Twentyfour7. Wärtsilä Quarterly Magazine NO WÄRTSILÄ QUARTERLY MAGAZINE

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1 NO WÄRTSILÄ QUARTERLY MAGAZINE AROUND THE GLOBE DETAILS MATTER INNOVATION WÄRTSILÄ 14RT-FLEX96C MASTERMIND AUTOMATION INSIDE SIGN OFF + FINANCE & BUSINESS WORLD R&D Twentyfour7. Wärtsilä Quarterly Magazine p

2 feature marketplace. The whole chain from the original idea for a product to supplying it to a consumer is managed. The supply of innovative products and the corresponding demand are in balance. Europe suffers from a lack of innovation-minded entrepreneurs who are ready to take risks. Environmental technology is a good example. Norms related to environmental issues in Europe set high requirements and large sums of money are invested in research and development into environmental technology, but Europe s share of the global market for environmental technology is still very low. Europeans should find out how to create demand for their innovative environmental technology. Innovation activity also requires the building of complete concepts. The evolution of the Finnish banking system is a good example. The leap made during the last 15 years from office-based services to personalized services delivered via the Internet has been enormous. The forces driving this process were twofold - demand, and structural change in the national economy. Investments in research and development materialized in the form of new service concepts, new operational models and new applications of existing IT technology. The framework conditions favoured change and plenty of well-educated customers were both able and willing to take advantage of the new service mechanisms being provided. In this type of change, while technology is important, the creation of a complete entity requires that development of all the separate elements be synchronised. Shared goals and collaboration between researchers and business entities are essential components of dynamic innovation systems. Recently, innovation activity has focused on ITC technology and biotechnology. In the next few years, activity in technology integration, application and content production will grow. The world will belong to those who can extract maximal advantage - in both the private and public sectors. Strategy for an innovative Europe. Esko Aho, President of Sitra, the Finnish National Fund for Research and Development, chaired a group of independent experts appointed by the European Commission to reinforce research and innovation within the EU. Submitted in January 2006, the group s final report recommended urgent development of an innovation-friendly internal market in the EU to improve p Europe s p RESULTS CAN ONLY BE GAINED FROM R&D BY CREATING INCENTIVES FOR REFOCUSING RESOURCES FROM OLD ACTIVITIES TO NEW ONES Twentyfour7. 33

3 feature INNOVATION IS A PROCESS THROUGH WHICH KNOWLEDGE IS USED TO MAKE MONEY. competitiveness in relation to the US and emerging economies in Asia. The goals set in the Lisbon Agenda in 2000, and the decision made in Barcelona in 2002 on the 3% investment in R&D, were right. But our group concluded that results can only be gained from R&D investments by creating incentives for refocusing resources from old activities to new ones, and by developing an innovation-friendly market for goods and services in Europe. Europe s problem is that its market is still very fragmented, and there are numerous obstacles to collaboration over borders. We need new financial structures and mobility of people, knowledge, money and organisations. We also need opportunity-oriented entrepreneurship instead of business activity which is only considered as an alternative to wage earning. Together, these constitute a paradigm change which goes well beyond the present narrow domain of R&D and innovation policy, says Aho. Commenting on work done by the group, Mr Aho said The results were presented at a meeting of the European Council and it was suggested that seven focus areas should be chosen for developing and testing new models of operation. These strategic areas are e-health, Pharmaceuticals, Energy, Environment, Transportation and Logistics, Security and Digital Content. For each focus area, an independent High Level Coordinator should be appointed to develop a specific model for Europe to improve its performance. During the Finnish EU Presidency the objective should be on drafting a Pact for Research and Innovation which constitutes a framework for synchronized innovation activities. These are all very practical issues advancing competition, developing public purchasing so that it can include more innovative elements, promoting European patents, simplifying public administration and increasing cooperation between business and universities. All this should be done urgently. Sitra works for a more successful Finland Sitra, the Finnish National Fund for Research and Development, is a national innovation organisation whose objective is to remove obstacles to the application of new technologies and models of operation. Esko Aho, a former politician and prime minister of Finland, was nominated President of Sitra in July 2004 after his return from the USA where he worked as a lecturer at Harvard University. Esko Aho is striving to improve innovation culture in the EU. 34 Twentyfour

4 FINANCE & BUSINESS TEXT: MAARIT KAUNISKANGAS WORLD PHOTO: P.A. ASIKAINEN Favourable regulatory changes in Japan The deregulation of Japanese energy markets means that Wärtsilä has been able to establish a foothold in the country s market for power plants. New environmental regulations are paving Wärtsilä s route forward in both the energy and marine markets. The energy market in Japan was only opened to free competition in 2000, some years later than in Europe. As they have cut their electricity prices to be more competitive, ten former state-owned electricity utility companies still dominate the marketplace. Even so, more than ten new private Power Producers and Suppliers (PPS) have been established since deregulation. Competition in Japan is harsh - for example, the Tokyo area utility company has lost only about 3% of its market share to new companies. The drivers for PPS concerns are high levels of efficiency and reliability, and cost effectiveness. GAS IS REPLACING OIL Wärtsilä has been selling power engines to these new PPS companies. According to Yushi Kumakura, General Manager, Wärtsilä Power Plants in Japan, the market trend is to replace oil with gas. Prices for gas are still lower than oil and gas has a lower environmental impact. Private companies are now replacing oil-using power plants with ones that employ gas, he says. Japanese gas companies are also introducing combined heat and power (CHP) technology in electricity production. CHP allows energy efficiencies of 60-70% to be achieved rather than the normal 40%. While liquefied gas can be transported to Japan, gas pipelines are out of the question - as is both the importing or exporting of electricity. In recent years, nuclear power has grown to become a major source of electricity generation in Japan and nuclear technology now supplies more than 30% of the country s total consumption. The share held by nuclear power, however, appears to have reached its peak in spite of government scenarios that portray its increased use. For historical reasons and because of minor accidents at nuclear power plants, Japan s population does not wholeheartedly embrace the idea of building additional nuclear power plants. GREENER IS THE WAY New regulations and the Kyoto protocol also appear to be paving the way for Wärtsilä marine engines. New emissions regulations are expected in High fuel prices and the enforcement of new international regulation such as Common Structural Rules (CSR) for tankers will actually favour, for example, modern electronicallycontrolled Wärtsilä two-stroke engines and the dual-fuel diesel-electric concept, says Ryu Onishi, General Sales Manager, Wärtsilä in Japan. After a rough slide in its market position at the beginning of the new millennium, Wärtsilä has steadily recovered to achieve a 17% market share in two-stroke marine engines. The pace of recovery is expected to accelerate with the introduction of Wärtsilä RT-flex electronically-controlled commonrail technology. RT-flex engines are now being adopted by major Japanese shipowners and continue to win a broader market base among shipyards and smaller domestic shipowners, says Erwan Dacquay, Technical Manager, 2-stroke Engines, Wärtsilä in Japan. Even though the Japanese market has always had a conservative mindset, shipowners have become increasingly concerned about environmental issues and are now taking action to improve their green image. Energy sources in Japan Hydraulic (Pumping) Hydraulic (Storage) Oil Gas Coal Nuclear Hydraulic (DAILY CONSUMPTION) PEAK LOAD INTERMEDIATE LOAD BASE LOAD SOURCE: FEDERATION OF ELECTRIC POWER COMPANIES OF JAPAN 4.06 Twentyfour7. 35

5 [MARKET REVIEW] finance & business world 4.2 IN THE COMPETITION for global business, concepts Future forces are changing R&D AUTHOR: MATTI KLEIMOLA The engineering industry is becoming a provider of customer value and solutionrelated services. Professor Matti Kleimola acts as a Senior Advisor in matters related to technology to the Board of Management at Wärtsilä Corporation. and solutions are as important as products. The engineering industry is currently undergoing a dramatic transition from providing products and solutions to being a provider of customer value and solution-related services. The scope of business concepts is expanding, favouring a knowledge-intensive and value-critical approach to product lifecycles. As a result of this development, companies are moving closer to their customers. This shift brings with it the need for new product concepts and service models. Research is generally considered to be a major driving force in technological, economic and overall social development. Also, the ongoing processes of globalization, which highlights the role of international competition, business and commerce based on high technology, and the production and application of new knowledge, further underscore the role of research in entirely new ways. Research and development is one of the key drivers of productivity growth. International evidence suggests that high levels of R&D support growth that is strong and stable. Key changes are under way in how and where R&D is carried out. Forces likely to drive R&D in the next decade are as follows: Customers will have a central impact on R&D. The information revolution will continue to enhance the power and infl uence of consumers in the marketplace. Both consumers and customers will take a stronger role in driving product and service innovations, and this will have an impact on prices, new features, and the choices available. Global private-sector companies will take on more R&D. Most business-funded R&D will be fostered and paid for by large multinational firms. R&D will both disperse and be concentrated in geographical terms. A key principle in R&D strategy is to carry out the most important innovation work in R&D centres or clusters where cutting-edge research and experimentation is being performed. Global spending on R&D should continue to grow faster than world GDP. Control the product and process ideas. Some companies put their trust in their ability to convert innovations into practice more effectively than others. They seek out and emphasize innovations that focus on improving operations and customer care. New ideas will come from outside. It is necessary to open a company to new ideas arriving in a variety of formats from a variety of sources (i.e. open innovation). Winning companies will be those that are most effective at translating such ideas into marketable products and services. 36 Twentyfour

6 06 of 38.2% compared to the corresponding period THIRD QUARTER Good demand continued AUTHOR: JOSÉPHINE MICKWITZ, IR MANAGER The third-quarter of 2006 was yet another good quarter for Wärtsilä. Net sales totalled EUR million, representing growth of 26.2% compared to the corresponding period in Operating income for the third quarter increased to EUR 56.3 million (43.5), 7.3% of net sales (7.2). Earnings per share totalled EUR 0.44 (0.32). Demand in main markets continued strong. Orders received by the Group during the first nine months of 2006 totalled EUR 3,303.5 million (2,390.6), growth in In the third quarter, order intake totalled EUR 1,090.0 million (870.8), 25.2% higher than in Q3/2005. Most new orders during the third quarter were booked by the Ship Power business, where the order intake totalled EUR million (361.5), 35.5% up on Q3/2005. The offshore segment was dominant in ordering activity but significant orders were also received in the gas carrier and cruise segments. In the Power Plants business, order intake was 22.2% up on Q3/2005 at EUR million. Order intake for gas-fired power plants was strong. At the end of the third quarter, Wärtsilä s order book stood at EUR 4,108.2 million, which gives us good visibility for the years to come. Market activity predicted to remain good in the near future. High energy prices are accelerating investments in energy-related industries and demand in all energy-related segments is expected to continue on a high level. Although some warning signals are visible, global shipbuilding is sailing at full steam ahead. Wärtsilä expects ordering activity to remain lively in the next six months and there are no immediate signs of a drastic market deceleration. In the Power Plants market, Wärtsilä expects the situation to remain good in the following six months, with high oil prices working in favour of the Group s products and solutions. Wärtsilä s prospects in 2006 and Demand in the ship power and energy markets looks likely to remain favourable for Wärtsilä for at least the next six months. Based on a strong order book, net sales by the Group are expected to grow more than 20% in The level of profitability achieved in 2005 will remain. Supported by the strong order book and lively ordering activity, net sales by the Group in 2007 are expected to be some 10-15% higher than net sales in Increased capacity available from mid-2007 will allow further growth in Net sales expected to grow more than 20% in [FACTS AND FIGURES] Key ratios EUR million Q3/2006 Q3/ / / Order intake 1, , , ,491.1 Ship Power , , ,545.3 Services ,077.1 Power Plants Net sales , , ,520.3 Ship Power Services ,093.1 Power Plants Operating income % of net sales 7.3% 7.2% 7.4% 6.7% 8.0% Income before taxes ) ) EPS, EUR ) The figure in the comparison period includes Imatra Steel s pre-tax profit of EUR 21.4 million and Wärtsilä s share of the Ovako profit after taxes (EUR 9.6 million). 2) The January-September 2006 result includes Wärtsilä s share of Ovako s profit after taxes, (EUR 18.1 million) and a capital gain of EUR million from sales of Assa Abloy B shares. FOR MORE FINANCIAL INFORMATION, PLEASE VISIT WÄRTSILÄ S INVESTOR SECTION AT Twentyfour7. 37

7 in-depth [ IN-DEPTH ] WORLD S MOST POWERFUL ENGINE ENTERS SERVICE TEXT: DAVID BROWN PHOTOS: AP MOLLER MÆRSK, SØFART/SØREN L. HVIID AND WÄRTSILÄ Superlatives abound for the new container ship M/S EMMA MÆRSK and its Wärtsilä low-speed main engine. The ship is the world s largest container vessel. It is also the longest and widest. 38 Twentyfour

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9 in-depth PROPELLED by the world s first 14-cylinder in-line engine, the M/S EMMA MÆRSK has a capacity of 11,000 TEU. Manufactured under licence by Doosan Engine Co Ltd in Korea, the Wärtsilä 14RT-flex96C lowspeed engine is also the world s most powerful reciprocating engine, developing a maximum continuous power output of 80,080 kw, or 108,920 bhp at 102 rpm. The first of a new series of 11,000 TEU container liners being built for the Danish A.P. Moller-Maersk Group by Odense Steel Shipyard Ltd in Denmark, the M/S EMMA MÆRSK entered service on 1 September The 14-cylinder Wärtsilä RT-flex96C engine is a major breakthrough in ship propulsion. It extends the power available to suit the new generation of large containerships while combining the benefits of proven, reliable engine designs with the complete flexibility of RT-flex electronically-controlled common-rail technology. Traditionally, low-speed marine engines have been built with a maximum of 12 cylinders. When it was recognised some years ago that container ships on the drawing board would need more power than was available from existing RTA96C and RT-flex96C low-speed engines, a solution was found to extend the engine power range to 80,080 kw by also offering 13- and 14-cylinder designs. The 14-cylinder RT-flex96C is therefore based on a well-established 12-cylinder RT-flex96C design, which was itself developed from the THE WÄRTSILÄ RT-FLEX 96C ENGINE IS A MAJOR BREAKTHROUGH IN SHIP PROPULSION. RTA96C engine type widely applied in container ships since It thus benefits from a wealth of service experience with engines of the same type. To date there are more than 340 RT-flex96C and RTA96C engines in service or on order worldwide. Adaptation for 14 cylinders. Extensive consideration was nevertheless given to the practicality of adding to the number of cylinders and ensuring that the engines match everyone s expectations in terms of safety, reliability and durability. As regards the engine structure, when adapting the RTA96C engine type to accommodate the RT-flex common-rail system, the opportunity had already been taken to introduce certain modifications on engines with all cylinder numbers to improve methods of manufacture and provide greater stiffness while reducing structural stresses. The revision also took account of 14-cylinder engines to ensure they would have adequate structural strength and rigidity without requiring any further modifications. 40 Twentyfour

10 in-depth pthe long shaft driving the propeller. Official shop test of the first 14-cylinder Wärtsilä RT-flex96C in the works of Doosan Engine Co Ltd, Korea, in November The crankshaft of the RT-flex96C has sufficient torque capacity for 14 cylinders as the material has been upgraded to allow an increased shrink fit for a greater design margin. The thrust-bearing structure in RT-flex96C engines with a mid-gear drive has been revised to reduce deformations and stresses even with the increased levels of thrust in a 14-cylinder engine when the vessel it powers is equipped with a shaft motor. Wärtsilä RT-flex common-rail system. The fully electronically-controlled Wärtsilä RT-flex common-rail system of the 14-cylinder engine brings shipowners important benefits. It gives unrivalled flexibility in the way the engines operate, resulting in smokeless operation at all operating speeds, lower fuel consumption, lower emissions, reduced maintenance costs and lower steady operating speeds for better manoeuvring. The RT-flex system also has the potential for adaptation to future needs. A clearly visible feature of the 14-cylinder RT-flex96C is the modest size of the compact supply unit compared with the overall dimensions of the engine, and the absence of the full-length camshaft which is a usual feature of mechanically-controlled engines. The supply unit with its fuel and servo oil-supply pumps p M/S EMMA MÆRSK is 397 m long and 56 m wide Twentyfour7. 41

11 in-depth High-efficiency waste heat recovery Major savings in fuel consumption and reductions in exhaust gas emissions are achieved in the M/S EMMA MÆRSK through the vessel s high-efficiency waste heat recovery (WHR) system. Exhaust gases from the ship s main engine pass through an exhaust-gas economiser to generate steam that drives a turbine-driven generator. The turbogenerator set also includes an exhaust-gas power turbine driven by a portion of the exhaust gases diverted from the main flow through the engine s turbochargers. The nominal output capacity of the turbogenerator is 8.5 MWe. Highefficiency WHR plants of this type can, however, provide electrical outputs of as much as 12% of main engine power, delivering equivalent savings in fuel consumption and reductions in exhaust emissions. Electricity generated by the turbogenerator is supplied to the main switchboard and employed in providing both shipboard services and additional propulsion power via two shaft motors. Some of the steam from the exhaust economiser is utilised to provide shipboard heating services. There are five auxiliary diesel generating sets with a combined capacity of 20.7 MWe. A major electricity requirement comes from the ship s extensive capacity for carrying refrigerated cargo. Power sockets are provided for 1000 forty-foot containers. In the high-efficiency WHR plant, energy recovery is maximised by adapting the engine to use the lower air-intake temperatures available by drawing intake air from outside the ship (ambient air) instead of taking it from the ship s engine room. As the engine turbochargers are matched to the lower air-intake temperatures, energy extracted from the exhaust does not affect air flow through the engine. The benefits of greater waste heat recovery are therefore achieved without increasing the engine s thermal loading and with no adverse effect on engine reliability. TEXT: DAVID BROWN The top of the engine on board of the M/S EMMA MÆRSK. THE RT-FLEX ENGINE GIVES UNRIVALLED FLEXIBILITY IN THE WAY THE ENGINES OPERATE. is on the engine side, at the mid position on a mid-gear drive. The supply unit delivers high-pressure fuel oil and servo oil to two identical seven-cylinder rail units located along the side of the cylinder tops. Wärtsilä also supplied the vessel with a set of JMT Airguard 4AS-B sterntube shaft seals and ten JMT shaft bearings for the long propeller shaft line. In the Airguard 4AS-B sealing system, the after seal has four lip-type seal rings with a compressed air barrier to ensure security against oil leakage from the sterntube, providing high reliability and long life. At the forward end of the stern tube the seal is equipped with two lip-type seal rings. The shaft bearings are of a spherical type, specially designed to cater for the displacements experienced with long intermediate shafts. AUTHOR IS MANAGER, MARKETING SUPPORT WÄRTSILÄ IN SWITZERLAND 42 Twentyfour

12 R& D Research INNOVATION TEXT: DAVID BROWN PHOTOS: WÄRTSILÄ & Development In PLS, both the feed rate and timing of cylinder lubrication are electronically controlled. Filter Tank CUTTING CYLINDER LUBRICATION COSTS Costs for cylinder lubricating oil in Wärtsilä low-speed engines will be considerably reduced by a new, electronically-controlled system - the Wärtsilä Pulse Lubricating System (PLS). This new system reduces cylinder oil consumption without compromising piston-running reliability by improving the distribution of cylinder lubricating oil to cylinder liners and the fully-flexible, precise timing of oil delivery. The guide feed rate for Wärtsilä RTA and RT-flex engines equipped with PLS as original equipment is 0.7 g/kwh of cylinder lubricating oil. In the case of a 12-cylinder Wärtsilä RT-flex96C engine of 68,640 kw output running at 85% load for 7000 hours/year and using cylinder oil [ RETROFIT ALSO AVAILABLE] PLS is also available for 1. retrofit to existing RTA and RT-flex low-speed engines. The major cost savings mean a quick return on the capital invested. Remote control system Alarm monitoring WECS Junction boxes Dosage pump Lubricator Cylinder CAN bus Power supply Cylinder oil pipe Servo oil pipe Servo oil return pipe that costs USD 1700/ton, the reduction from the guide feed rate of 1.1 g/kwh with an existing accumulator system to the new guide feed rate of 0.7 g/kwh can result in annual cost savings of more than USD 270,000 corresponding to a 36% saving in the costs of cylinder lubricating oil. FULLY-FLEXIBLE, ELECTRONIC CONTROL The key feature of PLS is that it delivers accuratelymetered, load-dependent quantities of lubricating oil to the cylinder-liner running surface at precisely the right moment. Cylinder oil is Retrofit PLS can be fitted to 2. existing cylinder liners using hardware like that used in new buildings, and installation can take place during a ship s normal commercial operation. delivered under pressure to the lubricators by a newly-developed dosage pump powered by pressurised servo oil drawn from the engine s system oil. Both feed rate and timing are electronically controlled via a solenoid valve located at the lubricator pump. There is full flexibility in setting the lubricator timing point, and volumetric metering ensures constant spray patterns across an engine s load range. The dosage of lubricating oil is precisely regulated even at low feed rates. As liner surface temperatures in RTA and RT-flex engines are above the dew point, there is no provision in PLS for variation of feed rate with respect to the sulphur content of fuel. For bunker fuels with levels of sulphur above 1.5%, no PLS adjustment is therefore required. AVAILABLE FROM JANUARY 2007 Service experience with PLS has proved very successful with excellent liner and piston ring conditions, and all tests have been made with feed rates of 0.7 g/kwh or below. Trials have been carried out using the Wärtsilä test engine in Switzerland since June 2003 and on shipboard engines since July Shipboard testing now totals more than 18,000 running hours. PLS will be available from January 2007 for newly-built RT-flex96C and RTA96C, RT-flex84T-D and RTA84T-D engines. Retrofit PLS is available now for RT-flex96C and RTA96C and from January 2007 for RT-flex84T-D and RTA84T-D engines. Additional engine types will be added in 2007 for both versions. Before PLS was launched in Hamburg in September 2006, orders had been received for complete Retrofit PLS in 25 engines. The first retrofit was completed that month in M/S Cosco Shenzhen, a 7500 TEU containership managed by E.R. Schiffahrt GmbH & Cie KG of Hamburg. AUTHOR IS MANAGER, MARKETING SUPPORT, WÄRTSILÄ IN SWITZERLAND All the required equipment, 3. including prefabricated piping, is supplied. Installation and commissioning are performed by Wärtsilä service engineers Twentyfour7. 43

13 infographics [ INFOGRAPHICS ] WÄRTSILÄ BIOPOWER S BIOGRATE TOWARDS A MORE SUSTAINABLE WORLD Biomass has fuelled the development of human civilization since fire was discovered and the use of biomass is now growing in both domestic and industrial applications. Steam Condensate Area Heating Coolant Flue Gas Fuel Conveyor Condenser Turbine Generator Unit Condenser Cooler Feed Water Tank Boiler Precipitator Bio Fuel Fuel Storage BioGrate Ash Containers Wärtsilä Biopower supplies biomass-fuelled power plants that meet each customer s precise needs. Biomass is on the verge of a renaissance. In efforts to reduce global warming by using CO 2 -neutral fuels - as required by the Kyoto Protocol - biofuels are becoming the natural choice. CUSTOMER-ORIENTED DESIGN Wärtsilä BioPower plants produce both electricity and heat using wood-based fuels such as residues from the harvesting of forests, wood chips, bark and sawmill waste. Wärtsilä s patented BioGrate, the core of every Wärtsilä Biopower plant, can burn fuels that have moisture contents of as much as 65% without requiring any auxiliary fuel. Representing state-of-the-art combustion technology, the BioGrate is a rotating design with a conical primary combustion chamber in which fuel is fed to the centre of the grate from below. Since heat is radiated from the refractory lining bricks as well as from the flames of combustion, the fuel is dried off in the middle of the grate without disturbing the burning bed of fuel in the combustion zone. Fuel is spread evenly over the grate, and the grate area itself is divided into several rotation zones which incorporate three to five rotating rings and two to four fixed rings. The unique conical shape of the grate means that burning is maintained at an even and optimal temperature. After the fuel has been completely combusted, the resulting ash falls from the edge of the grate into an ash space which is filled with water. Fly ash is removed from the flue gases using an electrostatic filter. At the top of the grate, a boiler produces steam that is used to drive a turbine. 44 Twentyfour TEXT: WÄRTSILÄ ILLUSTRATION: STEWART GRAY

14 FUEL HANDLING In biomass-fuelled plants, the fuel properties are the basis for plant design. The main factors contributing to uninterrupted plant operation are use of the correct combustion technology and a properly-designed system for fuel handling and supply. Individual fuel components can be mixed in an interim storage system which has sectional and automated fuelfeeding devices, an arrangement that allows the use of non-homogenous fuel components still maintaining efficient and clean combustion. In common with the other components in Wärtsilä Biopower plants, the system is highly automated, permitting unmanned operation with daily visits. Currently, almost a hundred BioGrates are operating in Wärtsilä BioPower and BioEnergy plants in Scandinavia, the Baltic Countries, Europe and Russia. THE KYOTO PROTOCOL Under the Kyoto Protocol, the European Union has set a goal of doubling the use of renewable energy sources in percentage terms as a proportion of total primary energy use. Measures include, for example, a ten-fold increase in electricity production based on renewable fuels by As patented BioGrate combustion technology offers a new level of performance in terms of low emissions - both NO x and CO emissions meet the strictest requirements - Wärtsilä Biopower has a solution for a more sustainable world. Using the state-of the-art combustion technology, the patented BioGrate employs a multirotational design and is the core of Wärtsilä Biopower plants Twentyfour7. 45

15 Master of the green hills Riikka Hakkarainen is an advancing professional. What does it take to grasp the body and mind of golf? [ PASSION ] 46 Twentyfour

16 passion Persistence gets you a long way. For some, it takes only a few years to reach their peak, for others it s a process that takes several years. Traditionally, top professional golfers have been well over thirty, Tiger Woods has broken the mould. Half of Riikka s time is spent practising, half goes on competitions. With the ground frozen for a good part of the year, Finland isn t exactly an ideal location for a thriving golf professional. Practising has to be done elsewhere. For Riikka, it s mostly in the U.S. and Spain. Travelling for 300 days a year is something worthy of respect. It s certainly given me an understanding of how different outlooks on life can work equally well. I WISH YOU WERE HERE. It s such a soothing sight. Anyone besotted by this challenging and oh-so-green pastime would be happy to walk in the crisp air among the cherished oak trees, hills that easily be full of Hobbits, and manor buildings built more than a century ago. Even though the traffic mêlée of Helsinki is only a stone s throw from the Tali golf course, it s still almost silent here, apart from occasional satisfying pings as players woods send golf balls flying. People getting ready for a late afternoon round of golf nod their hellos to a young woman carrying her golf bag - and the air of a true professional. One or two would like to obtain a few tips for their exercise routines. Riikka Hakkarainen, 29, has just flown in from Austria, one of the several - 22 to be exact - tournaments on the European Ladies Tour. Her handshake is very firm. So is her gaze, concentrated, confident. For Riikka, who has played golf professionally since 1997, this year and last have been groundbreaking. Winning the Tenerife Ladies Open in April has been the high point of Competence with daily support from doing. Most of the really hard work takes place during spring, well before the tough summer season. Building the right feel takes a long time. On competition days, she gets up some three hours before each start, does a set of Pilates and then moves to the practice area to hone different shots. The whole routine takes four to five hours and after each competition, she continues practising. When she s not competing, training occupies the whole day, with jogging and lifting weights to accompany the golf. Riikka has worked with three coaches in her career. Timo Karvinen, who just happens to be her husband, has been Riikka s primary coach since her teens. Chuck Cook offered fresh insights for a couple of years. Some professional golfers like to switch coaches as much as once each year. I think that as far as coaches are concerned, it s essential to know what p TEXT: MINNA TAKKUNEN PHOTOS: TOMMI TUOMI 4.06 Twentyfour7. 47

17 passion you want and then have the mindset to get it. While I was working with Chuck, it often surprised me how he came up with the exactly the same ideas as Timo. Juri Hanin, who has worked with Finnish javelin heroes, guided Riikka through some mental coaching. Juri emphasised the competitive mentality, which actually means different things in different sports. The aggression you pump up in other sports turns against you in golf. Juri was surprised when he discovered that rather than intense emotions, an inner state of peace and joy is the best mental diet for golfers. When she has fun, she means business. Finding the right balance between a well-rehearsed focus and a relaxed attitude is the name of the game. If you re trying too hard, it shows immediately in your play. Also, if you re not enjoying your game, the results reflect that. There s no point in playing if you re not having fun. Golf demands that many things click at a single moment in time. Getting it just right is linked with careful analysis. This where the sense and sensibility, the body and mind of golf, meet. With driver in hand, a professional absorbs the surroundings. Where and how is the wind moving? How can the differences in elevation be made to work in your favour? On what type of surface will the ball land, will it bounce or stick? And if that first shot isn t perfect, the mercy of golf is that a lack of excellence in one element can easily be compensated by excellence in others, making the overall picture strong. For Riikka, it s in putting that she excels. There s never a dull moment in golf. There are so many variations - in courses, weather, and all the conditions that keeping the game interesting. A beautiful domino effect. I remain committed because I have continued developing. The will to succeed feeds the flame, and success pours on more fuel. How about her favourite golf courses? Terry Hills near Sydney in Australia is one of the most beautiful that Riikka can think of. In Finland, the short golf season means that she finds herself fairly often at the well-maintained Kytäjä Golf course, some 60 kilometres from Helsinki. More and more families are getting into golf, it s such a good way to spend time together, says Riikka, her delight obvious. But it has also been amusing, with lots of fresh faces on the greens. Newcomers often clap at you just popping the ball out of a bunker. Polishing skills is gorgeously endless. Knowing that you can never be too good keeps me going. She has a healthy appetite for winning. Even when I play simple card games against my computer, my hunger to win is so very strong, says Riikka, her face lighting with a smile which tells you she has that promising something. Just watch her. Getting it just right is linked with careful analysis. 48 Twentyfour

18 solution Multi-purpose floater CHANGES THE RULES MPF Corp is building the world s biggest and most versatile drill ship, a multipurpose floater. Wärtsilä is providing the vessel s eight diesel engines, and a great deal more such as automation. There is a clear trend towards drill ships for several reasons, or perhaps just one - money. New technologies make it possible to build bigger vessels that can drill farther and deeper into the ocean seabed, and explore, drill and produce oil in environments where the conditions are harsher than ever. At the beginning of the current decade, when oil prices were low, incentives for pursuing these kinds of opportunities and making the necessary investments were few. The recent rise in oil prices and supply-side bottlenecks - such as a lack of drilling units - mean that oil companies are now looking for a competitive edge, driving forward the development of large multipurpose floaters. Harsh-environment FPSOs (Floating Production, Storage and Offloading units) and the fact that most new large oil fields are being discovered in deep water have opened a window of opportunity for MPF Corp. Ltd. Many companies are now prepared to venture into harsh and deep-water environments, and a number of oil fields are being developed in Brazil, Canada, the Gulf of Mexico, India, Norway, South East Asia and West Africa. [ SOLUTION ] Simultaneous drilling and production. Under development by the Norwegian oil-service entrepreneur Wilhelm P. Blystad since the middle of the 1990s, the Multi Purpose Floater (MPF) concept is designed for simultaneous drilling and production in harsh p TEXT: RISTO PAKARINEN ILLUSTRATION: MPF CORP Twentyfour7. 49

19 solution [ SOLUTION EPC PROJECT ] The MPF 1000 has a dead weight of 170,000 tons, a displacement of 222,000 tons, a variable deck load capacity of 35,000 tons and 10,000 m2 of available deck space topside. The MPF 1000 s double-function drilling rig has a 15,000-metre reach and can operate in depths of up to 3,000 metres. environments that include ultra-deep water. The world s largest and most versatile drill ship, the MPF 1000, combines floating production, storage and offloading with drilling. The 290-metre long vessel can store a million barrels of oil. Scheduled for delivery by the end of 2008, the total cost of MPF 1000 is close to EUR 500 million. Wärtsilä s share of this sum is more than EUR 50 million. The ultimate goal for this vessel is to simultaneously produce and drill for oil and gas, helping oil companies generate cash flow at an earlier stage in the exploration and production process. Normally, an operator would need to drill for oil, test the well, shut down the drilling rig, bring in a production unit, and then send the drilling vessel away, says Eivind S. Bugge, Managing Director of MPF Corp, Norway, a Norwegian subsidiary of the Bermuda-registered company. Starting oil production earlier. With the MPF 1000, an operator can start producing oil at a much earlier stage than in traditional systems. We have seen both drilling rigs and other equipment that have been continuously available for oil extraction in the North Sea, with the result that utilization rates are much higher. Compared to the latest generation of semi-submersible rigs, the sheer size of the MPF 1000 means it has a considerably higher deck load capacity and a lot more available deck space. When the stakes are as high as this, everything has to perform as specified. Bugge stresses MPF s approach to quality. Systems and engines must be of high quality and should last for many years to meet the vessel s classification of a minimum of 30 years of operation. Wärtsilä s well-known diesels are a big plus in this respect, and we are very happy to have acquired these engines in a period of high demand, he says. For Wärtsilä, cooperation with MPF Corp is special for a number of reasons. In addition to providing eight diesel engines with a combined power output of 58,880 kw, generators, eight underwater demountable thrusters, medium-voltage switchgear, low-voltage distribution boards and frequency converters, Wärtsilä is also supplying safety and automation systems (including emergency shutdown, fire and gas, power management and vessel automation), a DP3 dynamic positioning system, thruster control and information management systems. Enabling turnkey solutions in the marine sector. Automation systems are used for supervising and controlling the drills and drilling equipment, power supplies, pumps, and conditions in the crew s living quarters. The automation part of the MPF 1000 contract is a new departure for Wärtsilä, opening up future opportunities in the delivery of turnkey solutions for marine applications. In the power plant world, Wärtsilä has been doing this for a long time, from turnkey deliveries to running and operating complete plants. Traditionally, we haven t included automation systems in the scope of delivery in our marine business, says Pekka Ahlqvist, Vice President, Automation, Wärtsilä. On the power plant side p 50 Twentyfour

20 solution COMPARED TO THE LATEST GENERATION OF SEMI-SUBMERSIBLE RIGS, THE MPF 1000 HAS A CONSIDERABLY HIGHER DECK LOAD CAPACITY AND A LOT MORE DECK SPACE. State-of-the-art drilling equipment allows parallel activities and efficient operation. The MPF 1000 s ability to store a million barrels of oil and its potential topside production capacities can significantly improve field economics Twentyfour7. 51

21 solution automation is included, so our new focus in automation is on vessels and the offshore market. We are looking to broaden the scope of the services we provide - Wärtsilä Automation covers a lot more than just automation and includes complete electricity systems, he says. The automation component in Wärtsilä s product portfolio was strengthened by the acquisition of Wärtsilä Automation Norway in the beginning of This acquisition supports our overall approach. While some of our competitors can offer fairly comprehensive solutions, the MPF 1000 offshore drilling vessel project is so big that very few companies can offer as much we do, says Ahlqvist. We re not aiming to become a manufacturer of general automation products and devices. We will focus on applications, and utilise our existing strengths in project management and engineering. Although we ll manufacture some strategic elements, most products and system components will be purchased from external suppliers, he says. THE MPF 1000 OFFSHORE DRILLING VESSEL IS WÄRTSILÄ S LARGEST AUTOMATION PROJECT SOFAR. More from each supplier. According to Ahlqvist, deliveries for the MPF 1000 comprise the largest single automation project that Wärtsilä has delivered to date. Opportunities resulting from the deal could be farreaching. That is what he is actually hoping. In the past, projects have been divided into smaller pieces, but we want to change that way of thinking, he says. And Bugge has nothing against that. Our aim is to reduce the number of suppliers that we as a company have to relate to and it was therefore important for us that Wärtsila could cover the complete scope of this project on the power generation, propulsion and automation side, he says. While the MPF 1000 is MPF Corp s first multi-purpose vessel, it is hopefully not the last, says Bugge. Already more than ten years old, the multi-purpose floater concept is finally coming to fruition. MPF Corp is working hard to build up momentum, and making preparations to deliver additional vessels to a market they believe is growing. Once vessels are available, MPF Corp s plans include offering vessel operation with the company s own resources, and providing customers with turnkey projects. 52 Twentyfour

22 Twentyfour7. Wärtsilä Quarterly Magazine in side A little extra on the side ANCILLARY 54 SERVICES CONTENTS 54 BALANCING ACT 57 MINIMIZING LIFECYCLE IMPACT 58 INDIA S LARGEST GAS-POWER PLANT 60 INDIAN MARINE BUSINESS 63 CUTTING-EDGE FERRIES 64 SERVING CHINA S SHIPBUILDERS k 67 SAVING FUEL BY IMPROVING EXISTING PROPULSION SYSTEMS 4.06 Twentyfour7. 53

23 [ INSIDE ENERGY ] Twentyfour7. [ ANCILLARY SERVICES ] TEXT: LENA BARNER-RASMUSSEN PHOTOS: WÄRTSILÄ A market for ancillary services is emerging in the United States. [ABOVE] Flexible plants which can run efficiently at part load allow operators to sell the ability to rapidly accept additional load. [RIGHT] A LITTLE EXTRA ON THE SIDE SINCE ITS DEREGULATION, the US electricity market has found itself in a constant process of transition. One feature of the redefined industry is the emerging market for ancillary services. Wärtsilä power plant technology is ideal for providing such services. As it is not yet possible to store electricity, making sure that fridges stay cool at all times means that a constant balance must be maintained between grid load and the amount of power generated. Dispatchers are usually able to predict the need for electricity on an hour-by-hour basis. But small variations in load which cannot be accounted for in advance always exist. These small fluctuations in the incremental demand for electricity have to be balanced by power plants that continuously adjust their output. In the US, the reserve capabilities that an electricity grid system needs to keep it stable are referred to as ancillary services. Traditionally, vertically-integrated utilities have maintained this continuous balancing act as a normal part of their business. Deregulation of the industry, however, has revealed a requirement for both technical and commercial rules concerning ancillary services. 54 Twentyfour

24 [ INSIDE ENERGY ] SYSTEM LOAD (MW) REGULATION Daily Load Pattern Regulation :00 8:15 8:30 8:45 9: :00 4:00 8:00 12:00 16:00 20:00 0:00 Predictable daily load pattern Random Regulation requirements Regulation is not peak shaving, interruptible load, emergency response, loadfollowing etc. Profitable spinning Ancillary services fall into two main groups. The first is the normal services which are needed at all times to keep the system frequency and voltage stable. The second is contingency services those needed when something goes wrong, such as a large power plant having to be shut down. Electricity is traded on an hourly basis and this gives rise to price fluctuations. Power plants are not run unless the market price covers their changing costs. On the other hand, when a plant is capable of selling ancillary services, favourable market conditions can substantially increase its profitability, allowing operation at times when the energy profit would be negative. For example, if the plant is flexible and capable of operating at high levels of efficiency over a wide range of loads, it can run on part load and sell its ability to rapidly accept additional loading. This is an example of what is called spinning reserve, an ancillary service currently sold in some regions of the US. An emerging market There has been some discussion about who has the responsibility to provide ancillary services and who should pay for them. Another issue is proper compensation for the power plants that can provide such services. Different countries have opted for different strategies. Most European countries have chosen to have power producers provide ancillary services and include the associated costs in electricity bills. In the US, however, a market for this type of service is emerging. The US is the first country which has provided a commercial framework for selling ancillary services, says Jussi Heikkinen, Marketing Director for Wärtsilä Power Plants. p Wärtsilä power plants reach minimum load in less than two minutes. The pricing of ancillary services Selling ancillary services can substantially increase a generator s profits if the production of energy and ancillary services is optimized. Ancillary services are capacity services, not energy services. In the main, costs consist of opportunity costs based on generator capacity that must be withheld from the energy market, and increased fuel costs resulting from the higher heat rates associated with part-load operation. To be able to provide and sell ancillary services, generators must withhold capacity from the energy market, i.e. operate on part load. The cost that a generator has to charge (or bid) to supply ancillary services is based primarily on the difference between the generator s production cost and the energy sale price for that hour. A generator with a production cost of USD 50/MWh would bid USD 10/MWh to sell spinning reserve if the energy price was USD 60/MWh. At any price higher than USD 10 for spinning reserve, this particular generator makes more profit by passing up the energy sale and selling spinning reserve. Conversely, at any price below USD 10/MWh for spinning reserve, this generator will lose money by staying out of the energy market. This makes the prices for ancillary service more volatile than energy prices. For example, contingency reserve prices are typically close to zero at night, when numerous generators are running at minimum load and have capacity available at essentially no cost. The price unit for ancillary services is USD/MW per hour as the generator is selling one MW of generating capacity for one hour, not actual energy. In other words, the generator is ready to rapidly produce additional electricity as and when needed. REGULATION COST DRIVERS Generators supplying regulation have some costs from increased heat rates, and also from the wear and tear on generating units that result from rapid load changes. But the main cost comes in the form of opportunity costs associated with manoeuvring in the energy market to ensure that capacity is available to sell in the regulation market. For example, a 600 MW generator with a full-power energy production cost of 15 USD/MWh would have to bid USD 27/MWh of regulation if the energy market was clearing at USD 30/MWh. This is to compensate the generator for profit lost in the energy market when output is reduced to create sufficient manoeuvring room to supply regulation, and to compensate for the reduced efficiency (i.e. increased heat rate) associated with the remaining output still being sold into the energy market. CONTINGENCY COST DRIVERS Because contingency reserves are deployed infrequently, there is no significant reduction in heat rate and no increased wear and tear on generating units as a result of frequent load changes. The only costs incurred are the opportunity cost resulting from withholding capacity from the energy market and increased heat rates due to part-load operation. The challenge is to decide how much capacity to offer to the energy market and how much to the ancillary market, and at what price. TEXT: LENA BARNER-RASMUSSEN 4.06 Twentyfour7. 55

25 [ INSIDE ENERGY ] Twentyfour7. [ ANCILLARY SERVICES ] ANCILLARY SERVICE TIME INTERVALLS IN THE USA Voltage Control Regulation Spinning Reserve Non-Spinning Reserve Tertiary Reserve Normal operations The market is however still in its infancy. According to Heikkinen, extensive areas of the US have no open hourly or daily market for ancillary services. After studying the US ancillary services market for more than a year, his investigations show that the emergence of such a market is of special interest to Wärtsilä, since selling ancillary services on the open market can earn additional revenue for the owners of Wärtsilä power plants. By selling ancillary services, power plants can still make a profit even when the electricity price is too low to cover variable costs, says Heikkinen. A competitive alternative Aeroderivative gas turbines have dominated the US market for ancillary services, but the rapid start-up ability and higher part-load efficiency of Wärtsilä s reciprocating engine technology offers a competitive alternative. One important feature is fast and reliable plant start-up. Wärtsilä power plants exceed current requirements by offering the ability to start-up and reach minimum load in less than two minutes. Another benefit is rapid loading. Wärtsilä plants can offer 100% loading within ten minutes of receiving the start command. Contingency operations Agreements 0,1 0, Time in Minutes Wärtsilä power plants can also offer flexibility when it comes to load range. Our power plants have a high part-load efficiency over the whole load range. This type of flexibility is important in maximizing a plant s profitability, says Heikkinen. Wärtsilä can also offer flexible plant sizing. Expanding a power plant s capacity is easy if conditions change. This means that plant size can easily be optimized to ensure that the capital involved is being used efficiently, he says. To date, Wärtsilä has sold four large gas power plants in the US that are capable of adding stability to the grid by delivering ancillary services. One of the most recent of these deals was closed in the spring of 2006 and involves the construction of a gas power plant in northern California on the site of what used to be a large nuclear power plant. The market for facilities of this type is growing rapidly. There s pressure to build more power plants, particularly in California. And in the present market situation most new power plants must be capable to produce ancillary services, says Heikkinen. Seven ancillary services There are seven different ancillary services which are commercially significant as possible sources of income for generators. Wärtsilä s power plants cater to all of them. NORMAL CONDITIONS Regulation and load following are the two services needed to continuously balance generation and load under normal conditions. Regulation reserves consist of online resources that can respond rapidly to requests by system operators for up and down movements. They are used to track minute-to-minute fluctuations in system load and to correct for unintended fluctuations in generator output. Load Following or Fast Energy Markets are similar to regulation but slower. They work as a bridge between the regulation service and the hourly energy markets. CONTINGENCY CONDITIONS The spinning reserve, non-spinning reserve and replacement reserve are capacity reserves that are on standby, ready to respond in the event of a power system contingency. As it is synchronized to the grid and online, spinning reserve can increase output immediately in response to a major generator or transmission outage. To be able to do this, the capacity involved must operate on part load. The non-spinning reserve works the same way as spinning reserve but does not have to respond immediately. Resources can be offline but must still be capable of reaching agreed output levels within a period of ten minutes. Replacement or supplemental reserves have a response time of minutes. They are used to restore spinning and non-spinning reserves to their pre-contingency status. Replacement reserve is not normally traded on an hourly basis. It is typically based on mutual long-term agreements. FREQUENCY REGULATION PRINCIPLE SYSTEM FREQUENCY 60 Hz Activate Limit deviation UCT: 2 * largest plant size (MW) PRIMARY CONTROL 5 30 sec. Restore normal Take over Free reserves ~ 1,5 % of installed grid capacity (MW) 30 sec. 10 min. 30 min. SECONDARY Free reserves CONTROL Take over TERTIARY CONTROL ~ 5 % of installed grid capacity (MW) OTHER SERVICES Voltage control is an injection or absorption of reactive power to maintain transmissionsystem voltages within required ranges. This is a local issue and these services are seldom sold on open hourly markets. Black starts involve generation capacity in the correct location that is able to start itself without support from the grid. This type of generation capacity has sufficient real and reactive power capability and control to be useful in energizing sections of the transmission system and starting up additional generators. 56 Twentyfour

26 [ INSIDE ENERGY ] WÄRTSILÄ BIO ENGINES DRIVE ITALIAN GREEN POWER [ ITALY BIOFUEL ] TEXT: PATRIK WHEATER WÄRTSILÄ is to supply a 75 MWe liquid biofuel power plant to the Italian city of Acerra, not far from Naples. The EUR 60 million turnkey contract was awarded by Fri-El Acerra Srl, an independent power producer formed as a result of a joint venture between Italy s Fri-El SpA and the French company EDF Energies Nouvelles. The engineering, procurement and construction contract includes not only the supply of four Wärtsilä 18V46 gensets in a combined-cycle configuration to maximize electricity production, but also everything else from the supply of a fuel unloading area to grid connection systems. Wärtsilä has also signed an eight year Operations and Maintenance agreement for the power plant. Once installed, the new plant will replace two gas turbines and run on palm oil which, in part, will be obtained from plantations owned by Fri-El. The facility is expected to be on line and supplying power to the grid in October Green Certificates for renewable energy sources Fri-El, a specialist in power generation from renewable energy sources, is expected to benefit from the Green Certificate incentives introduced by the Italian government to meet the requirements of the Kyoto Protocol. Emissions of CO 2 by the new plant will be practically zero, keeping it in line with Italy s target of reducing greenhouse-gas emissions by 6.5%. Each power generation plant that uses non-renewable sources for energy production is currently obliged to produce 2.35% of its annual electricity production using renewable sources. If a plant cannot comply with this requirement, it must purchase Green Certificates for each 50 MWh of the calculated 2.35% of annual output. Power companies such as Fri-El that produce energy from renewable sources will be awarded Green Certificates at the same rate and will be able to sell these to other power plants. In this way, owners of plants that produce low levels of greenhouse gas emissions benefit twice from their investment; firstly from selling electricity to the national grid, and secondly from trading their Green Certificates. The Fri-El plant is a major milestone for us within the renewables market as it shows that we have built a reputation in the market for our applications and solutions, says Marco Golinelli, Vice President, Wärtsilä Power Plants in Italy. No need for fuel refinement To minimize the lifecycle impact on greenhouse gas emissions, Wärtsilä liquid biofuel power plants are designed to run on straight vegetable oil, without using any supplementary energy for fuel refinement. Energy from liquid biofuels offers important advantages, says Golinelli. Biofuels allow the simultaneous generation of electricity and heat with no sulphur emissions and no consumption of fossil fuel resources. Since biofuels are classed as renewable, no additional CO 2 is emitted and they thus contribute to a reduction of the greenhouse effect. This is one of the best ways of ensuring the economic viability of green energy projects in Italy. Also, because of the high levels of overall performance that can be achieved in power plants which use medium-speed reciprocating engines, it s becoming an increasingly attractive alternative for electricity generation, says Golinelli. Currently, Wärtsilä has 25 MW of liquidfuelled biofuel plants in operation in Italy. Including the Fri-El facility at Acerra, plants with a total capacity of 230 MW are under construction or on order Twentyfour7. 57

27 [ INSIDE ENERGY ] Twentyfour7. [ INDIA, ARKAY ] INDIA S LARGEST GAS-ENGINE POWER PLANT FOR MORE THAN TWENTY YEARS, Wärtsilä power plants based on medium-speed engines have been meeting the baseload power demand of India s industrial consumers and independent power plants. TEXT: M.C SURESHKUMAR PHOTOS: WÄRTSILÄ Electrical power generated at Arkay is fed into the grid operated by India s national transmission company. Not only have these plants had to supply power reliably, they have also had to ensure that the costs of generation were lower than the grid tariff. It was therefore critical to make use of fuels which were inexpensive and available in good quantities. Up until 2001, all medium-speed engines sold by Wärtsilä in India were suitable for operation on heavy-fuel oil (HFO), which was and still is the most inexpensive liquid fuel available from refineries. Subsequently, when natural gas became available in some parts of the country, the market for Wärtsilä s medium-speed, lean-burn gas engines opened up. Developed in the 1990s, these engines were already popular in Europe and America. As the availability of natural gas was limited, usage of this fuel was subject to a pecking order. Natural gas discovered in the 1980s in the offshore Bombay High region was transported through cross-country pipelines passing through India s western and northern states, and mainly used in fertiliser plants, large gas-turbine power plants and for transportation. In the first years, therefore, few opportunities for power plants based on gas engines arose. However, the onshore natural gas subsequently discovered in parts of India s Southern Region was not available in quantities that would merit transportation to fertiliser plants and large power plants and therefore became available for use in smaller power plants of a size that suited Wärtsilä s medium-speed engines. These opportunities were exploited and a significant number of gas engines were sold in the period Group-captive plants generate enthusiasm Another positive development was the passage of the Electricity Act This removed many restrictions and created an atmosphere that facilitated the establishment of captive power plants. It also encouraged the idea of group-captive plants, a form of operation in which a group of promoters and/or consumers come together and jointly establish a captive power plant of whatever type suits them best. When the Gas Authority of India Ltd (GAIL), India s state-owned gas agency, announced that gas from isolated gas wells in Ramanathapuram in the southern state of Tamilnadu would be available, the promoter Arkay Energy (Rameshwaram) Ltd responded to the tender and was allotted a certain quantity of gas to set up a power plant in this remote area. As there were no local industries who could consume the power generated, some heavy consumers in other parts of Tamilnadu were invited to participate in the project, with the assurance that power would be channelled through the high-tension lines of the state s national transmission company. 58 Twentyfour

28 [ INSIDE ENERGY ] As the Arkay power plant was located close to the gas well, transportation charges were kept to a minimum and the advantage of lower costs could be shared by all consumers. Since this concept involved the twin benefit of sharing the investment burden and savings in the cost of delivered power, the response was quite enthusiastic. GAIL s preferential pricing on off-the-well gas for the first few years, some 40% of the cost of HFO with a corresponding calorific value, further improved the viability of the project. Increased flexibility and efficiency required In an earlier venture at a nearby location that involved the sale of power to the state-owned utility company, Arkay had chosen to use a 52 MW combined-cycle gas-turbine plant. This time, since power was being distributed to different consumers with the requirement that generation must be matched to consumption on a real-time basis, Arkay felt that a higher degree of flexibility in operation and higher levels of efficiency at different plant loads were desirable. The modular solution proposed by Wärtsilä based on a 20-cylinder configuration in the Wärtsilä 34 series offered the best efficiency and lifecycle operating costs. This, together with Wärtsilä s capabilities regarding turnkey execution and operations and maintenance of the plant, convinced the promoter to select Wärtsilä as a partner. The first phase was the installation of ten Wärtsilä 20V34SG engines together with a waste-heat-recovery boiler and steam turbine for a total plant output of 95.4 MW (87.30 MW plus 8.10 MW combined cycle). In Phase 2, another two Wärtsilä 20V34SG engines will be installed in , lifting the final installed plant output to 112 MW. Work on the project started in the first quarter of 2005 and thanks to the superb teamwork that characterises Wärtsilä s delivery management process, the plant was in commercial operation by March With an efficiency of 43.8% and additional 3.93% from the combined-cycle component, overall efficiency at the facility reaches 47.78%. Demand for multiple gas engines Efficiency figures are much higher than the levels that could have been achieved with simple-cycle turbines and both flexibility and start-up capability also far exceed what is possible with combined-cycle turbines. From a Overall efficiency at the Arkay plant reaches 47.78%. national perspective, this also represents the most efficient utilisation of resources: use gas straight from the well and thus avoid transportation losses, burn the gas to produce power at the highest levels of efficiency and lowest possible emissions, use the waste heat from exhaust gases to produce additional power, and deliver power to consumers through high-voltage lines, keeping transmission losses as low as possible. The Arkay power plant has been operated and maintained by Wärtsilä personnel with a high degree of reliability and excellent levels of efficiency. As the local grid in Tamilnadu is considered to be reasonably stable, transmitting the power over long distances has not presented a problem. With more gas discoveries on India s eastern coast and the promise of a national gas grid by 2008, the huge demand for reliable, economical, clean energy means that Arkay s group-captive model based on multiple gas engines can be replicated in other parts of the country. Another 24 MW group-captive plant is already under construction in Malanpur in Madhya Pradesh in central India. Many more opportunities are expected to appear and Wärtsilä India is fully geared up to serve the needs of this exciting market. AUTHOR IS SENIOR MANAGER (SALES), WÄRTSILÄ IN INDIA Multiple generating sets offer higher levels of operating flexibility Twentyfour7. 59

29 [ INSIDE MARINE ] Twentyfour7. [ INDIA MARINE ] Shipshape in India WÄRTSILÄ S PRESENCE in India goes back to the 1980s, making the company one of the first internationals to enter the power-starved Indian market. As the Power Plants business now has an established position in the country, Ship Power is following in its footsteps. TEXT: MARJA BERISA PHOTOS: WÄRTSILÄ The Indian shipbuilding industry is said to be on the verge of a boom. To date, development has been moderate, but unquestionably upwards. Over the last 10 years, the Indian government has exhibited a new interest in supporting both the domestic shipbuilding industry and foreign investment. The privatisation of shipyards, opening of the market, healthy local demand, top-level technological know-how and a more efficient value chain all pave the way to a business boom. On the other hand, the same process is under way in other markets - especially China. When it comes to shipbuilding and the service offering that it requires, what is it that makes the Indian market stand out? Towards a balanced market situation We ve travelled a long way since the 1980s. India is a very cautious and cost-conscious market, but we re at the point of no return. Shipbuilding-wise, the government has, after a long period of overlooking the industry s potential, made policy changes that encouraged the local shipbuilding industry, which now competes in the global shipbuilding market, says Sanjay Verma, Head of Ship Power, Wärtsilä in India. The balance between inviting foreign companies into the domestic market and encouraging local CCC Pioneer is equipped with five Wärtsilä 9L20 generating sets. 60 Twentyfour

30 [ INSIDE MARINE ] businesses to expand is a delicate one, and has at times been tough. Certain market segments such as the Indian Navy require large portions of the scope to be assembled or produced locally, for the remainder of the market it makes business sense to import equipment that is ready to install. Even so, both shipowners and shipyards prefer to have services that are provided locally, says Rakesh Sarin, Head of Services, Wärtsilä in India.* Nevertheless, the past decade is a showcase example of moving in the right direction. The legal system and regulations have been clarified, and the amount of red tape has been reduced. Tax incentives and investment programmes offer advantages to the shipyards and shipowners who are operating in the global market. The Indian Navy also has an ambitious shipbuilding programme. The length of the Indian coastline and the number of natural harbours attract shipbuilders. Low production costs, skilled people and the English-speaking work force are well-acknowledged assets. India is also a democratic market. Proximity to the main shipping routes and its geographical location make India an ideal location for ship repair and other services. Smooth sailing and rough seas Naturally there are weaknesses as well. As a market for the ship industry, India is not as well established as for instance Japan and Korea. Also, our waterways aren t that well developed and we cannot yet compete with the infrastructure and government support that s available in China, for example, says Verma. But some obstacles have become advantages. You can view population numbers from two different angles. With 1.2 billion people you get poverty and congestion. On the other hand, these people need goods and services, and things moving from A to B. That s a blessing, as the economy is picking up and creating local jobs and opportunities, says Sarin. As for democracy, it comes in two flavours: freedom of speech and freedom of movement - for goods and for people. I d say these are something that sets India apart from its biggest competitors. Add in dedication and education the strong human resources component and things start to look very good indeed. A business with a long lifecycle Wärtsilä (Wärtsilä Diesel at that time) supplied its first engine to India in The timing was advantageous as Wärtsilä was among the first equipment suppliers in the market. Competition was scarce, but so was the business - in the beginning. Wärtsilä would provide an engine and customers ran it. Providing power for ships was not a centre of focus - Wärtsilä was not a known brand in ship power and had no business unit dedicated to the marine sector in India. Equipment was supplied if requested, but the entire shipbuilding business remained a government-controlled, sluggish economic sector. Things changed in when Wärtsilä acquired Sulzer Diesel, a recognised brand with important customers within the Indian shipping fleet. At the same time, Wärtsilä s power plant business began offering value-added services. With each engine delivery, a new set of aftermarket and service products were offered. Wärtsilä included Operation & Maintenance (O&M) contracts, maintenance services, e-business tools and energy audits in its portfolio. Once equipment was sold, it had to be maintained for its entire lifecycle, a period of several decades. Wärtsilä invested heavily in strengthening lifecycle support capabilities through its technology and competent people. This became the foundation of the company s success in India. Growth on the Power Plants side took longer to have a ripple effect on the Ship Power business. There was potential, but for reasons of national policy, Indian ships and vessels were purchasing peripheral services - dry docking and bunkering - in places such as Singapore and the United Arab Emirates, says Sarin. GEOGRAPHICAL LOCATION MAKES INDIA AN IDEAL LOCATION FOR SHIP REPAIR AND OTHER SERVICES. Shipbuilding expertise exported As the shipbuilding business grew, small local workshops that catered to the service needs of shipowners and shipyards began to emerge. On the other hand, savings in money terms often carried a sting in the tail. Quality was not as good as it could be, and for foreign players this proved both an opportunity and a challenge. Companies such as Wärtsilä could offer high quality work, but the question was whether local customers would be willing to pay a premium, says Sarin. Wärtsilä s strength was its Power Plants offering combined with aftermarket services tailored for the power plant sector. This business model could be copied to cover the need for ship power services and Wärtsilä is now investing in its marine service operations. Currently, some 85% of Wärtsilä s service business in India comes from the power plant sector. Ship Power customers shipyards and shipowners have similar needs, but with different timeframes. Indian shipbuilders cater to both domestic and foreign customers. p 4.06 Twentyfour7. 61

31 [ INSIDE MARINE ] Twentyfour7. [ INDIA MARINE ] At the moment, about 70% of all orders come from abroad. The Indian government has established a subsidy policy for shipyards that make products for export, and the domestic building industry has become highly competitive. While shipbuilders who are Wärtsilä customers require continuous support throughout the building and warranty stage, the needs of a shipowner go far beyond this once a vessel is at sea, the need for lifecycle services spans decades. Providing services bring stability to cyclical business The Indian coastline totals 7,517 kilometres, has 12 major ports and 187 lesser ports. There are now six significant shipping hubs around India s coast, and these are where the business opportunities are. Gujarat, Mumbai, Goa and Cochin head up growth in shipbuilding industry on the west coast, and Vizag-Chennai and Kolkata are the busiest hubs in the east. Expanding Ship Power service business is a strategic priority for Wärtsilä. Equipment supplies alone won t do, and the shipbuilding industry is a cyclical, seesaw-type of business. The question was how to get the attention - and the business - of India-based shipowners. For some time now Wärtsilä has run a successful workshop in Khopoli, near Mumbai, and this unit s ship repair licence makes it an important link in the service chain, says Sarin. First of all, marine customers already had their service providers, some of them local, some of them based in places such as Singapore and Dubai. How could they be encouraged to opt for a total package provided by Wärtsilä? Sailain has two Wärtsilä 9L20 engines. Building trust through consistent quality The answer is to mimic the McDonald s approach consistent quality across all regions. We decided that trust and quality will prevail over lower cost. This is a relationship business. So we re now establishing a network of service units across the country, with one or two shops in each major hub. This way we can offer the same consistent quality at affordable rates, especially compared to the cost of services procured from outside India, says Verma. Cost efficiency comes from the concept of one-stop shopping. The shipbuilder s partner is right there onsite, COST EFFICIENCY COMES FROM THE CONCEPT OF ONE-STOP SHOPPING. ready to provide every spare part involved in a maintenance operation. For Wärtsilä in India the goal is to have workshops set up across India by A lot of shipping customers are now becoming familiar with the levels of quality we provide. And we have a strong global partner network to support our local workshops, so we can also handle major repairs, says Sarin. Customer trust is built diligently. The Khopoli Technology School, for example, part of Wärtsilä s competence-building programme, caters to customers needs by offering training. Shipowners can have their technicians and engineers trained at Khopoli, and customers can visit the propeller and engine workshops to see for themselves how Wärtsilä services products. Apart from providing training for customers, Wärtsilä also manufactures gear boxes and nozzles for propellers at Khopoli for marine customers worldwide. Triggering new orders The growth in service personnel at Wärtsilä in India also reflects the boom in business. The number of people working in Ship Power service has increased substantially in the past 5-6 years. In overall terms, Wärtsilä s service operations in India employ some 800 people. About a year and a half ago we started offering shipping companies a propeller repair service. We noticed that many companies have huge propellers sitting in warehouses with tips and other parts broken. We were able to get a foot in the door by fixing these broken propellers at reasonable cost for about 25% of the cost of a brand new item. Customers get a solution with an affordable price tag and the same lifecycle as a brand-new propeller. The volume of orders from this customer segment is now very healthy, says Sarin. A wide portfolio of products, consistent service quality, onsite workshops, training, functioning networks and onestop shopping combined with Wärtsilä Global support makes Wärtsilä in India an attractive ship power partner. * AS OF 1 OCTOBER 2006, RAKESH SARIN IS APPOINTED VICE PRESIDENT, SALES AND MARKETING, POWER PLANTS, WÄRTSILÄ CORPORATION 62 Twentyfour

32 [ INSIDE MARINE ] The combination of feathering CPPs and CoastGuard anti-pollution seals is an exceptional feature of the new RoRo design. CUTTING- EDGE, NOT CUTTING CORNERS TEXT: JUKKA VISKARI PHOTOS: SEATRUCK FERRIES [ SEATRUCK FERRIES ] IT STARTED with a blank sheet of paper. The goal was to design the best possible freight-only ferry for a route across the Irish Sea. Wärtsilä is providing the technical solutions which will help Seatruck Ferries realise their aim to have the fastest shallow-draft RoRo vessels. Under the umbrella of the Clipper Group, Seatruck Ferries will post another milestone in 2007 with the introduction of two new shallowdraft RoRo vessels of unique design. With a top speed of 22 knots, the two vessels will be employed on a busy route between Heysham in Lancashire, England and Warrenpoint in Northern Ireland. Our three ships are already running at full capacity and we re having to turn customers away. So the target is to replace the current vessels with ones that are much more efficient, says Andy Askham, Ship Manager of Seatruck Ferries. The new ships, designed to be the largest that can enter the port of Heysham, a location where the tidal range is high, will cut journey times by almost 30 per cent and increase annual cargo capacity on the route from 85,000 units to 130,000 units. When Clipper Point and Clipper Pace enter service in 2007, they will be the first purpose-built freight ferries introduced on Irish Sea routes for more than 20 years. Wärtsilä is providing a full package of technical solutions for the two ships, whose strategic measurements are a maximum length of 142 metres, 1,800 lane metres of cargo (120 trailers) and a maximum draft of 5.2 metres. Seatruck Ferries has also ordered a further three vessels based on a similar design but is still evaluating route options for them. These additional vessels are expected to enter service by the end of Tailor-made from scratch Seatruck Ferries commissioned naval architects Knud E Hansen from Copenhagen to design the vessels. p 4.06 Twentyfour7. 63

33 [ INSIDE MARINE ] Twentyfour7. [ SEATRUCK FERRIES ] The task was unique since there was no existing blueprint or prototype. The entire model had to be built from scratch. Knowledge accumulated by Seatruck Ferries, now celebrating its tenth birthday on the Heysham-Warrenpoint route, made a significant contribution to a successful design. The Spanish shipyard Astilleros de Huelva was commissioned to construct the vessels and building began in June Wärtsilä was closely involved with the shipyard in optimising the vessel design. This allowed an optimal package of technical equipment to be tailored for the two vessels. At their hearts lie a pair of powerful Wärtsilä 46 main engines, each of which provides 9240 kw at 500 rpm. As the largest supplier of feathering CPPs (controllable pitch propellers) in the marine market, Wärtsilä is providing feathering CPPs, gearboxes, and the propulsion control systems that convert engine power into thrust. The two 1000kW transverse-mounted tunnel thrusters provide plenty of power for manoeuvring, even in strong winds. Three Wärtsilä Auxpac generating sets and an emergency generating set provide the electricity required on-board. High-specification CoastGuard anti-pollution seals were selected as stern tube seals. An option for the customer to take part in CBM (condition-based maintenance) is also being provided by Wärtsilä. The other major players were not able to offer such a comprehensive package. They had to bring together a consortium of manufacturers, says Andy Askham. He is well aware that if an issue of performance or compatibility arises when there are multiple players, manufacturers can end up blaming each other. We are dealing with a number of Wärtsilä companies and factories around Europe. The main engines are made in Italy, the stern tube seals are made in the UK and the propulsion systems come from The Netherlands. So we re really happy to have a one-to-one interface with Wärtsilä in the UK. To solve any problems, we only need to knock on one door. Seatruck Ferries did not cut corners in ensuring maximum reliability for their customers. They have opted for a highspeed vessel which has a draft shallow enough to cope with the tidal range, which can handle the sandy shallows (hence the CoastGuard seals), and offers good fuel economy and flexibility through HFO-burning main engines combined with feathering CPPs, says John Grant, Marine Manager, Wärtsilä in the UK and a leading contact point for Seatruck Ferries. Two exceptional technical features in this order are the feathering CPPs and the high-specification CoastGuard antipollution seals. Employing a feathering CPP rather than a We are really happy to have a one-to-one interface with Wärtsilä. normal CPP significantly reduces drag caused by a propeller. This helps to minimise fuel consumption when vessels operate using only a single shaft line, something which Seatruck Ferries intends to do on daytime sailings. With just one engine operating, the new vessels will still be able to reach a speed of 17 knots. Facing challenges head-on Weather conditions on the Irish Sea are similar to those on the North Sea. The tidal range at Heysham is more than 10 metres and winter conditions are particularly severe, says Askham, who has worked as a chief engineer on the Warrenpoint-Heysham route. Even with storms of Force 10 on the Beaufort scale and a huge tidal range, customers have to have their cargo delivered on time. Seatruck Ferries boasts the fewest lost sailings on the Irish Sea, and the new vessel s powerful engines will provide an even greater reserve to ensure that schedules are met. The challenge is not only to avoid breakdowns but to produce solutions which enable ships to transit quickly enough, and to manoeuvre safely in all weather conditions, says Askham. Worn or damaged stern-tube seals are a very common problem on short sea RoRos. Wärtsilä worked with us and provided a solution with CoastGuard seals. Even though they are not the cheapest, we think the technological payback is going to be significant, says Askham. The seals protect the shaft lines from the sandy, abrasive water conditions. We see Wärtsilä contributing towards minimising downtime with reliable engineering and 24/7 service and spare parts support. Efficient, reliable business Seatruck Ferries has purchased more than excellence in engineering from Wärtsilä. They have bought the concept of a long-term relationship, and local service support from a global organisation that is able to add value to clients locally, says John Grant. According to Andy Askham, Wärtsilä has also shown that it understands the needs of Seatruck Ferries customers as well as the company s own needs. They know that hauliers have to make onward deliveries, often with perishable goods. We re looking forward to working very closely with Wärtsilä for years to come in ensuring that we keep these vessels at maximum levels of efficiency and reliability. Right now, there s no more efficient way of carrying trucks across the Irish Sea and in shallow draft conditions at these high speeds. 64 Twentyfour

34 [ INSIDE MARINE ] ENGINES FOR CHINA S SHIPBUILDERS THE CHINESE SHIPBUILDING INDUSTRY is growing rapidly. In response to high levels of demand, a new joint venture is being established to manufacture large, low-speed engines. TEXT: EIJA-LIISA HILTUNEN-NORDSTRÖM [ SHIPBUILDING INDUSTRY IN CHINA ] Three major players have decided to combine their skills and expertise in the Chinese shipbuilding market. In October 2006, the China Shipbuilding Industry Corporation (CSIC), Wärtsilä Corporation and Mitsubishi Heavy Industries (MHI) announced that they will set up a joint venture to manufacture large low-speed engines in China. The new company will be known as Qingdao Qiyao Wärtsilä MHI Linshan Marine Diesel Co Ltd (or simply QMD), and CSIC will hold 50%, Wärtsilä 27% and Mitsubishi 23%. Dozens of shipyards are now building vessels in China and all these ships need engines. The aim of establishing the joint venture is simple - to serve China s shipbuilding industry better. In national terms, the Chinese shipbuilding industry is currently the world s number three, and its target is to become number one by The planned annual production capacity of the QMD manufacturing facility is 2600 MW. According to Li Chang Yin, CSIC s President, QMD s offering will be more than just the provision of increased manufacturing capacity. As the largest Chinese group in a sector that includes merchant and military ships, marine engineering and marine equipment, CSIC s vision is that the new factory will enable further development of the ship machinery industry s technological capabilities. Achievement of this objective will be facilitated through international co-operation with strong technology partners. It is also Li Chang Yin s belief that improved technological capabilities will encourage technical innovation amongst CSIC personnel, enhancing the competitiveness of Chinese shipbuilding and further increasing its global market share. Two-stroke engines under licence QMD will develop, manufacture and sell a new generation of energy-saving and environmentallysound low-speed two-stroke marine engines using advanced technology from Wärtsilä and MHI. QMD will also manufacture, assemble, test sell and service low-speed engines under licence from Wärtsilä and MHI. Japan-based MHI operates in many sectors and is one of world s leading manufacturers of heavy machinery. In the marine sector for example, MHI supplies diesel engines, turbines, boilers, propellers, deck machinery, water jets and pumps. MHI expects that the new co-operative venture will raise the reputation of its Mitsubishi UE engines in world shipbuilding markets. It will also extend Mitsubishi UE engine business in an important shipbuilding country, said Hiroo Uchimura, General Manager, Industrial Energy Power Systems Department of MHI. Local suppliers are important The QMD plant will be located in the Shanghai area where CSIC is establishing a marine industry cluster. Production is currently scheduled to begin in late As QMD will use local suppliers whenever possible, efficient networking will be important. Technology transfer will support local companies in raising their production standards to world-class levels. Wärtsilä and MHI, who had previously formed a strategic alliance to develop two-stroke marine diesel engines, will use QMD s facilities for research into new engines, development and testing. Through partnerships with Chinese companies, Wärtsilä has established an assembly facility in Shanghai, and Wärtsilä propellers, thrusters and generating sets are also being manufactured in China. Even though the new QMD factory is being set up to serve Chinese shipyards, it will also be able to export engines to companies operating in other regions such as Europe and India. Throug partnerships, Wärtsilä is manufacturing auxiliary engines, propellers, thrusters and gensets in China. Dozens of shipyards are today building vessels in China Twentyfour7. 65

35 [ INSIDE MARINE ] Twentyfour7. [ PROPULSION IMPROVEMENT ] New Wärtsilä-design propeller blades in a 2400 mm HR nozzle (MV Trygvason). IMPROVED PERFORMANCE AND LOWER RUNNING COSTS TEXT: ANTON VOERMANS PHOTOS: WÄRTSILÄ SIGNIFICANT INCREASES in fuel prices over the last years have had an adverse effect on ship operating costs. The need to maintain a vessel s economic profitability has resulted in a wideranging focus on fuel-saving devices - in the broadest possible sense. Changes to a vessel s propulsion system, the mechanism through which engine power is converted into motion through the water, are one obvious way of influencing both fuel efficiency and performance. In this context, the term propulsion system means the propeller and any ancillary devices that affect its performance such as a surrounding nozzle. The options available for improving existing installations retrofits - depend on both the propeller type and the vessel it is installed in. The economic results are usually measured in terms of the Return On Investment (ROI). Hydrodynamic losses The total propulsion efficiency of a propeller, i.e. the proportion of the energy produced by a ship s engine that is converted into motion, varies from 50% to 70%. In the case of an average propeller, reductions in efficiency can be traced to three physical phenomena: axial, frictional and rotational losses. Propellers generate thrust by accelerating the incoming water. Behind the vessel, the flow of water away from the moving propeller mixes with the water in the local environment and the resulting turbulence means that some energy is lost. The name given to this phenomenon is axial losses. Friction is present whenever two surfaces which are in contact move over one another. This is also the case when water flows over the surfaces of a propeller blade. The dominant factors affecting these frictional losses are the total blade surface, blade surface roughness and the speed at which a propeller is rotating. Rotation of the propeller blade also leads to a rotation of the water in a vessel s wake. The energy used in making this happen is then not available for the generation of axial thrust. These are called rotational losses. 66 Twentyfour

36 [ INSIDE MARINE ] Using modern hydrodynamic software, cavitation can be predicted with greater reliability. Improving performance Devices that improve the efficiency of propulsion by reducing fuel consumption fall into three categories: up to 5%, up to 10%, and up to 15%. In the first of these, measures such as polishing a propeller or repairing edge damage can easily increase its operating efficiency by 2-4% and the corresponding ROI is short, 1-3 months. Redesigning a propeller using state-of-theart concepts, without optimizing boundary conditions such as propeller speed and diameter, can lead to a performance improvement of some 5%. Raking the tips of a propeller s blades reduces local rotation of the water in this zone, and for large fixed pitch propellers (FPP) the positive effect can be as much as 3%. Cavitation is a condition where water starts to boil spontaneously at low temperature. In cases where a propeller is not designed well, this results in bubbles imploding on the surface, reducing the propeller s lifetime. Using modern hydrodynamic software, cavitation can now be predicted with greater reliability. As higher power densities can then be allowed, lower blade areas can be utilised and the resulting reduction in frictional losses can achieve effi ciency improvements of up to 3%. Since new propellers are required for all these courses of action, the ROI is 4 5 years. Combining tip rake and a lower blade area yields fuel savings of up to 5% and offers an ROI of about three years. Heavy running Improvements of up to 10% in efficiency involve more fundamental changes which may also affect engine speed and operation. In general terms, a larger propeller diameter in combination with low rotational speed leads to improvements in efficiency and a reduction in axial losses. This type of modification can be applied to all ship and propeller types. In cases where propeller diameter cannot be increased, increasing the number of blades to five or even six sometimes provides a method for further optimization. Typical ROI in such cases is 18 months to 2.5 years. After many years of operation, fixed pitch propellers (FPPs) can become heavy running as a result of, for example, increased hull resistance. The terminology heavy running is somewhat misleading, as the problem is that the propeller loading and engine characteristic do not match - the engine s power output limit is reached before the propeller s full power is achieved. The result is that the engine is overloaded, leading to both increased fuel consumption and increased rates of wear in engine components. One solution to heavy running is modification of the propeller pitch. The same level of power will then be absorbed at a higher engine speed, and engine operation is shifted out of the red zone. Fuel savings of 6% to 8% have also been reported after trailing edge cutting. This is a modification in which the trailing edge of the blade is cut off and the aft part of the blade wing-section geometry is changed by grinding. The payback period in this case is just two months. Ducts and nozzles The concept of surrounding a propeller with a nozzle or duct is very well established and has a long history. Converting open propellers to a ducted configuration can result in efficiency gains of as much as 15%. Currently, some 25% of Wärtsilä controllable pitch propellers (CPP) run inside a nozzle. In an accelerating nozzle the water speed at the propeller is higher than it is in the case of an open propeller. This increase in axial velocity reduces the propeller load, especially for propellers that are heavily loaded. This results in an increase in the overall performance achieved by the propeller and nozzle compared to that of the propeller alone. Also, the pressure distribution round the nozzle generates forward thrust, resulting in a force in the forward direction. To extend the application of ducted propellers towards higher ship speeds in combination with a larger bollard pull, Wärtsilä has introduced a high efficiency nozzle (HR nozzle). This unique design has a curved exterior and interior, p US$/ton Year Increases in fuel prices in recent years have been substantial, adding significant complications to the economics of ship operation. frictional losses 15% HFO 3% S HFO 1% S LFO 0.035% S axial losses 20% rotational losses 5% efficiency 60% Typical losses in propellers of standard design. Fixed pitch propeller (FPP) with and without tip rake. Conventional propeller design [LEFT] and LIPS tip rake propeller design [RIGHT] Twentyfour7. 67

37 [ INSIDE MARINE ] Twentyfour7. [ PROPULSION IMPROVEMENT ] Return On Investment (year) Economics of retrofits modern design propeller modern design propeller diameter and rpm adapted less interesting more interesting ducted propellers 1 prop.- engine grinding and repair interaction Efficiency improvement (%) Wärtsilä nozzle improves fishing efficiency Built in 1988, MV Trygvason is a single-screw trawler originally equipped with an open-type, 2600 mm-diameter CPP. The vessel is powered by a Wärtsilä Nohab F38A with an output of 1580 kw, running on marine diesel oil. To save fuel, the owner was seeking a propulsion retrofit with an attractive Return On Investment (ROI). Wärtsilä s proposal was a modern propeller design of diameter 2400 mm operating in a high efficiency (HR) nozzle. Calculations indicated a bollard pull increase of 29% and a 13% improvement in free-running efficiency. Operating parameters in both sailing and fishing conditions were optimized. The ROI for this rebuilding was calculated as being less than two years. avoiding flow separation and contributing to higher levels of efficiency. Ducted propellers have a pitch that is significantly higher (up to 40%) than open-type propellers. By replacing an existing open propeller with an HR ducted propeller, bollard pull can be increased by about 25% and free running efficiency can be increased by 10-15% (see sidebar). The actual improvement in performance achieved will depend on the power density of the propeller and the vessel s sailing speed. Retrofit economics Assessing the profitability of a propulsion improvement requires knowledge of the increase in hydrodynamic efficiency and either the investment or the total costs involved. A recent Wärtsilä in-house study reviewed the fuel savings resulting from a number of completed retrofit installations. Data on fuel consumption was supplied by ship operators or estimated using project information. The estimated ROI for each propulsion improvement strategy is shown in the diagram. Since each type of device has a wide field of application that depends on the type of ship, its size, engine and the fuel used, areas that indicate the range of hydrodynamic improvement and payback times are shown. Increases in operating costs that result from higher fuel prices affect all ship owners. Wärtsilä offers a number of solutions that save fuel by improving propulsion efficiency, helping to ensure that vessels can be run profitably. Relatively simple operations such as grinding and repair of modern propellers offer interesting savings and short payback times, while the replacement of old designs and modifications to improve heavy runners can provide very significant benefits. Installing ducted propellers, especially LIPS HR nozzles, yields increases in free-running propeller efficiency of as much as 15%, with payback periods of just months. REVERSE ENGINEERING As the original propulsion unit was not a Wärtsilä design, measurements were made on a spare propeller blade to establish the blade geometry. Both hydrodynamic and mechanical calculations were performed to define the maximum hub loading. Cavitation calculations provided reference values for noise and vibration. Using this data and a technical specification, new geometry for the propeller blades was produced. Wärtsilä s state-of-theart computer techniques make it possible to not only improve bollard pull and efficiency, but also to reduce hub loading. In this case, the nozzle effect meant that the new design s cavitation and pressure-pulse performance offered a considerable improvement over the vessel s original equipment. Both noise and vibration levels remained well within reference limits. BETTER THAN EXPECTED The retrofit was carried out in Norway and the trawler was out of operation for about two weeks. Trials showed a bollard pull close to 30 tons calculations had indicated 27 tons. Before the retrofit, the bollard pull had been 21 tons. The owner also reported a reduction in fuel consumption of approximately 30%. The trawler now uses less fuel when pulling a specific net, or can trawl using a larger net. A MUCH QUIETER RIDE MV Trygvason s owner is very pleased with the overall result. It s much quieter onboard now, says Captain Støle Lønning, a regular visitor to North Sea fishing grounds. In the first year, we used the boat just as it was when we bought it, but it became very expensive to run. Even though it wasn t the cheapest option, Wärtsilä s nozzle solution was the most effective. We can now use more efficient trawling equipment, and we haven t suffered any loss in sailing speed, something which has happened to others. Wärtsilä offers propulsion improvement for both Wärtsilä and third-party installations. Following an initial assessment, deliverables are a budget price, an indication of the resulting efficiency improvement and the estimated ROI. The entire conversion process from initial discussions to sea trials of a new installation takes 6-12 months. 68 Twentyfour

38 Wärtsilä Quarterly Magazine* Small, but important There are many things in everyday life that are not so easy to see but still important. A smile in the rush hour, the nuts and bolts that hold devices together, water-resistant microfibres in the fabric of a coat. All these add spice to life, and they really matter - in spite of their size. *Sign off Licence manufacturing in Brazil more on page 75 [SIGN OFF] AT YOUR SERVICE TRAVELLERS GEAR HISTORY CORNER LITTLE ENGINEER CHILDRENS QUOTE 69

39 sign off [ AT YOUR SERVICE ] SPECIALIST HAIRCARE Kakimoto Arms, a stylish hair salon situated in the Roppongi Hills district of Tokyo, is dedicated to making its customers both beautiful and wealthy. The key is comprehensive, high-quality customer service provided by a variety of specialists all the way from receptionist to hairstylist. Nobue Hoshino, Kakimoto Arms top stylist and its director, reveals the secrets of her salon. HOW WOULD YOU DESCRIBE YOUR SERVICE PROCESS? We serve our customers with the utmost care. After being greeted at reception, where they can leave their coat and belongings and don a robe, each customer is taken into the salon for a hairstyle consultation with their stylist. According to each customer s wishes, their hair is washed, cut and/or coloured and their nails are manicured. Each of these tasks is carried out by a different specialist as that ensures the highest quality. We really focus on customer comfort. For example, we place a warm, rolled-up towel under a customer s neck while their hair is being washed, and as the sinks we use for 70 Twentyfour hair washing are movable, customers don t have to move from one place to another during the washing, cutting and colouring processes. We also offer our customers tea, coffee or water as refreshment. WHAT PARTICULAR SERVICE IS YOUR SPECIALITY? Since Japanese people like to colour their hair and we are well known for our skills in hair colouring, it is a perfect match. Our professionals have been trained at the Daniel Galvin Salon in London. Acknowledged as the world s leading hair colourist, Galvin has introduced many innovative colouring techniques. HOW DO YOU FOSTER CUSTOMER LOYALTY? We have many regular customers who are very satisfied with the hairstyling and other services we provide. For these people, the best guarantee is our employees, who are keen to develop their skills and truly passionate about their work. Our customers really value the competence that our hairdressers display. TEXT: KATJA ALAJA PHOTO: PETRI ARTTURI ASIKAINEN We really focus on customer comfort. Nobue Hoshino

40 WHEN IT COMES TO TRAVEL FOOTWEAR, the top three requirements are comfort, comfort and comfort. A five-hour walking tour around New York in new but s can turn your holiday into a blisteru try to SHOES CAN MAKE OR BREAK YOUR DAY +[ TRAVELLERS GEAR ] Marine emergency medical kit Going freshwater boating or water skiing? The Marine 200 medical emergency kit is organised in colourcoded compartments classified by type of injury. It contains items such as medicines, sterile dressings, trauma pads, bandages, forceps and folding scissors, an instant ice pack, and a book on marine medicine. Insect repellent, mosquito net and sting relief A trip into the tropics can be ruined if you re not properly equipped against mosquitoes and other biting insects. If you want to avoid getting bitten and ending up full of itchy bumps, don t travel without an insect repellent and a mosquito net. If these don t help, sting relief gel will. Safety pins If a button comes off and you haven t packed a sewing kit with you, a safety pin can save your day. You can also use it to fasten your hotel or safe key inside your coat pocket, or pin the pockets of your garments closed with your valuables on the inside. And if you re travelling with a backpack, use safety pins on the backpack zippers - pickpockets hate struggling with sharp objects. Photoquiz answer Hachiko dog, near Shibuya station is a meeting point in Tokyo. In 1920s, Hachiko was the loyal dog of a professor meeting his master every evening still ten years after his master had died. Polarity a magnetic boardgame Tired of electronic games? Try Polarity, a strategy boardgame that harnesses the force of magnetism. Players take turns placing hovering magnetic discs on the board in order to impose chaos on their opponent. The resulting chaos causes the discs in play to come together in a flash of magnetic frenzy. Stacks of more than one disc count as points, and the player with the most points wins. For details, see PHOTOS: MIRVA KAKKO 4.06 Twentyfour7. 71

41 sign off [ HISTORY CORNER LITTLE ENGINEER S PAGE ] Taj Mahal, India. 20 YEARS IN INDIA TEXT: EIJA-LIISA HILTUNEN-NORDSTRÖM Wärtsilä started operating in India in the early 1980s, but the listed company - standard practice in those days - was only established in The goal was to offer better services to Wärtsilä s rapidlygrowing customer base. For most of the last 20 years, the focus has been on Power Plant business. Over time, Wärtsilä has grown from being a DG Set supplier to a provider of turnkey solutions and longterm O&M contracts. Although India has not traditionally been a major force in shipbuilding, the country is now emerging as a major ship repair hub, especially for offshore vessels. This is good news for the Ship Power business. The Wärtsilä brand is strong in India, representing trust, reliability and excellence. India is undergoing a significant transformation, and its economy is nowadays increasingly robust and liberal. Wärtsilä in India is ready to make the Indian elephant dance. LEVITATING Galileo Gravitator GALILEO GALILEI ( ) was an Italian scientist who improved the design of the telescope and was one of the first people to use it to observe the sky. He was the first to discover Jupiter s moons, and to conclude that the moons he saw were orbiting the planet. Galileo s conclusion that a planet could have smaller planets orbiting around it helped upset the notion, prevalent at that time, that all celestial bodies revolved around the earth. Mars Jupiter Moon Galileo also determined the correct mathematical law for acceleration, which he verified by careful measurements. Even though the story that Galileo dropped balls of different mass from the Leaning Tower of Pisa to demonstrate that their time of descent was independent of their mass - excluding the limited effect of air resistance - is not now generally accepted as true, he did carry out experiments involving the rolling of balls down inclined planes which proved the same thing. During the Apollo 11 mission some 300 years later, Neil Armstrong experimented by dropping two objects of different size and proved that objects in a vacuum fall at the same rate. You can now conduct your own gravitational experiments with the Levitating Galileo Gravitator, which demonstrates celestial gravitation. It comes with four spheres (i.e. model planets) the Moon, Mars, Jupiter and Saturn and a magnetic source to provide a source of gravitational force. Your task is to make the spheres levitate. Place one of the spheres under the Gravitator s magnetic source and adjust the balance of the gravitational pull affecting it with the fine-tuning knob until the spheres start to hover. The LEDs located in the top and the base of the device give each sphere a bluish-purple glow, helping you find the right balance. Use the rotation switch if you want the sphere to spin slowly. The Gravitator mimics the rotation of the moon as it orbits the earth, and Mars, Jupiter and Saturn as they orbit the sun. The Galileo Gravitator is 280 mm tall and has a base diameter of 218 mm. It weighs just over a kilogram, has an embellished gold frame and is supplied with an AC power adapter. PRICE: USD FOR DETAILS, SEE 72 Twentyfour

42 [ ONCE UPON A TIME ] TEXT: LEENA KOSKENLAAKSO ILLUSTRATION: VILLE TIETÄVÄINEN CHRISTOPHER COLUMBUS EXPLORER OF THE SEAS GREAT DISCOVERIES require faith and courage. Both courage and a determined resolve were characteristics of Christopher Columbus, the man who accidentally discovered America. Christopher Columbus was born in It is believed that he went to sea at the age of fourteen. He settled some years later in Portugal, married a Portuguese noblewoman and the couple had a son. In 1485, after the death of his wife, Columbus and his young son moved to Spain. In the fifteenth century, people in Europe did not know of the existence of the North and South American continents and the Pacific Ocean. Columbus was a man of learning, and was probably convinced that the world was round. He figured out that if he sailed far enough to the west, he would eventually reach the Far East and its riches. Finding a trade route to Asia became his solitary goal and obsession. IT TOOK COLUMBUS ten years of persuasion before Ferdinand and Queen Isabella of Spain were ready to finance an exploratory trip to the west. In 1492, they finally agreed to a grant that allowed Columbus to set sail, provided that he brought back gold, spices and silks from the Far East. He was also instructed to disseminate Christianity and to lead an expedition into China. Columbus and his crew departed from Palos, Spain, in August 1492 with three ships: the Niña, the Pinta, and the Santa Maria. Guided by compass, they sailed westwards of a rate of about 150 miles a day. The crew worked in 4-hour shifts. The voyage took longer than expected and the hungry crew grew restless, but Columbus would not be deflected and land was finally sighted in October. Columbus set foot on what he thought was an island in Asia, but in reality they had reached what is now known as the Bahamas. Since no riches were found there, they sailed on, visiting the island of Cuba and another island called Hispaniola, known today as Haiti and the Dominican Republic. When he returned to Palos in Spain in March 1493, Columbus was hailed as a national hero. SINCE COLUMBUS thought he had reached the Indies, he called the islands native people Indians. Relations between the Indians and Columbus crew were initially friendly, but problems began to accumulate because of brutal behaviour by the Spanish newcomers towards the natives. Columbus set off on his second voyage in September 1493 to land in what he thought was Japan but was actually the islands of Dominica, Guadeloupe and Jamaica. His third voyage took place in 1498 and resulted in the discovery of Trinidad, Tobago, Grenada and Margarita. The fourth voyage began in 1502 and took Columbus to the coast of Panama. The Indians there were hostile and the explorers were forced to flee to Jamaica. Columbus sailed back to Spain in 1504 and died in 1505, still convinced he had set foot in Asia Twentyfour7. 73

43 sign off [ CHILDRENS QUOTE ] IF YOU WERE AN INVENTOR what would you invent? And what would this invention do? I would like to invent a robot. It would be around the same size as myself and built like a human. The robot should be controlled by a remote, and I can hear, see and talk through its ears, eyes and mouth. It would help me do everyday tasks. It would be cleaning up my room, carry my backpack when I go to school and when I kick my soccer ball into the neighbour s backyard it would go and get the ball for me. LUCAS WINKELMANN, 7 years, Herlev, Denmark Lucas I would invent the superhoovercomocinetikcellphone ; a vacuum cleaner with integrated mobile phone, flat screen, TV and fan. PETRA JENSEN, 7 years, Valby, Denmark I would invent the digital car ; a noise and exhaust-free car whizzing over land without wheels or tyres. ANTON JENSEN, 9 years, Valby, Denmark Petra and Anton 74 Twentyfour

44 sign off Licence manufacturing in Brazil SHIPBUILDING IN BRAZIL is restarting following a decade of inactivity. The country s new government is encouraging local production. And as the demand for oil only grows, oil producing companies need new vessels and those vessels need engines. Many of the new ships to be built in Brazil will be using Wärtsilä engines manufactured under licence. An agreement between Wärtsilä and the state-owned industrial company NUCLEP (Nuclebrás Equipamentos Pesados S.A.) was signed in December NUCLEP will build two-stroke marine engines for new bulkers and product carriers ordered by Transpetro, the shipping arm of Petrobras, Brazil s state-owned oil company. Over a period of five years, 26 vessels will be produced. The first engine delivery is scheduled to take place in 2008 and the target is to produce between six and eight engines each year. It is also quite likely that NUCLEP will manufacture engines for vessels ordered from Brazilian shipbuilders by PDVSA, the Venezuelan state oil company. Local manufacturing preferable The manufacturing of engines under licence is a totally new concept for NUCLEP, which was originally set up in 1975 to produce nuclear power plants. To date, only some 20% of the company s capacity has been utilised. The building of Wärtsilä engines will not only generate jobs, as usage of production capacity will rise to 100%. NUCLEP will be the only manufacturer of two-stroke engines in Latin America. The licence agreement with Wärtsilä will help us obtain orders from all over Latin America, because Wärtsilä is well known and local production is preferred. Even the Brazilian government approves of this new partnership, says Jaime Wallwitz Cardoso, President of NUCLEP. Wärtsilä is helping its new partner by training NUCLEP engineers. Last winter, two engineers visited a training centre located in Switzerland. In autumn 2006, a group of eight engineers underwent training and another group of ten engineers will follow. Wärtsilä-trained personnel will be responsible for disseminating know-how at the NUCLEP plant. Ole Johansson, Wärtsilä s CEO and President [LEFT] and Jaime Wallwitz Cardoso, President of NUCLEP. [RIGHT] TEXT: MAARIT KAUNISKANGAS PHOTO: KIRSI SALOVAARA 4.06 Twentyfour7. 75

45 GREEN, STRAIGHT AND UNPROCESSED. Wärtsilä liquid biofuel power plants use high efficiency reciprocating engines to turn vegetable clarified oils to electricity and heat. Liquid biofuel can be produced from practically any oil-rich crop. From oil palm, soy, rapeseed and olive to sunflower seeds, grown in many regions all around the world. See what we have done so far at wartsila.com

46 WÄRTSILÄ is a registered trademark.

47 Twentyfour7. Wärtsilä Quarterly Magazine 90 W 45 W 0 45 E 90 E 135 E WÄRTSILÄ NETWORK 75 N 45 N 0 45 S [ SOLUTION ] Multi-purpose floater changes the rules MORE ON PAGE 49 MPF 1000, MPF CORP

48 REPORTAGE i

49 Wärtsilä Quarterly Magazine REPORTAGE i DETAILS MATTER Tokyo s Ginza Line, viewed from the Shibuya centre, transports millions of travellers a day. MORE ON PAGE 20 03

50

51 Wärtsilä Quarterly Magazine* *contents PHOTO: PETRI ARTTURI ASIKAINEN 44 INFOGRAPHICS BIOGRATE Ingenious design provides optimal conditions for combusting biomass without using auxiliary fuel. A choice for the future. REPORTAGE 20 Details matter Tokyo epitomises the Japanese desire to make sure everything runs as smoothly as possible. IN-DEPTH 38 Wärtsilä 14RT-flex96C The world s most-powerful reciprocating engine, powering the world s largest container vessel. SOLUTION 49 Multipurpose floater A harshenvironment FPSO opens up a window of opportunity for MPF Corp. and for Wärtsilä. [ CONTENTS ] FEATURE 30 Innovation Economies seeking to encourage innovation have to focus on a lot more than just R&D. PASSSION 46 Mastermind Success in golf requires that many things click at just the right moment. It s that simple. PLUS: 35 FINANCE & BUSINESS WORLD 43 R&D, INNOVATION 4.06 Twentyfour7. 5

52 NO BOARDROOM CONVERSATION WILL BREAK THIS ICE. The world has enough talkers. We are doers. We are more than 13,000 men and women across the globe who are dedicated to achieving our clients goals including keeping a fleet running. We are the engine of industry, see what we are doing today at wartsila.com

53 WÄRTSILÄ is a registered trademark.

54 Wärtsilä Quarterly Magazine* *contents inside Energy & Marine 54 EXTRAS The emerging market for ancillary services in the United States. 57 ITALY S GOING GREEN Power plants that use vegetable oil, and profit from Green Certificates. 58 GAS POWER IN INDIA Group-captive projects are generating plenty of enthusiasm. 60 INDIAN MARINE BUSINESS An extensive ship power portfolio makes Wärtsilä an attractive one-stop partner. 63 EFFICIENCY RULES Seatruck s new shallow-draft RoRos have unique design features. EVENTS, PAGE 75 AROUND THE GLOBE SIGN OFF 65 QMD IN SHANGHAI Joint venture in China will produce large, low-speed engines. [ CONTENTS ] 10 Spotted beauty 12 CALENDAR upcoming events NEWS orders, appointments 13 DICTIONARY useful definitions add sparkle: FIREWORKS 14 PEOPLE & FACES Sweden s royal couple visit Wärtsilä More NEWS 15 COLUMN by Raimo Lind 16 MY BOOKS Mumbo jumbo and delusions YESTERDAY, NOW, TOMORROW Measuring speed. 17 PHOTO QUIZ Where do you find a loyal dog? 18 COLUMN by Pekka Ahlqvist 19 CORPORATE CITIZENSHIP Support for the Mesoamerica Center 69 DESSERT the importance of smiles - and nuts and bolts! 70 AT YOUR SERVICE specialist haircare 71 TRAVELLERS GEAR shoes can make or break your day 72 HISTORY CORNER twenty years in India LITTLE ENGINEERS PAGE spinning spheres with Galileo 73 ONCE UPON A TIME Christopher Columbus courageous and determined 74 CHIDRENS QUOTE wisdom from younger generations 75 EVENTS Licensing in Brazil 66 PROPULSION IMPROVEMENT Different approaches, a wide range of returns on investment. EXTRAS, PAGE 54 UNIQUE RORO, PAGE 63 Publisher: Wärtsilä Corporation John Stenbergin ranta 2 P.O. Box 196 FI Helsinki Finland Telephone: and feedback: twentyfour7@wartsila.com Editor-in-Chief: Mikael Simelius Managing Editor: Virva Äimälä Editorial team: Marit Holmlund-Sund, Maria Nystrand, Dan Pettersson, Nina Pulliainen Editorial office and layout: Kynämies Oy Helsinki Finland English editing: Rick McArthur Printed by Punamusta Joensuu Finland ISSN WÄRTSILÄ is a registered trademark Copyright 2006 Wärtsilä Corporation Paper: cover Galerie Art Gloss 250 g/m 2 inside pages NovaPress Silk 90 g/m 2 Cover photo: JMT Airguard 3AS on the production line by Petri Artturi Asikainen Written permission from Wärtsilä Corporation is required for the reproduction of articles in whole or in part. 72 LITTLE ENGINEER The following information contains, or may be deemed to contain forward-looking statements. These statements might relate to future events or our future financial performance, including, but not limited to, strategic plans, potential growth, planned operational changes, expected capital expenditures, future cash sources and requirements, liquidity and cost savings that involve known and unknown risks, uncertainties and other factors that may cause Wärtsilä Corporation s or its businesses actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by any forward-looking statements. In some cases, such forward-looking statements can be identified by terminology such as may, will, could, would, should, expect, plan, anticipate, intend, believe, estimate, predict, potential, or continue, or the negative of those terms or other comparable terminology. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Future results may vary from the results expressed in, or implied by, the following forward-looking statements, possibly to a material degree. All forward-looking statements made in this publication are based only on information presently available in relation to the articles contained in this magazine and may not be current any longer and Wärtsilä Corporation assumes no obligation to update any forward-looking statements. Nothing in this publication constitutes investment advice and this publication shall not constitute an offer to sell or the solicitation of an offer to buy any securities or otherwise to engage in any investment activity. Disclaimer 8 Twentyfour

55 editorial Dear Reader, AT WÄRTSILÄ, WE KNOW that daring to innovate is essential. We also know we must constantly move forward and change while engaging in a wide range of activities which enable us to both create and improve the products and services that correspond to customers needs today and in the future. SINCE WE BELIEVE that customers prefer to deal with global partners who have local presence and are able to offer total solutions, we are expanding the services we offer in the electrical and automation sector to complement our existing offerings in several locations. To reinforce this strategy, we have initiated a joint venture with Mitsubishi Heavy Industries (MHI) and the China Shipbuilding Industry Corporation (CSIC). Announced in Hamburg in September, the innovative Wärtsilä Pulse Lubricating System is clear proof of our technological expertise. INDIA HAS BEEN a very important market for Wärtsilä for the last 20 years, especially within the power plant sector. It has also now become one of the key markets for Wärtsilä Ship Power and Wärtsilä Services. Japan has played an important role in shipbuilding. For Wärtsilä, the acquisition of Japan Marine Technology (JMT) in 2004 and the associated manufacturing of seals and bearings has significantly enhanced our understanding of this market. EVEN THOUGH we are a technology company, the human dimension remains our driving force. Examples of this are Wärtsilä s support for the Mesoamerica Center and its new facility in Guatemala, and sponsorship of a skilful and passionate golfer. Enjoyable reading! [ TWENTYFOUR7. ] Mikael Simelius Vice President Marketing Communications & Branding mikael.simelius@wartsila.com 4.06 Twentyfour7. 9

56 Wärtsilä Quarterly Magazine* Wärtsilä and MAN Diesel to co-operate in research. more on page 12 [ AROUND THE GLOBE ] *around the NEWS PEOPLE AND FACES EVENTS DICTIONARY PHOTO QUIZ Q&A 10 Twentyfour

57 A SPOTTED BEAUTY THE AGILE LEOPARD (Panthera pardus) lives in eastern and central Africa as well as in some parts of Asia. Powerful and graceful, this big cat thrives in swampy tropical forests, rugged mountains, deserts and grassland. Whether spotted or black, the leopard s coat makes it difficult to see in all types of terrain while making the job of hunting for prey easier. A MUSCULAR BODY with broad paws and long tail makes the leopard a good climber. They are strong enough to carry prey of up to twice their own weight into a tree to eat it. They are good swimmers and opportunistic hunters who will eat almost anything monkeys, rodents, reptiles, amphibians, birds, fish, wild pigs and hoofed mammals such as antelopes. globe IN THE WILD, the nocturnal and solitary leopard may live less than 10 years. In captivity, this beautiful creature can live for more than 20 years. Extremely-acute hearing and eyesight are the leopard s strongest senses, helping it to spot potential prey and avoid threats such as lions, tigers, and hunters, and of course habitat destruction. On a hot day, this magician of balance can sometimes be discovered taking a nap in a tree, its presence revealed by two legs and a tail hanging below the branches. TEXT: EIJA-LIISA HILTUNEN-NORDSTRÖM 11

58 around calendar the globe POWER-GEN INTERNATIONAL November Orlando, USA POWER-GEN Exhibits feature the latest in power products and technologies. STAND 1428 GASTECH 2006 December 4 7 Abu Dhabi, United Arab Emirates The 22nd International Conference & Exhibition for the LNG, LPG and Natural Gas Industries. STAND F 72 SALON MARITIMA PARIS December 6 9 Paris, France SEATRADE CRUISE SHIPPING March 12 15, 2007 Miami, USA International event for cruise line visitors and cruise industry suppliers. WÄRTSILÄ FINANCIAL INFORMATION The Financial Statement Bulletin for the 2006 financial year will be published on Tuesday 6 February The Annual Report 2006 will be published in Week 10, Wärtsilä s 2007 Annual General Meeting will take place on Wednesday, 14 March 2007 in Helsinki, Finland. MIDDLE EAST ELECTRICITY 2007 Firmly established and recognised as the premier energy event in the Middle East, February 11 14, 2007, Dubai, United Arab Emirates NEWSFLASH Wärtsilä and MAN Diesel to cooperate in research HERCULES-ß a wide-ranging cooperative research project - is being proposed by Wärtsilä and MAN Diesel, two world-leading Europe-based manufacturers of marine engines. Innovations and technological breakthroughs which result from the project will be used to reduce fuel consumption and emission levels in the next generation of marine diesel engines. Technology Demonstrator engines incorporating the new technology will be among the outputs of the four-year project, and some of the technologies developed will be validated in new vessels. Agreement on the project is expected in 2007 and funding proposals will be made within EU Framework Program 7. Wärtsilä Propulsion UK a worthy winner In September, Wärtsilä Propulsion UK won the RBS International Trade Award at the 2006 Hampshire Business Awards. Selection criteria were: k [CONTINUES ON PAGE 14] 12 Twentyfour Winners of the 2006 Hampshire Business Awards.

59 around the globe FIREWORKS Nothing feels more festive than a spectacular fireworks display at the end of a special day or event. Celebrating New Year s Eve, for example, just wouldn t be the same without the dazzling explosions of light, colour and sound that fireworks provide. The history of fireworks stretches back to ancient China and the Han Dynasty (206 BC to AD 220). The world s first firecrackers were made by roasting sticks of bamboo. The resulting loud bang, known as bian pao, was intended to frighten away evil spirits. As the centuries passed, Chinese people also began to use firecrackers as a way of praying for happiness and prosperity. The discovery of gunpowder in China made the invention of true fireworks possible. In ancient China, the knowledge and skills possessed by pyrotechnicians fireworks masters made them a members of highly-respected profession. In most modern cultures, fireworks add an extra and lively dimension to New Year parties, anniversaries, inaugurations and official openings. Competitions are arranged to reward the most captivating displays Dictionary LOW-SPEED ENGINE An engine whose maximum running speed is 300 rpm or below. Normally taken to be a crossheadtype two-stroke engine. OFFSHORE Industrial activity out at sea, such as drilling and pumping operations associated with oil or gas wells. Ro-Ro (ALSO RORO) VESSELS Ro-Ro stands for Roll-on/Roll-off, and describes a ship designed for carrying wheel-based cargo (including vehicles) which is loaded and unloaded by being driven rather than lifted using a crane. SIMPLE-CYCLE POWER PLANT In a simple-cycle power plant, the waste heat from the prime mover(s) is not used as the energy input for another power-generation process/ prime mover. APPOINTMENTS Mr Clas-Eirik Strand was appointed President, Wärtsilä China Ltd. and Director, East Asia Operations on 1 October Based in Shanghai, Mr Strand is also Chairman of the Wärtsilä companies in Japan, Korea, Vietnam and Taiwan. Mr Strand was formerly President of Wärtsilä in Switzerland and responsible for Wärtsilä s Ship Power two-stroke engines. Mr Lars Anderson was appointed Vice President, Wärtsilä s Ship Power two-stroke engines on 1 October Mr Anderson is a member of the Ship Power Board and reports to Mr Jaakko Eskola, Group Vice President, Ship Power. Mr Anderson is based in Winterthur, Switzerland. Dr. Martin Wernli was appointed President, Wärtsilä Switzerland on 1 October Dr. Wernli is a member of the Engine Division Board and reports to Mr Lars Hellberg, Chairman of Wärtsilä Switzerland and Head of the Engine Division Twentyfour7. 13

60 around the globe [ PEOPLE & FACES ] Swedish royal couple tours Wärtsilä A TOUCH OF HISTORY TEXT: LEILA WESTERBACK PHOTOS: KRISTER LÖFROTH ON 14 SEPTEMBER 2006, Wärtsilä had both the honour and the pleasure of introducing its operations to King Carl XVI Gustaf and Queen Silvia of Sweden. The visit to the Finnish company s Vaasa facilities was part of the City of Vaasa s 400th anniversary celebrations. Wärtsilä was the only industrial company to be included in the programme. THE ROYAL PARTY was introduced to the incredible size and power of the engines and the high level of turbocharging. Detailed questions regarding the engines and components clearly indicated that the Swedish king is very interested in technology and also knows a great deal about it. Some of this knowledge results from his military service in the Swedish navy. THE TOUR INCLUDED the construction site for new Wärtsilä 32/34 plant and the logistics centre, and finished in the courtyard. Sales Director Tore Björkman presented a Wärtsilä 20V34 gas engine awaiting shipment to Azerbaijan and explained that the engine would be travelling to its destination along an ancient route used by the Vikings. This observation generated so much discussion that the precise route had to be checked using a map. THE VISIT by King Carl XVI Gustaf and Queen Silvia was the culmination of the city s jubilee celebrations. It also added a touch of history, as the City of Vaasa was established by Carl IX of Sweden in [CONTINUES FROM PAGE 12] NEWSFLASH Commitment to international trade, evidence of versatility, imagination and persistence, increased export or import turnover, sales into new markets and Innovative products/services. Project Genesis cruise ship powered by Wärtsilä In July 2006, Aker Yards in Finland contracted Wärtsilä Corporation to supply six Wärtsilä 46 commonrail diesel engines and four Lips transverse tunnel thrusters for the 220,000 grt Project Genesis cruise ship being built for Royal Caribbean Cruise Ltd (RCL). The engines will be incorporated into the ship s diesel-electric power plant that supplies all propulsion, ancillary and hotel services. Project Genesis is scheduled for delivery in the autumn of 2009 and will be operated by Royal Caribbean International. Wärtsilä BLRT Services Klaipeda open for business The Wärtsilä BLRT Services Klaipeda joint venture started operation in September. Owned by Wärtsilä Corporation (51%) and the BLRT Group (49%), the new company offers full shiprepair services in the Baltic region, including the servicing of engines, gearboxes, propellers and other onboard equipment. In addition to its 70 employees, the new company can draw on the extensive resources of both Wärtsilä and BLRT s subsidiary Western Shipyard to meet specific service needs. Wärtsilä in Norway Three Wärtsilä companies in Norway: Wärtsilä Norway, Wärtsilä Propulsion Norway and Wärtsilä Automation Norway, are to be merged into a single company under the name Wärtsilä Norway. The merger is expected to come into effect on 1 January Order for 50 propellers in China The Wärtsilä CME Zhengjiang Propeller Co. Ltd joint venture in China has received an EUR 17 million order for 50 fixed pitch propellers (FPP) for delivery to two Chinese shipyards, the New Century Shipyard and the New Times Shipbuilding Co. Ltd., both located in China s Jiangsu Province. The propellers are destined for tankers and container ships scheduled for delivery in 14 Twentyfour

61 [ COLUMN ] Focus on core areas The Wärtsilä/CME joint venture is currently investing in a new propeller foundry in Zhengjiang which will enable the company to supply complete FPP and shaftline packages, as well as blades and hubs for controllable pitch propeller (CPP) installations. The new plant will be ready in June World s largest swinging bell Ordered by the Japanese entrepreneur Kiyokazu Shoji for his tourist resort in Gotenba City, the world s largest swinging bell has been cast at Wärtsilä Propulsion s foundry in Drunen in The Netherlands. As the huge bell exceeded the capacity of Royal Eijsbouts foundry, the two companies worked together to produce it, designing and building Drunen s highest-ever casting system, a mould almost 14 metres high. The new bell has a diameter of almost four metres and weighs more than 36 tons. Its first peal will be heard in Japan around Christmas IN 2000, WÄRTSILÄ DECIDED to focus its activities on Ship Power, Power Plants and Services (also called the Power businesses) and to gradually reduce levels of ownership in non-core sectors of the company. The latest steps in these areas were taken when Wärtsilä, together with SKF and Rautaruukki, agreed to sell the operating companies of Ovako to a Dutch-German investor group. This transaction will be finalized by the end of 2006 and is estimated to close during Q4/06. Earlier this year, in May, another step was taken by selling 10 Million Assa Abloy B-shares, reducing our stake in the company to just 2%. IN TRANSACTIONS OF THIS TYPE, timing is of the utmost importance to guarantee the best possible value for shareholders. Assa Abloy s share price had recovered to a reasonable level, while the bullish market situation in the steel industry enabled a withdrawal from Ovako ownership on optimal terms. When Wärtsilä became an owner of Ovako, the goal was to benefit from synergies between operations brought in from SKF, Rautaruukki and Wärtsilä. Ovako s business has now developed to a point where a change in ownership represents a natural step. The significant capital gains resulting from the above transactions increase Wärtsilä s cash flow and improve solvency. In actual fact, combined with a good operational performance and cash flow, these transactions will eliminate the Group s interest-bearing debt by the year end. SINCE AN OPTIMAL RETURN for shareholders calls for reasonable gearing, we can now study the possibilities for further development of the Group through acquisitions and/or improvement of the dividend stream. Raimo Lind Executive Vice President, Chief Financial Officer Wärtsilä Corporation 4.06 Twentyfour7. 15

62 around the globe [ YESTERDAY, NOW, TOMORROW Q&A ] My books TEXT: TERO SEPPÄLÄ HOW MUMBO-JUMBO CONQUERED THE WORLD A short history of modern delusions Francis Wheen British journalist Francis Wheen observes modern society and finds it has diluted, if not completely forgotten, the Age of Enlightment and its legacy. His claim is that instead of using common sense, we resort to mumbo-jumbo and delusions. In most cases, he excels in building a compelling case to support his observations. The themes flow from globalization, capitalism and stock market to sciences, religion and politics, as well as to conspiracy theories, business life, leadership and self-help gurus a real cornucopia of specimens. MEASURING SPEED The origin of knots The entertaining examples seen in almost everything and everywhere are the book s inherent strength but also a shortcoming. Nevertheless, Wheen s analytical collage is amusing and well worth reading. AUTHOR IS GENERAL MANAGER, PORTFOLIO PLANNING & VOLUME OPTIMISATION, WÄRTSILÄ CORPORATION Knowledge of a ship s speed through the water is an essential element in systems of dead reckoning, standard practice in the days before modern navigation instruments became available. YESTERDAY Standard equipment on all small vessels, the Chip Log consists of a sand glass to measure time and the chip, a small weighted wood panel attached to a reel of 150 fathoms (275 metres) of light rope. Marked with knots tied at equal distances of approximately eight fathoms (14.6 metres) along its length, the chip is cast into the sea behind the ship, and the resulting drag causes the rope to unwind from the reel. Counting the number of knots that go overboard in the half minute measured by the sand glass provides a remarkably-accurate estimate of a ship s speed. This is the origin of the knot, the nautical unit of speed, which is one nautical mile per hour. Since one nautical mile (6080 feet) is almost exactly the same as one arc minute of the earth s circumference, both ships and aircraft use this unit when calculating distances. NOW In addition to systems that use positioning information obtained from GPS satellites, pitometer logs, impeller logs and Doppler speed logs are all current methods of measuring speed through the water. In larger constant-draught ships fitted with CP propellers, the relationship between between propeller-shaft rpm and speed through the water is also a fairly consistent one, so engine speed can also be used for this purpose. TOMORROW As with the other tools used in navigation, mechanical methods of measuring speed are first supplemented, then eventually replaced by digital techniques using information obtained from satellite and other systems. All of these, of course, depend on the availability of reliable sources of energy. TEXT: RICK McARTHUR PHOTO: MIRVA KAKKO 16 Twentyfour

63 around the globe Where can you find this dog a symbol of loyalty? You ll find the answer on page 71. photo quiz 4.06 Twentyfour7. 17

64 around the globe [ COLUMN ] Automation STRENGTHENS OUR BASE TAKING A NARROW-MINDED VIEW, automation is great, just a fraction outside Wärtsilä s core business. So who wants to be narrow-minded? Not us. For years, we ve been delivering major turnkey projects in the power plant business, making sure our customers get not only state-of-the-art machinery in their power plants, but also the plant management systems - the automation. In the marine business, our traditional focus has been on main and auxiliary engines and propulsion, leaving electrical and automation systems and even other things that are closely related to engines to others. Many of our customers would however prefer to deal with fewer but stronger players in the market, those that can deliver complete packages, all the way from A to Z, from engines to turnkey systems and a full range of after-sales services. By expanding our services on the electrical and automation side, we strengthen our position in the marine business as a preferred one-stop service provider for entire vessels. The plan is not to become another manufacturer of general automation products and devices, but rather to focus on applications within our core businesses, using products and systems based on industry standards and open architecture. Our competitive edge will come from a new range of products and system designs which complement our existing technological abilities, and our comprehensive, in-depth understanding of customers needs in our traditional business areas. The way I see it, working on our core business in this way will make us a better and stronger supplier both now and in the future. Pekka Ahlqvist Vice President Automation 18 Twentyfour

65 Wärtsilä Quarterly Magazine [CORPORATE CITIZENSHIP] Wärtsilä supports Mesoamerica Center A LEADER IN PROVIDING ELECTRICAL GENERATION TECHNOLOGY TO POWER THE ECONOMIES OF CENTRAL AMERICA, WÄRTSILÄ HAS INSTALLED MORE THAN 1500 MW OF GENERATION CAPACITY IN THE REGION DURING THE PAST FIFTEEN YEARS. While doing so, Wärtsilä became increasingly aware of the rich history of this beautiful part of the world and its peoples. More than three thousand years ago. The region now known as Mesoamerica (southern Mexico, Guatemala, Belize, Honduras and El Salvador) was a vital cradle for many different but interrelated pre-columbian civilizations. It is only in recent decades that historians and archaeologists have begun to gain a more complete understanding of the area and its peoples. ARTS, LANGUAGES AND ARCHAEOLOGY As part of its commitment to development in the region, Wärtsilä is a supporter of the Mesoamerica Center, University of Texas (UT) and Casa Herrera, a new Guatemalan facility. Located in Antigua, this facility will allow international scholars, researchers and artists to interact directly with their peers in the Guatemalan community, and to open many of its activities to the public. Beginning in January 2007, historic Casa Herrera will house the programmes of the Mesoamerica Center, focusing on study of the arts, languages and archaeology of Mesoamerican indigenous cultures. DISCOVERIES FROM THE PRE-CLASSIC PERIOD Thanks to Dr. David Stuart and Dr. Julia Guernsey, two members of the UT faculty who work in the Mesoamerica Center, these cultures are speaking to us from the past. Recent discoveries made by researchers and others have helped to re-define the Preclassic period (300 BC 250 AD) in ancient Mesoamerica. Although long considered some sort of dark age, new discoveries have illuminated our understanding of the Pre-classic period as a time when written language, culture, and the arts flourished. Dr. Stuart s area of expertise is the ancient Mayan hieroglyphic writing system, while Dr. Guernsey focuses on tales told not in words but in the marks left by daily activities and artistic creations. She acknowledges that the stories uncovered by deciphering the Maya s written language are a vital piece of the puzzle, but adds that, for art historians like herself, Art speaks volumes, and was an equally important form of expression and communication. A VERY SOPHISTICATED CIVILIZATION Recent discoveries have provided researchers with crucial links between the Classic Maya and their antecedents, the Olmecs, who flourished during the Middle Pre-Classic florescence. As Dr. Guernsey emphasizes, these new discoveries confirm that The term Pre-Classic, with its suggestion of something that wasn t fully formed or developed, is a misnomer. Clearly frustrated by the use of this term, and its inaccurate implications, she continues The more we learn, the more we realize that what we re looking at is a very sophisticated civilization. A lot of the ideas we typically credit to the Classic Maya are actually much more ancient. Work by researchers such as Dr. Stuart, Dr. Guernsey and their Mesoamerican Center colleagues means these ancient voices will be heard more clearly in future years. AUTHOR IS VICE PRESIDENT, POWER PLANTS, WÄRTSILÄ IN NORTH AMERICA TEXT: FRANK DONNELLY PHOTOS: WÄRTSILÄ 4.06 Twentyfour7. 19

66 reportage Besides larger infrastructural elements there are also small but essential items that keep Japanese society functioning. The list features efficient trains, multi-function mobile phones, and high-tech seals. DETAILS MATTER 20 Twentyfour

67 [ AFRICA AMERICAS ASIA EUROPE OCEANIA ]

68 Guidance for travellers looking for the route they should take can be found on maps that display the subway lines in different colours. Each station has its own alphanumeric code. 22 Twentyfour

69 reportage TEXT: KATJA ALAJA PHOTOS: PETRI ARTTURI ASIKAINEN As the sun rises over Tokyo, the hustle and bustle begins in the tiny suburban apartments of the city s 12 million residents. After a quick breakfast, reminiscent of a European lunch fried fish, rice, vegetables and miso soup, a Japanese soup flavoured with soybean paste people hurry to perform their duties at work and school. Travellers prefer trains and the subway because they can sleep during the journey, while cars just get stuck in traffic jams. Tokyo s transport network, with more than 70 train and subway lines and 1000 stations, is bigger than its counterparts in New York and Paris. Tokyo also boasts Shinjuku, the world s busiest station, used by well over three million people each day. Essentially a giant hub where passengers change trains, Shinjuku Station has more than 200 exits. Guidance for those not sure of their route is available from a map that shows all the subway lines in different colours with alphanumeric codes for each station. The Shinjuku show is repeated every couple of minutes between 7 a.m. and 9 a.m. Doors fly open and masses of stylish businessmen, so called salarymen and business women briskly flow out. At almost the same moment, groups who are boarding trains step into super-clean compartments from the super-clean station, both of which are the Tokyo standard. When travelling to Japan s other big cities, people use Shinkansen, often called bullet trains because of their rounded shape and high speeds. The fastest, Nozomi, runs at around 300 km/h from Tokyo to Osaka and on to Fukuoka. In the future, passengers will be travelling at speeds of more than 500 km/h if development work on levitating magnetic trains is successful. UNIQUE FORM OF RUBBER PLAYS KEY ROLE Since early in the morning, employees of Japan Marine Technologies (JMT), Wärtsilä-owned and one of Japan s top marine equipment manufacturers, have been hard at work at the Toyama factory. They produce sterntube seals and bearings for the propulsion shafts used in ships. For trouble-free operation, one of a vessel s small but very essential components is a JMT Airguard 3AS, an anti-pollution, lip-type sterntube sealing system. It has a dual function stopping lube oil from leaking into the sea and preventing sea water from entering the sterntube by the ingenious use of an air barrier and multiple sealing rings. As it uses a unique, in-house-developed rubber compound in the seal rings, the most important parts of the seal, JMT has complete control over its production instead of purchasing the material from subcontractors. The quality of the rubber employed is of fundamental importance - it must be strong enough to resist both the pressure p Sushi delightful to the eye, and a delight for the palate. English in signs and publications is a rarity Twentyfour7. 23

70 reportage In certain parts of Tokyo, also streets are nonsmoking areas. Crossing the streets in Tokyo is like swimming in a sea of people. 24 Twentyfour

71 The quality of the rubber employed is of fundamental importance. of the seawater and the heating caused by the revolving propeller shaft. Research and development aimed at continuous improvement is integrated into everyday activities at JMT. It includes the endurance testing of rubber seal rings in hazardous operating conditions, fatigue testing and other methods of identifying improved materials that can be used in seal rings. Even though many other Japanese companies are moving production to China and southeast Asia to take advantage of lower production costs, the high quality of JMT products and the expertise and service consciousness displayed by the JMT team means that production of JMT Airguard 3AS lip seals in Toyama will continue. Since JMT is expecting significant growth in lip seal business, investing in Japan is a must. HEALTHY SEAWEED IN A BENTO At lunchtime, business people pour out of their offices in the Marunouchi business district, a key financial centre and home to several of Japan s largest corporations. Even salarymen on bikes, who usually favour pedestrian alleys, can be found here. Many head towards convenience stores to buy a proper bento, a ready-made lunch in a box. Beautifully arranged, bentos include rice, fish or meat and pickled or cooked Seal liners are an important component in JMT Airguard 3AS lip seals. Produced using a special type of highnickel-chromium steel, they offer optimum resistance to wear and corrosion. vegetables and possibly sushi, for example maki rolls made from rice, tuna and nori seaweed. Tasty seaweed is as essential to the Japanese as pasta is to Italians. It is an ingredient in miso soup, salads and rice dishes and also as a side dish. Seaweed contains many minerals, calcium and vitamins and is healthy just like the whole of the Japanese diet. It s no wonder that the Japanese have the longest life expectancy in the world: 86 years for women and 79 years for men according to the World Health Organization. On the other hand, eating habits are now changing as young people have discovered western fast food. People do not eat in the streets as this is considered to be impolite, but return to their strictly organized open-plan offices. After enjoying their lunch, employees continue working hard for their employers. Everyone is expected to stay late - especially those looking for promotion. It is commonly said that they should not leave the office before their superiors, and this can happen as late as 8 or 9 p.m. MOBILE PHONES OFFER MANY SERVICES While employees are busy at work, students, housewives and the elderly have time to shop in Tokyo s giant department stores, electronics shops and fashion boutiques. Many people head to Akihabara, the famous electric town, where box-like buildings blink in every possible p 4.06 Twentyfour7. 25

72 Manga comic-strip characters appear in many forms and in many locations. Some young people even dress the way their favourites do. colour. The electronic shops offer everything from the latest digital cameras to electronic components manufactured by both international companies and Japan s best-known brands: NEC, Panasonic, Sharp, Sony, Toshiba... Sony s MP3 player resembles a fancy lipstick. Salesman Gino Kuo Tsung confirms that it is the very latest model, continuing the current boom in MP3 players. Japanese people always want new gadgets, says Kuo Tsung, who is originally from Taiwan. Why is this? They are rich, says Kuo Tsung, and he s on the right track. In 2005, Japan s GDP per capita was some EUR 25,500. The Japanese are also extremely fond of entertainment. They are constantly fingering their big, clamshell-style mobile phones as they can use them to watch TV, write s, read news and manga comic strips, take photos, purchase goods from mobile-phone shopping websites and find out where they are or should be. Even if 7-8% of all electrical appliance sales in Japan are still made in Akihabara, it has lost clients to powerful competitors in Shinjuku. Akihabara is therefore focusing to an increasing extent on anime, i.e. animation, video games, toys and doujinshi - self-published manga comic strips or novels - a growing trend thanks to the development of personal publishing technology. Some doujinshi are alternative versions of existing manga or anime series, others are created from scratch. Extremely style conscious, the Japanese also love shopping for clothes. The most demanding consumers prefer the brand shops in the Ginza and Omote-Sand fashion districts. The Prada building in Omote-Sand is also architecturally fascinating an innovative six-story glass crystal which is soft despite all its sharp angles. Some of the glass is curved, giving you the sensation that the building is moving as you walk around it. HIGH-QUALITY SEALS KEEP VESSELS MOVING When JMT Airguard 3AS lip seals are ready for delivery to clients, they are loaded onto ships which transport them to shipyards in Japan, South Korea and China. One client is NYK Line, Japan s leading shipping and logistics company and also one of the world s largest, whose fleet of more than p 26 Twentyfour

73 reportage The Japanese are also extremely fond of entertainment. Glitz and glam covers and stickers for mobile phones come in every conceivable colour and form. There s a multitude of consumer devices, some so small that it s interesting to work out what they actually do. This is one of the newest MP3 players Twentyfour7. 27

74 Specialist engineers are on standby at strategic locations all over the world if an inspection should be required. Tokyo has been designed to be rail-centric, with major train stations such as Shinjuku, and suburban railways at street level. Even though expressways for cars have been built, the basic design philosophy continues. 28 Twentyfour

75 reportage 700 ships includes container carriers, VLCCs, LNG carriers, LPG carriers, bulk carriers, car carriers and multipurpose RoRo vessels. Recently, NYK Line has signed contracts for 20 large container carriers that will be fitted with JMT Airguard 3AS lip seals. JMT Airguard 3AS lip seals are fitted around propulsion shafts while a vessel is being constructed. Once a ship has been launched, access to the seals can only be gained during scheduled visits to harbour or dry dock. As the first sealing ring shuts out seawater and the second and third rings provide active security against oil spillage, lip seals ensure that ships can be kept on the move in an environmentally-friendly way. The durable construction of JMT Airguard 3AS lip seals means that maintenance is easy. NYK Line only has to arrange for replacement for the seal rings every five years, and the metallic liner usually lasts for the lifetime of a ship. While lip seals are in practice fail-safe, external factors such as fishing nets or very sandy water may result in damage. JMT is always on hand to provide immediate service. As well as providing NYK Line with consultation services, specialist engineers are on standby at strategic locations all over the world if an inspection should be required. SERVICE BEGINS WITH A GREETING After the working day is over, Japanese people head for the bright lights, often for social reasons. They go to bars, clubs, restaurants, cinemas and theatres, but are most passionate about karaoke and playing games. The best-known entertainment districts are Roppongi Hills, which offers nightclubs with an international flavour, and multi-faceted Shibuya and Shinjuku, where even the grasshoppers can be heard chirping. This is more than welcome as life in Tokyo puts a lot more pressure on what can be seen than on what can be heard. Of all the different games available, pachinko is a real favourite. The noise level in the Sega game centre in Shibuya is truly unbelievable it s as if one is in the middle of a battle. On the contrary, people of all ages are simply playing pachinko to their heart s content, trying to control numerous tiny steel balls being thrown into a combination slot and pinball machine. As a businessman checks his mobile phone in the middle of a game, the comical cat trinket he has attached to the phone sparkles. It s a Japanese thing, he explains, laughing. As evening turns into night, the small eateries serving yakitori - chicken on skewers and ramen, noodles with a variety of toppings in a delicious broth become increasingly tempting. Even though such places are thought of as fast food restaurants, the level of service is just as high as in the most expensive sushi establishments. The air is full of irassyaimase! the Nice to meet you! greetings used to welcome each group of diners. SHIPS BRING LIFE TO JAPAN Day after day, NYK Line ships arrive at Tokyo s harbour and other locations in Japan. They are very welcome as Japan s mountainous terrain means the Japanese would have a hard time doing without the wide range of imported raw materials they bring. Shops also receive the goods they have ordered from overseas suppliers. With reliability levels as high as %, including failures not attributable to JMT, every single JMT Airguard 3AS lip seal plays its part with the greatest distinction. It s one of the small but necessary details that keep Japanese society functioning smoothly. The trains and subways used by Tokyo s 12 million inhabitants are punctual, clean and safe. Even in a crowd of hurrying people, politeness is a fundamental part of the Japanese way Twentyfour7. 29

76 feature Innovation opens a path to PROSPERITY [FEATURE] 30 Twentyfour

77 TEXT: MARJATTA PIETILÄ ILLUSTRATION: KLAUS WELP INNOVATION activity is the most important competitive factor in the global economy. In this race, the US is clearly in the lead. While production is moving to low cost locations in Asia, Europe is gathering its innovative resources to bolster its economies. An innovation system is often understood to be a synonym for research and development (R&D). This is, however, not the case. While R&D activity is the core of an innovation system, to be innovative an economy must also have the ability to apply new technologies and succeed in creating framework conditions and structures that support change. This includes establishing a market with both active consumers and users of new services who will stimulate innovation. The best innovations are seldom created by experts in an existing field. The most fruitful soil for innovations is at the interfaces between different worlds, where customers and experts in different industrial sectors and science meet. Innovativeness is also something that is more associated with the young than with the old, because the latter are more cautious about the risks that innovation demands. Age itself does not set limits on innovativeness, but attitudes towards risk taking should be reconsidered. Success in global competition involves three factors: research and development, industrial manufacturing and the skills involved in p 4.06 Twentyfour7. 31

78 feature Text: Marjatta Pietilä Revolutionary sources of light The Millennium Technology Prize is the world s largest technology prize. It is awarded for a specific, groundbreaking technological innovation that improves the quality of human life, contributes towards the realization of human values, and encourages sustainable economic growth. The prize of one million euros and the Peak trophy were presented in September to Professor Shuji Nakamura by Tarja Halonen, President of the Republic of Finland. Professor Nakamura developed new and revolutionary sources of light-bright-blue, green and white light-emitting diodes (LEDs) and a blue laser. His innovation launched a completely new sector in lightproducing semiconductor research and development, and has made possible the widescale industrial production of energy- saving LED lights. Not only do they have much longer lives than normal incandescent lamps, LEDs consume far less energy. According to Professor Nakamura, using LEDs for all forms of lighting could halve the amount of electricity used for this purpose. One of the future applications for Professor Nakamura s invention is the sterilisation of drinking water. The use of ultraviolet LEDs makes the process of water purification both cheaper and more efficient. In data-storage and transfer applications, using the light generated by blue lasers means that the amount of data stored on CDs or DVDs can be five times higher than is possible using current techniques. Professor Shuji Nakamura was born in Japan in He has worked in the US at the University of California, Santa Barbara since The Millennium Technology Prize is funded by the Millennium Prize Foundation and awarded every second year. The foundation was established by Finnish organisations, industrial concerns and the Finnish state. The first Millennium Technology Prize was awarded to Sir Tim Berners-Lee in 2004 for his invention of the World Wide Web. commercialisation. In terms of R&D skills, the US represents the highest levels. In manufacturing, the focus has moved to Asia, but in the commercialisation of new innovations the USA is, once again, at the top. In all these areas, Europe is lagging behind and faces great challenges in improving its performance, if it is to maintain a competitive edge. China and India will also be strong in manufacturing in the future, and their share of research and development activity is increasing. Currently, although they are training large numbers of scientists and technologists, they still have a long way to go before they can be called innovative societies. In China, societal structures are still centralized. India lacks an environment that supports innovation. Both societies also have many unsolved problems in their framework conditions. Technology used in production is mostly imported, not developed by domestic concerns. Also, the basis for innovation is not solely educational or material factors, there must be incentives and a culture that supports change in both attitudes and performance. Success cannot be bought by simply investing in R&D. Investing in research and development is a process through which money is used to create knowledge. Innovation, on the contrary, is a process in which knowledge is used to make money. While the latter process is poorly managed in Europe, the US has succeeded in integrating R&D investment and its application. North Americans have created entrepreneurial structures where risks are turned into victories and almost all innovations are tested in the 32 Twentyfour