In respect of Wartsila brand engines, the company's strategy is to produce the most important parts themselves and outsource the rest. In total Wartsila Power Divisions has around 600 suppliers, spread throughout Europe and indeed the world. Some parts (such as crankshafts) can only be sourced from a few specialist suppliers, capable of producing such high technology products. Less sophisticated components tend to be sourced from Finnish suppliers.
In addition, the company has taken to developing long term relationships with many of its suppliers and to adopting a partnership approach. These suppliers are involved at a very early stage in the development of new engines.
1.4 Competition Aspects
In 1999 Wartsila Power Divisions supplied engines with a total output of 2,500 MW directly together with a further 2,600MW through its licencees. This represents a significant increase on 1998 when it supplied 2,100 MW directly (there being no information available in respect of licencees) and 1997 when it supplied engines with a total output of 1,900 MW.
According to the publication Diesel & Gas Turbine Worldwide, between June 1998 and May 1999 Wartsila Power Divisions captured 36 per cent of the medium-speed (four-stroke) market for marine engines and 35 per cent of the low-speed (two-stroke) market. These figures represented increases from 28 per cent and 31 per cent respectively recorded during the previous 12 month period (June 1997 to May 1998). In addition they indicate that Wartsila Power Divisions is the market leader in respect of the supply of medium-speed engines, ahead of competitors such as MAN, Caterpillar and Rolls-Royce. In respect of the low-speed engine market these figures show Wartsila Power Divisions to be the second biggest supplier, behind MAN and ahead of Mitsubishi.
In the overall market for main marine and auxiliary engines Wartsila Power Divisions was reported as having a market share of 29 per cent (up from 25 per cent the previous year). This reflects the fact that it is only a very minor player in the high-speed engine market.
Wartsila Power Divisions believes itself to be particularly strong in the cruise ships market, and reports that in 1999 it secured a market share of more than 50 per cent.
1.5 Investment Policy
The company undertakes a rolling three year programme of investments in its manufacturing operations. In 1999 investments in production were mainly focused on upgrading test run facilities, with projects completed at the Vaasa factory and started in Turku.
