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STRUCTURE OF SHIPBUILDING SECTOR IN ROMANIA

SHIPYARDS

STX RO Offshore TulceaSTX RO Offshore BrailaDamen Shipyards Galati

Constanta ShipyardDaewoo Man alia Heav

SHIP DESIGN COMPANIES

Ship Design Group GalatiDutch Marine Trading Galati

ICEPRONAV GalatiOnly SRL Galati

SHIPBUILDING INDUSTRY SHIPBUILDING INDUSTRY IN ROMANIAIN ROMANIACONTINUITY AND COMPETITIVENESS CONTINUITY AND COMPETITIVENESS

Industries2x1 Holding Cape Midia Shipyard

Severnav Drobeta Turnu Severin

Orsova ShipyardGiurgiu ATG Shipyard

SHIP REGISTER COMPANIESGermanischer Lloyd RomaniaBureau Veritas Romania Control

International

Det Norske Veritas Romania

HIGH EDUCATION AND TRAINING INSTITUTIONS- University Dunarea de Jos Galati

- University Ovidius Constanta Faculty of Mechanical Industrial and Maritime Engineering- Naval Academy Mircea cel Batran

- Maritime University of Constanta

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SHIPBUILDING SECTOR MARKET SHARE IN CGTYEAR NUMBER BUILT

(CGT)EXPORT

( CGT)TOTAL VALUE

THOU EUROEXPORT

THOU EURO

2002 12 148,587 148,587 272 272

2003 9 98,605 98,605 151 151

SHIPBUILDING SECTOR MARKET SHARE IN CGT

2003 2007

Weight of Shipbuilding sector in GDP % 0,76 0,82

Productivity of Shipbuilding Sector CGT/CAPITA 4,93 15,42


2004 9 93,865 93,865 134 134`

2005 18 246,915 246,915 331 331

2006 71 574,456 447,704 580 461

2007 27 282,476 282,476 410 410

Shipyards Turnover-2007 Shipyards Employers-2007Turnover 410 mil EURO Total = 10,800

Shiprepair~54 mil EURO Ship repair = 900Merchant New building ~400 mil Euro Merchant New building = 9,700Naval ~ 10 mil Euro Naval =200The ship export represents 94% of the total production of the Romanian shipyards, thus shipbuilding improves theexport/import balance.Products-Merchant Vessels (Tankers, Bulk Carriers, Container Feeders, LPG, Barges, etc.)-Offshore &Specialized Vessels (AHTS,PSV, Dredgers, Tugs, Yachts, etc)-Ship repairs &ship conversions-Naval Vessels

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Containers 4860TEU already delivered Crude Oil Tanker 69K DWT alreadydelivered

New Building Commercial Ships : 180,000 DWT BULKCARRIER & 11,000 TEU CONTAINERSHIP (8 Vessels / Year)

Containers 5560 TEU deliveredContainers 5560 TEU under progressin different stages(biggest container build in Black Sea area)

Capesize Bulk Carrier 180k DWT startbuilding

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REPAIRS &REPAIRS &CONVERSIONCONVERSION

WORKSWORKSSteel WorksSteel Works

Docking ,Docking ,Blasting & PaintingBlasting & Painting

Pipe WorksPipe Works

Mechanical &Mechanical &Electrical WorksElectrical Works

SANTIERUL NAVAL CONSTANTA S.ACONSTANTA SHIPYARD

Conversions Projects:Conversions Projects:

AA Buoyancy Barge into to a Desalination PlantBuoyancy Barge into to a Desalination Plant

BB Single Hull to Double Hull TankersSingle Hull to Double Hull Tankers

CC Single Hull Aframax to Post Panamax BulkcarrierSingle Hull Aframax to Post Panamax Bulkcarrier

Conversion Project AConversion Project A Conversion Project BConversion Project B Conversion Project CConversion Project C

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NEWBUILDING Production FlowNEWBUILDING Production Flow

TECHNICAL PROGRESS through TECHNOLOGYDesign & EngineeringDesign & Engineering

PlanningPlanning Sea trialsSea trialsModern and Efficient Ship DesignsPromotion in the market Building large series

- - -

SANTIERUL NAVAL CONSTANTA S.ACONSTANTA SHIPYARD

DELIVERYDELIVERY

Materials SupplyMaterials Supply

ShopShop primingpriming Steel cuttingSteel cuttingAssembly &Assembly &Indoor outfittingIndoor outfitting

Blasting &Blasting &PaintingPainting ErectionErectionin the dry dockin the dry dock

OutfittingOutfitting

SNC PC-50 - 50.000 dwt - Oil Product & Chemical IMO 2 TankerSNC BK- 60 - 60 000 dwt - SUPRAMAX Bulk carrier

SNC TK-115 - 115 000 dwt - AFRAMAX Crude Oil Tanker

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DAMEN SHIPYARDS GALATI

Heavy Lift vessel Patrol vessel

Platform Supply vessel Tug vessel

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Advanced & Outfitted Hulls for off-shore industry completed inside the group

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Complete vessels built in STX RO Offshore Braila

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PRODUCT MIX DESCRIPTION Hulls with a high outfittingdegree :

Specialized vessels for theoffshore industry;

Multipurpose supply vessels;

Anchor handling vessels; Other specialized vessels for

the offshore industry; Factory-freezer trawlers; Medium size ferries.

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SEVERNAV S.A. SHIPYARD

Main ParticularsLength o. a. 116,00 mLength b. p.p. 105,00 mBreadth mld. 17,60 mDepth to main deck 9,90 mDesign Draft 5,50 mDeadweight abt. 3800 TMain Engine Output abt. 3840 KwD.G. - 2 pcs. Output 1.250 KVAD.G. - 1 pc. Output 400 KVAE.D.G..- 1 pc. Output 270 KVAShaft Gen. Output 625 KVABowtrusther Engine Output 300 KwService speed 15,0 kmNo.of passengers 220 passengers

PASSENGER - CARGO VESSELS

- 27 ship crew

- 36 Hotel/Restaurant personnelClassification: BV, I 3/3 E + PASSENGER SHIP/F; DEEP SEA +MACH +AUT - MS

ETHYLENE GAS CARRIER 8.600 cbmMain Particulars

Length over all 129,00 m

Breadth 17,80 m

Draught 8,60 m

Classification: GERMANISCHER LLOYD 100 A4 E1

Liquefied gas tanker MC E1 AUT Inert

Main Engine: Main Engine output (MCR): abt. 6000 KW

Service speed: abt. 16,5 Knots

Cargo System: Is consisting of: 3 independent cargo tanks, type C(bilobal tanks); cargo piping system; cargo pump plant; cargo holdventilation system; cargo reliquefaction plant; inert gas plant; one hosehandling crane electric-hydraulically is provided.

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Designing and building inland and marine vessels up to 10.000 dwt.Specialized in steel constructions, naval equipment and ship repair works.Aluminum, GRP and steel craft building.Export-import activity, goods shipping and technical assistance.

LABOUR FORCE Abt. 1550.ARCHIVED EVENTS

two RORO Tanker vessels of 2.400dwt fora Greek company. new design andworldwide innovation.

SEVERNAV S.A. SHIPYARD

two luxury Motor yachts of 63 and 75 ft fora Dutch company.PLANNED EVENTS

intensive modernization program intendedto improve the working technologies,to comply with the highest standards.

invest to improve the quality of itsproducts, in the following priorityobjectives:

- integrated informational system;- shut blasting, blasting and painting

equipment;

- equipment for improving of life and

working conditions of its employees;- environment protection.

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EVOLUTION OF PERSONNEL IN ROMANIAN SHIPBUILDING INDUSTRY

28756

25000

30000

35000


2040720500

2040017285 17303 17260 16600 16580

10800

0

5000

10000

15000

20000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

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SHIPYARD SHIPREPAIR

ACTIVITY FACILITIESSTX RO Offshore Braila Minor activity Combined yard

Constanta Shipyard Repair and building Combined yard

Damen Shipyards Galatz Minor activity Combined yard

SHIPREPAIR SUB-SECTOR


Industries

2x1 Holding Cape MidiaShipyard

Repair yard Repair yard

Mangalia Shipyard (Navy ) Repair and building Combined yard

ORSOVA Shipyard Minor activity Combined yard

SEVERNAV Drobeta TurnuSeverin Repair and building Separate repair facility

STX RO Offshore Tulcea Minor activity Combined yard

The yards highlighted in bold print in the above table are considered to have ship-repair as either thesole or significant activity whereas the other yards are considered to operate currently as predominantly

shipbuilding yards.

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ANALYSIS OF SECTORS

STRONG POINTS WEAK POINTS

Skilled labor force at a low costGood facilities dry docks, slipways or

synchroliftGood quality of the productsA long traditionGood geographical position: Black Sea Coast

1000 km on Rotterdam - Constantza Waterwa

Under used of existing capacitiesLow productivity within 15.42 cgt / capitaLack of cash and rather high debts for the small

companiesSometime Delays in delivery time


Developments in shipbuildingThe order book of the Romanian shipyards is expected to record about 494,824 cgt at the end of2008.Within 2006-2007, 5,800 workers left Romanian shipyards for jobs in EU and USA shipyards. The

workforce shortage seriously affected the vessel deliveries, therefore the financial figures for 2007.The engineering design recorded a significant number of orders.

Education and training will be enhanced in order to cover the effects of personnel loss.Evolution of ship maintenance, repair & conversion

The total turnover related to the ship repair & conversion activity decreased in 2007 with 21% in

comparison with 2006.

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GOVERNMENT INITIATIVES

The Government finalized the privatization program of the companies in this sector.The privatization methods were:- Selling the State owned shares package to strategic investors (SN Constanta, Damen Galati, STX RO OffshoreBraila, STX RO Offshore Tulcea)- Capital gains ( joint venture) (Daewoo Mangalia Heavy Industries, Severnav Drobeta Turnu Severin, Navy YardMngalia)During the privatization process a program of support measures for the shipyards was applied (2004-2006),amounting 23,316,232 EURO.These support measures were generated for the restructuring purposes and for privatization and export promotion.

Stage of support measures granted to the shipyards between 2004 and 2006, in accordance to theclassification of OECD Questionnaires C/WP6 (2007)8

Type of aid/Company 2004 2005 2006 TOTAL


2004-2006

A. Direct transfer of funds from Government/ Mangalia Shipyard

65,368.7 3,530 - 68897,7

D. Loan guarantees / Constanta Shipyard - 7,054,595 - 7,054,595

E. Export credit facilities/Contanta Shipyard, DMHI,STX RO Offshore Tulcea, Braila, Navol Oltenita,Severnav, Mangalia Shipyard, Orsova Shipyard

11,137,747 6,958,709.6 6,427,003 24,523,459

F. Take over of debts by Government or debtreliefs for industry/Constanta Shipyard

9,795,089 3,202,920 - 11,998,009

G. Conversion of the debts into shares/ ConstantaShipyard

11,109,638 31,909,550 - 43,019,188

H..Government revenue that is foregone or notcollected/Constanta Shipyard, DMHI

359,792 83,500 220,240 663,532

I. Rehabilitation of infrastructure / Severnav(Rehabilitation Danubes bank)

343,023 343,023

TOTAL Lei(romanian currency) 31,810,657 49,212,804 6,647,243 87,670,704

Average exchange rate LEI/EURO 4.0532 3.6234 3.5245Total-EURO 7,848,282 13,581,940 1,886,010 23,316,232

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Since 1990, during the restructuring period no new productioncapacities were built.

No such investments are envisaged in the future. The restructuring of ownership was completed, except two shipyards. Improving competitiveness of yards is necessary, in order to allow

them to compete globally without a special support regime:

CONCLUSIONS (1)


Quality systems according with ISO standards and certification by wellknown classification companies; Sustaining of innovation activity, in order to promote the most

performing technology Promotion of legislation concerning the industrial parks and clusters

(especially in the areas Galatzi-Braila and Constantza Mangalia) Restructuring and adjustment of existing capacities Continuous training of the labor force

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Development of marine equipment industry complementary with EUcountries

The poor domestic demand will keep Romanian shipbuilding anexport oriented industry for the next years

Our strategy will pay attention to the international legal framework. An important role in the restructuring process of the Romanian shipbuilding

industr la ed the Romanian Shi builders Association ANCONAV set

CONCLUSIONS (2)


up in 1994. Since 2004 ANCONAV was accepted as member of CESA. Romania was invited for full membership in OECDs Council Working Party

on Shipbuilding Romania fully supports the principles of the Agreement Respecting

Normal Competitive Conditions in the Commercial Shipbuilding and repairIndustry and is convinced that its coming into force , as soon aspossible, could offer long term and improved stability for shipbuildingindustry.

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THANK YOU VERY MUCH


FOR YOUR KIND ATTENTION

Mr. VICTOR SCHMIDTMr. VICTOR SCHMIDT Mr. MARIN DANMr. MARIN DANDEPUTY GENERAL DIRECTORDEPUTY GENERAL DIRECTOR MANAGERMANAGER -- ANCONAVANCONAV

Tel: + 4021.305.52.00Tel: + 4021.305.52.00 Tel: 0241753340/1249Tel: 0241753340/1249Fax: + 4021.3112434Fax: + 4021.3112434 Mobile: 0722697218Mobile: [email protected]@minind.ro [email protected]@dmhi.ct.ro

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