20 Mar 03. News from Alstom Marine that the market for its cruise liners has collapsed has reignited the debate that the only way of saving the European shipbuilding industry is to concentrate on military shipbuilding, combining the industries of France, Germany, Italy, Spain and the UK into a naval EADSlike organisation.

Alstom aborted the launch of the $861m Queen Mary II, its latest liner, due to dredging requirements. Patrick Kron, the new chief executive forecast a higher-than-expected loss for 2002 for Alstom. He has confirmed that a disposal programme is underway including the power transmission division; the marine division accounts for 5% of group accounts and is virtually unsaleable and is unlikely to remain afloat in its current form for 30 months. The St Nazaire shipyard, the centre of the division, has been forced to take back ownership of eight vessels from the collapsed Renaissance cruise line, two of which are moored off the coast of Marseilles. The company has not signed a cruise ship order since 2001 and is building five cruise ships for delivery in 2004, with little after that

To form an EADS structure for European shipyards Alstom would require a merger of Chantier de l’Atlantique with DCN (which Thales has a stake in the export division JV) but DCN stated that they were not aware of the proposals.

The value of the unit is hard to gauge it is leaking €50m per year giving it a negative value of €500m. But politically the loss of 12,000 direct and indirect jobs would be unacceptable.

The announcement by BAE SYSTEMS (BATTLESPACE UPDATE VOLUME 5 NO 11, March 13th 2003) of its shipyard re-organisation may also be a signal of eventual European co-operation, leaving the Barrow submarine yard, currently working with 250 engineers from the GD Electric Boat Company segment, as an entity tied to GD and U.S. submarine technology.