In July 2014, Wärtsilä and China’s CSSC signed an agreement to establish a joint venture (JV) for manufacturing medium and large bore medium speed diesel and dual-fuel engines – resulting in the formation of the CSSC Wärtsilä Engine (Shanghai) Co., Ltd. Better known as CWEC, the JV will have its home in Lingang, Shanghai. We caught up with CWEC’s Managing Director, Hannu Mäntymaa, just days before the official opening of the production facility on 9 January, 2017.
1) The formation of the CSSC-Wärtsilä Engine Company (CWEC) is deemed a strategic cooperation between two leading companies. What does this mean for the marine market?
CSSC is the leading shipbuilder in China, and even one of the leading shipbuilders in the world. They have a strong strategic focus to grow in the more advanced vessels category, such as LNG carriers and cruise ships. Wärtsilä has the market-leading 4-stroke engines. So, the collaboration between these two companies – with their strengths and customer focus – is extremely important for the marine market. This collaboration also paves the way for the transformation in China to the gas era, because we have dual-fuel engines as part of the joint venture. By having the higher-tech Wärtsilä engines assembled here in China, we’re also enabling Chinese shipbuilding to transform towards advanced vessels.
2) Why have Wärtsilä and CSSC embarked on this strategic cooperation when the former already has engine-manufacturing JVs in China with other local partners? What unique advantages does CWEC bring to China?
With this CWEC joint venture, this is the first time Wärtsilä is cooperating with CSSC in engine manufacturing, and ours is also the first engine factory in China to manufacture large-bore medium-speed engines. Also, we are the first factory to manufacture four-stroke dual-fuel engines in China. So, with this JV, Wärtsilä expands its portfolio availability of engines in China. This enables the local shipping and shipbuilding markets to transform to the gas era, and also to move towards more advanced vessels.
3) The CWEC production facility will produce main engines and auxiliary generating sets of Wärtsilä 26, Wärtsilä 32, Wärtsilä 34DF and Wärtsilä 46DF. Why were these particular products selected for production at the CWEC facility?
When this cooperation was first discussed, there was a thorough market analysis made by CSSC and Wärtsilä in preparation for the JV investment. Through the analysis, we were able to define the target markets for this JV – which are cruise and ferry, LNG carriers, large container vessels, special vessels, and the offshore market. When you look at these market segments, these engine types fulfil the market needs. Hence, there’s a clear logic behind the decision to assemble these engine types here at the CWEC plant.
4) The CWEC plant has a production capacity of 180 engines per year. Do you think you will meet this capacity given the current market scenario?
We know that the current market situation is challenging, but this joint venture was made with a long-term perspective. We are focusing on segments – LNG carriers, Cruise & Ferry, offshore, special vessels – that have strong growth ambition here in China. And when we look at the longer term – say 3 or 5 years – we are very confident that we’ll be able to meet this capacity scenario. In fact, as part of the JV agreement, there’s also the option to increase the capacity if there is market demand in the future here in China.
5) Which markets will the products manufactured at the CWEC plant serve?
The joint venture will focus on the local shipbuilding market, so primarily CSSC yards, and also all other yards here in China. We specifically have products that best serve the target markets that we have identified through this cooperation.
7) Have engines or other products manufactured at the CWEC plant already been sold to customers?
We have actually been able to have a good and successful start. At the same time that we have been completing the construction of the plant, we have been able to sell over 70 engines to the local market. This was possible thanks to strong co-operation with customers, strong support from CSSC and Wärtsilä – but of course, the hardworking CWEC sales and production teams also.
8) Quality is a key concern for vessel owners. Does the CWEC factory have its own set of quality standards to follow?
It was agreed in the joint venture that we will fully follow Wärtsilä’s high quality standards, so we have Wärtsilä controlling the production, quality and supply chain. A strong principle that we will always observe is that the design, quality and features of the products that we are manufacturing are 100% the same as the production from any other Wärtsilä production facility. So, that is a special feature of this JV, that Wärtsilä is strongly present at the site every day, and overseeing production and quality.