Wärtsilä serves two main industries; the marine and the power industry, for which we provide products, solutions and services to a large range of customer segments. In Ship Power, the scope of delivery varies from individual equipment components to full system integration, whereas in Power Plants the scope varies from engine supplies to turn-key project deliveries. The role of Services is significant in the main customer industries.
The marine industry
The main vessel segments covered by Ship Power are Merchant, Offshore, Cruise&Ferry, Navy and Special vessels. Ship Power customers comprise both shipyards and ship owners.
General shipbuilding and shipping market drivers
Demand in the shipbuilding and shipping industries is basically driven by the development of the global economy and its impact on trade and needed transport capacity. The global economy also influences the level of fuel prices, which in turn has both a direct and an indirect impact on the shipping and offshore industries. Other factors, such as shipyard capacity, new build prices, decommissioning and scrapping, interest and freight rates, and environmental considerations, also affect these industries. The main market driver for our Ship Power business is the global demand for new vessels, in particular regarding ships built for seaborne cargo transportation, offshore oil exploration and support, cruise and ferry services, and for naval contracting.
Main drivers for Wärtsilä's Ship Power business
- Developments in the global economy
- Development of world trade and needed transport capacity
- Development of oil and gas prices
Competitors and market position
Wärtsilä Ship Power has continuously broadened its portfolio, which today ranges from engines and propulsion equipment to electrical equipment, automation and ship design. Our competitive advantage lies in having the broadest offering in the industry. This offering is backed by the capability to build environmentally sound solutions, and by the best service support throughout the lifecycle of the product.
|Equipment offered by Wärtsilä||Main application*||Main competition**||Wärtsilä's market position|
|4-stroke main engines||Small tankers, small container vessels, LNG (Liquid Natural Gas) carriers, drillships, FPSO (Floating Production, Storage and Offloading), offshore support/service vessels, cruise vessels, ferries, ro-pax vessels||MAN Diesel, MAK (CAT), Niigata, Rolls-Royce||Market leader: Wärtsilä's share 30-40% of the market (in KW)|
|2-stroke engines (license built)||Large merchant vessels: bulk carriers, tankers, container vessels||MAN Diesel, Mitsubishi Heavy Industries||Market challenger: Wärtsilä's share appr. 15% of the market (in KW)|
Auxiliary engines (4-stroke)
|Generating sets for all vessel types||Highly fragmented market, price sensitive and heavy competition. Main competitors: MAN Diesel and its license manufacturers, Yanmar, the HiMSEN engine designed and manufactured by Hyundai Heavy Industries. High-speed engines also compete in this market||Market challenger: Wärtsilä's share between 1% and 5% of the market|
|Controllable Pitch Propellers (CPP)||Small container vessels, offshore supply/service vessels, FPSO, cruise vessels, ferries, dredgers||Rolls-Royce, Schottel||Fragmented market with several players. Wärtsilä amongst top players|
|Fixed pitch propellers (FPP)||Large merchant ships (tankers, container vessels, bulk carriers), LNG carriers, drillships, cruise vessels, ferries, tugs, dredgers||Hyundai Heavy Industries, Mitsubishi Heavy Industries & Mecklenburger Metallguss||Fragmented market with several players. Wärtsilä amongst top players|
|Tunnel thrusters||All vessel types||Rolls-Royce||Market challenger|
|Steerable thrusters||Drillships, FPSO, offshore support/supply vessels, pipelayers, AHTS (Anchor Handling Tug Supply), tugs||Rolls-Royce, Schottel||Fragmented market with several players. Wärtsilä amongst top players|
|Seals and bearings||Merchant vessels: bulk carriers, tankers, container vessels||Michell (RR), Renk (MAN)||Market challenger|
* Only main applications of interest to Wärtsilä mentioned
** Only main competitors mentioned
|Segment||Vessel type||Main offering||Wärtsilä's value proposition and market trends||Competitive landscape|
|Merchant||Tankers||2-st engines, Auxiliary engines, FPP||Unique portfolio (including ship design) and service network. Environment and efficiency increasingly important, higher operative expenses boosting demand for efficient equipment and vessels||MAN clearly dominates the market for 2-stroke engines. The rest of the equipment: larger vessel sizes are typically standardised and equipment providers face intense and fragmented competition. On the other hand more specialised applications (chemical tankers, shuttle tankers, and smaller vessels in general terms) provide opportunities for focusing on complete lifecycle solutions and efficiency|
|Containers||2-st engines, Auxiliary engines, FPP, CPP, Tunnel thrusters, Ship design, Gearboxes|
|LNG||4-st main Dual Fuel-engines, CPP, Gearboxes|
|Bulkers||2-st engines, Auxiliary engines, FPP, Tunnel thrusters, 4-st engines for smaller vessels|
|Other: cargo, roro, car carriers, LPG carriers||All of the above|
|Offshore||Exploration (floating): drillships, semisubmersibles, etc||4-st engines, Steerable thrusters, Tunnel thrusters, FPP, Electrical propulsion, Automation, Gearboxes||The most extensive single source offering and network, including ship design, project management and engineering. Emphasis on safety, reliability, energy-, operational- and environmental efficiency||Few players with extensive offering (Rolls-Royce). Competition divided by application, ie. Automation (Kronsberg, Converteam, Siemens, ABB), Ship Design (Ulstein -RR) etc|
|Floating production units: FPSO's, FSO, floating LNG, etc||4-st engines, Steerable thrusters, Tunnel thrusters, CPP, Electrical propulsion, Automation, Gearboxes|
|Service/Supply vessels: OSV's, PSV's, AHTS, AHS||4-st engines, Steerable thrusters, Tunnel thrusters, CPP, Electrical propulsion, Ship Design, Automation, Gearboxes|
|Other: crane vessels, pipelayers, accomodation vessels||All of the above|
|Cruise and Ferry||Cruise vessels||4-st engines, CPP, FPP, Steerable thrusters, Tunnel thrusters, Automation||The most extensive offering and network in the market, customer care. Environmental performance and lifecycle approach important. High operating costs calling for greater efficiencies||Limited competition with only main players having access to the market (MAN, Caterpillar, Rolls-Royce, ABB, etc)|
|Ferries||4-st engines, CPP, FPP, Steerable thrusters, Tunnel thrusters, Automation, Ship Design|
|Other: ro-pax, yachts||All of the above|
|Special vessels||Tugs||4-st engines, FPP, Steerable thrusters, Tunnel thrusters, Automation, Ship Design||Extensive offering including ship design and holistic approach to efficiency in operations. Lifecycle service and environmental aspects on top of the agenda||Competitive landscape varies depending on vessel type, owner, etc. Competition highly fragmented with small and big players present|
|Dredgers||4-st engines, CPP, FPP, Steerable thrusters, Tunnel thrusters, Automation, Ship Design|
|Other: fishing vessels, ice breakers, research vessels, work boats, inland water ways vessels||All of the above|
|Navy||Frigates, corvettes, patrol vessels, aircraft carriers, destroyers, support vessels||Waterjets, seals and bearings, tunnel thrusters, 4-st engines||Focus on selected vessel types with selected components and lifecycle services. Strong engineering capabilities and focus on reliability||Limited competition with only main players having access to the market (MAN, Caterpillar, Rolls-Royce, ABB, etc). The segment is dominated by high speed engines|
The power industry
The main market segments covered by Power Plants are Flexible baseload, Grid stability and peaking, Industrial self-generation and the Oil & Gas industry. The main customer groups within these markets are utilities, Independent Power Producers (IPP's) and industrial manufacturers in industries such as the cement, mining and textile industries.
Wärtsilä's power plant projects are financed by the customer's own cash flow or through debt financing, typically from local financial markets. As a result, Wärtsilä power plants are funded in many geographical markets. Wärtsilä does not provide funding to its customers, but provides support in finding funding solutions for them.
General market drivers in Power Plants
Demand for power generation is driven primarily by economic development. As energy consumption grows, the demand for both new power generation equipment and replacement equipment for older capacity increases correspondingly. Looking ahead, growth is expected to be higher in non-OECD countries, due to increasing industrialisation and improving living standards. The majority of Wärtsilä's Power Plants business comes from the emerging markets. In emerging markets, as well as in remote areas, demand for flexible baseload power plants burning heavy fuel oil (HFO) is driven by growth in electricity consumption, and by developments in the price of oil. Demand for gas driven plants increases along with the introduction of gas networks to the emerging markets.
Climate change and stricter environmental regulations are spurring investments in renewable solutions. Renewable solutions, such as wind power, lead to unforeseen grid stability challenges, which require additional backup and balancing power. The large scale use of renewable power increases the need for flexible, reliable, and efficient power that Wärtsilä's solutions provide.
Demand for gas driven power plants is expected to grow by 2% per year, and 80% of this growth is expected to occur in non-OECD countries. Wärtsilä is well positioned in this market.
Power Plants competition
The power plant market is highly fragmented, and this is reflected also in the competitive situation. In larger liquid fuel or gas-fired projects, Wärtsilä often competes against gas turbine technology and other manufacturers of reciprocating engines. In the heavy fuel oil based power plant market, Wärtsilä's competitors are mainly other engine suppliers. We hold a leading position in this market, and our competitive strength is the ability to provide complete turnkey power plants combined with fuel and operational flexibility. In the gas power plant market, our competitors are both gas engine and gas turbine suppliers. Our main strengths compared to gas turbine suppliers are higher efficiency in varying loads, and the capability to achieve fast starts without increased costs.
Main drivers for Wärtsilä's Power Plants business
- Economic growth in emerging markets
- Growth in use of gas as fuel in power plants
- Environmental concerns
- Replacement of older equipment
Our Services business serves both end markets
Our Services business serves both our marine and power plant customers. In terms of Services’ revenues, approximately 60% derives from the marine industry.
General market drivers for Services
The ultimate market driver in the marine service business is the activity levels of the vessel fleet. The amount of idled and anchored vessels has a direct impact on the Services business. The speed at which vessels are operated also has a certain impact on the business. The marine service business is strongly driven by the existing, as well as new, environmental regulations. Lifecycle efficiency, for which the availability, reliability and economic viability of the equipment are all very important, drives the Services business in both end markets. Other drivers that are highly emphasised are the need to lower operating costs, and the need for enhanced safety. Today an important driver for the power plants after market is the trend towards outsourcing the operations and management of power plants. In the future, we believe this will become a more important driver also for the marine markets. Wärtsilä offers efficiency and monitoring solutions for these needs.
Competition and market position
There is no single competitor with the ability to supply such a broad offering, on a 24/7 basis, from one single source, globally. Each service product has, therefore, its own set of competitors and challenges. There are only a few global players to talk of, thus competition is mainly local. Wärtsilä has a strong market position in its service markets.