruise and ferry and naval markets. More recently we have taken advantage of this dual experience in the merchant and naval fields to develop our first mega yacht. In short, we could describe all the core capabilities of Fincantieri in one word - innovation: innovation in terms of products, i.e. constant investment in R&D to keep us technologically up to date and attuned to the customers? needs, and innovation in terms of process management, aiming at cost and time effectiveness. These are our strengths, our tools to leverage the market in the different segments where we are operating.

Defence Turkey: Fincantieri agreed an industrial partnership with RMK Marine shipyard for the construction of four patrol vessels for the local Coast Guards. Could you please tell us something about your activities within the scope of this Project and an update on progress so far?
In July 2004 the Undersecretariat of Defense Industries announced the tender for the design and construction of 4 Patrol Vessels for the Turkish Coast Guard.
Fincantieri set up an industrial partnership with RMK Marine S.A. (KOC Group) for this specific project to participate in the tender procedure. The contract, which was announced by SSM for the Coast Guard Search and Rescue Ship to cover the search and rescue missions of the Turkish Coast Guard Command was signed on January 16th, 2007 in Ankara. Fincantieri has a high profile in the program, providing the design of the vessel, the main material packages and the technology and know-how transfer towards the local shipyard as well as the logistic support and training of both the crew and RMK staff.
Construction of the four vessels is carried out locally.
The contract entered into force on June 20th, 2008 and in less than 8 months, on February 18th, 2009, the first steel cutting of the first of class TCSG Dost took place in RMK Marine shipyard. Fincantieri is pleased with the local yard cooperation: the support team has already been settled in Tuzla for a few months and is carrying out monitoring and training on the job for technology transfer; the program is on track.

Defence Turkey: Fincantieri is one of the companies participating in the Landing Platform Dock. Could you please inform us about your activities in Turkey? What are your objectives and strategies?
Fincantieri has a strong interest in cooperating with the Turkish Institutions for the new Landing Platform Dock Program. Our Company has the best practice in the design and construction of this type of vessel deriving from our experience gained with the Italian Navy, in addition to experience as leaders in the construction of cruise and ferry vessels. Past experience in the design and construction of similar vessels is essential as the LPD is a ?complex? Land-Helo-Naval base used for power projection. Fincantieri already delivered 3 LPD Vessels to the Italian Navy and is currently working on the new Italian LPD program which seems to have similar requirements as the Turkish project.
With reference to the Turkish LPD, we understand that both the operational requirements of the Vessel and the purchasing model have still to be finalized. In particular, as far as we know, the acquisition will be for a single vessel and the export opportunities for tightly tailored products are very limited. These two factors have to be considered by the Turkish Institutions to identify the most suitable purchasing model, evaluating if it is worth paying extra for technology transfer to a local shipyard or if it is preferable to reduce costs by buying from an international company that already has the in-house expertise. Fincantieri has its own opinion on the matter based on an industrial point of view, however, at the end of the day, the decision rests with the Turkish Institutions who doubtlessly will consider their strategic approach in the wider picture.
Fincantieri is a flexible company and will comply with the final decision as the Company can play either the role of Prime Contractor ? with close involvement of Turkish Industry to maximize the local content- or act as supplier of the design, main material package and technology transfer to a local shipyard.

Defence Turkey: In recent years Turkey has taken significant steps forward in the field of naval system technologies within the framework of major projects such as Milgem Patrol and Anti-Submarine Warfare Ship Building. What are your strategies and plans regarding investment and joint production in Turkey to strengthen collaboration with the Turkish Authorities and Defence Industry?
Over the years, Fincantieri has built up a wealth of experience in cooperation with foreign partners including bi-national programs. The main on-going international cooperation programs of our Company are, first of all, SARS (Turkey), the bi-national program between Italy and France for both the HORIZON frigates class and the FREMM class, cooperation with Germany for the U212A submarine program, with Lookheed Martin Consortium for the Littoral Combat Ship to be delivered to the US Navy, and cooperation with the Indian Navy for their new aircraft carrier. In this context Turkey is certainly one of the core regions for our Company. This consideration led us to take an open minded approach to the SARS program, signing a Memorandum of Understanding with RMK Marine for the local production of all 4 vessels since the very beginning. In our opinion, the 90m. OPV was the right program for the private local shipyard to enter the naval business with the help of a foreign, experienced partner. In addition, it was a good opportunity for Fincantieri to start a cooperation with the Turkish shipyards to evaluate joint opportunities also in the merchant sector. Indeed, Fincantieri is one of the most diversified groups in the world in the design and construction of both merchant and naval vessels. Duality in naval and merchant shipbuilding enables the Company to transfer the best practices from one sector to the other, creating a virtuous circle made up of technology, performance, quality and cost. Moreover, the SARS contract allowed Fincantieri to start a cooperation with both the local Combat Systems Industries and the local suppliers of the main items. Our aim is to take this cooperation well beyond the SARS contract borders.

Defence Turkey: Is it possible that there will be a role for the Turkish Defence Industry in your marketing strategies regarding regions neighbouring Turkey?
Fincantieri has been considering the Turkish Defence Industry as a key player to cooperate with for the marketing and sales of Naval Vessels not only in the regions near Turkey but worldwide.
The first example is the teaming agreement that our Company signed with RMK Marine for the marketing and sale of the SARS Off Shore Patrol Vessels towards third Countries which helps also to strengthen the strategic commercial leverage between Turkey and Italy.
We are confident that this is only the starting point of an wider, fruitful cooperation of mutual benefit between Fincantieri and the Turkish Defence Industry.