October 20, 2004
EC demands shipyard subsidies be repaid
The European Commission is demanding that shipyards in Spain, Germany and Greece repay what the EC deems were illegal subsidies by their national governments. The yards are Izar, Kvaerner Warnow Werft and Hellenic Shipyards. In the case of Hellenic Shipyards, not only must subsidies be repaid but "certain illegal provisions must be repealed. "
The Commission has established that out of this amount Euros 556 million has been used to cover losses and to provide other forms of support to IZAR's commercial shipbuildingactivities. The rest of the capital was used to cover social costs and other costs linked to past and recent military activities of IZAR and its predecessor Bazan. Funds for military activities are not covered by the European Union's state aid rules. But the Euros 556 million aid provided for IZAR's non-military activities is not in line with the rules and the Commission, therefore, concludes that this amount has to be recovered from IZAR.
The restructuring period lasted from 1994 to 1998, after which the shipyards should have become profitable. This did not happen, and the shipyards have continued to generate losses.
Temporary defensive mechanism. The Commission in 2001 proposed a temporary defensive aid to help EU shipyards face the unfair Korean competition in market segments such as product-, chemical- and LNG-tankers and containerships. This aid, of up to 6 percent of the contract value per ship, has been available since October 2002 and the provision was recently extended until March 31, 2005. *
InterSHIP is a Euro 38 million research project, financed jointly by Euroyards and the European Commission and designed to improve the competitiveness of European cruise, ferry and ro-pax shipbuilders, to develop safer and more environmentally friendly ships considering their entire life cycle, and to achieve a drastic reduction of building and development costs as well as time-to-market of innovative solutions.
"LeaderSHIP 2015" is a Commission initiative aiming at strengthening the competitiveness of EC shipyards. The Leadership 2015 Group has identified a number of priorities in the field of maritime industries: strengthening R&D and innovation, establishing a level playing field at world level, developing financial and guarantee schemes, ensuring the protection of intellectual property rights, and providing access to a skilled workforce. Implementation of these priorities will be subject to particularly close scrutiny. In both cases, this will mean implementing the guidelines proposed by the Commission and adopted by the Council on the basis of the recommendation of the High-Level groups.
One if the first results of LeaderSHIP is support for innovation, and was included in a new Framework on state aid to shipbuilding, which has been applicable since January 1, 2004 and which allows up to 20 percent innovation aid for shipbuilding for the innovative parts of the project. Shipbuilding is the only industrial sector in the EU that has access to such aid. and naval shipbuilding, and ship repair.