US Expansion: Francesco Valente, president and CEO of Fincantieri Marine Group, said parent company Fincantieri is interested in both the offshore and military markets. (Mike Morones/Staff)
ROME AND WASHINGTON — In the wake of Fincantieri’s purchase of a major US shipyard where it has introduced European techniques to build littoral combat ships, the Italian firm is planning for an initial public offering (IPO) this year it hopes will free up cash for further expansion in the US.
The IPO, announced by the Italian government last year, is being planned as Italy’s other large defense group, Finmeccanica, struggles to convince lawmakers to let it shed its loss-making civil transport firm Ansaldo Breda.
State-controlled Fincantieri is meanwhile heading for the markets with a plan to sell a 40 percent stake, helping the Italian government drive down its debt pile, but also freeing up spending money for the firm, CEO Giuseppe Bono said.
Italy’s Finance Minister Fabrizio Saccomani said on Feb. 12 the operation would include a sell-off of the government’s stake as well as a capital increase. The government has said it wants the IPO, planning for which is now fully underway, before the summer.
According to Francesco Valente, head of US subsidiary Fincantieri Marine Group, US acquisitions could be in the pipeline.
“We plan to expand our capabilities globally, including in the US, and offshore is a market we are interested in, as is the military market,” he said, referring to the booming shipbuilding and ship repair businesses that support offshore oil field activities in the Gulf of Mexico.
Valente, who did not rule out the purchase of an offshore vessel builder in the Gulf Coast area of the US, added, “we want to be present. We are looking at the market for opportunities with purpose.”
Fincantieri, which has built frigates, carriers and submarines for the Italian Navy and is a world leader in cruise ship construction, agreed to pay $120 million in 2008 to acquire Manitowoc Marine, the owner of four US yards, including Marinette, which had been picked by Lockheed Martin to build its littoral combat ships.
Valente said Fincantieri has invested $74 million at Marinette, and $25 million at its sister yard, Sturgeon Bay, to beef up efficiencies.
Military and civil ship repair work, as well as in-service support work, are also among Fincantieri’s ambitions in the US, he added.
The firm missed out on building new offshore patrol cutters for the US Coast Guard at Marinette, but Valente said Fincantieri plans to bid on new fast response cutters when the service puts out more offers. Those cutters, based on a Dammen design from the Netherlands, are built now by Bollinger Shipyards in Louisiana.
The firm also has been marketing another craft built for the Coast Guard, the 45-foot response boat-medium, built by Fincantieri’s Ace Marine in Green Bay, Wis. “We are promoting that for a foreign military sale in the Middle East,” Valente said.
He declared it was no coincidence that an Italian firm and Australia’s Austal were being used to build LCS variants. “We have been asked to bring in efficiency, to deliver ships of high quality at a price that was unheard of. This is going to continue,” Valente said.
Among the changes imported from Europe by Fincantieri was canny outsourcing, where “the shipyard is at the center of a family of companies, where former employees set up companies that work for us and other companies. This has made us very competitive,” he said.
“Technologically, I am a big believer in becoming less boutique. In other countries they have separate companies doing pipes. For the next 10 years that will be the mantra here,” he said.
The firm is also seeking to bring to the US new, simpler processes for insulating steel and using flanges instead of welding for pipes. “We looked at processes at Marinette and introduced a Japanese-style work station method, trying to make efficient use of workers,” said Valente, who added assembly work has been moved indoors at Marinette to avoid the effects of inclement weather.
Fincantieri has been pushing the Italian government for an IPO since 2007, when the process was halted by union opposition, and the uncertainty of Italian politics means obstacles may yet be raised ahead of the IPO this year.
That uncertainty has been brought home to Finmeccanica, which is seeking to sell off noncore activities to focus on defense, security and aerospace activities as well as drive down debt. The firm managed to sell most of its stake in energy firm Ansaldo Energia last year, but it is still seeking to convince politicians to allow it to sell its loss-making, train-building outfit Ansaldo Breda. Ansaldo Energia has sought in vain to restructure Ansaldo Breda in recent years, while unions have opposed its sell-off.
In a speech to a parliamentary commission on Feb. 10, CEO Alessandro Pansa said Ansaldo Breda’s losses were wiping out the benefits of broad restructuring and efficiency drives at units such as Selex ES and Alenia Aermacchi.
“Ansaldo Breda, as it is, is not financially or economically sustainable,” he said, adding that Finmeccanica risks needing to sell off other units if it could not cede Ansaldo Breda.