Saturday, November 8, 2008

Commission announces plans for sale of Polish shipyards

European Competition Commissioner Neelie Kroes today (Nov 6) announced plans for sale of the Polish yards saying, "Clearly, today's decision is not the one which the shipyard workers would have liked. This is without a doubt one of the hardest proposals to the Commission that I have had to make as Competition Commissioner."

Blaming the Polish authorities for the present state of affairs the competition commissioner said, "The sad reality is that the very large subsidies received were consistently used for day to day operations, to keep the yards going in the short term rather than invested to make the yards viable in the long term," adding, "...even though shipbuilding has been booming worldwide and prices for new ships rising, the yards in Gdynia and Szczecin were still making a loss on every ship they produced."

"In particular, despite further large amounts of state aid and substantial job losses, the plans would not ensure the yards' commercial viability," the Commissioner lamented.

Asked if she will go to Poland to fulfill the promise of delivering the plans to the Polish shipyard workers in person, Commissioner told journalists, "I am planning to go to Poland and visit three shipyards as soon as possible (to present the plans as promised by me)," adding, "It will be in early December but earlier the better."


Outlining the sale procedures, the Commissioner said, "The assets have to be sold at market price to the highest bidder. The tenders must be non-discriminatory, ensuring access to all types of potential buyers, irrespective of the purpose of their investment. No conditions can be attached to the tenders (for example, a requirement that a bidder purchases all the assets of a given yard)."

"The sole award criterion for the selection of the winning bid will be revenue maximisation for the benefit of the yard's creditors," said the Commissioner adding that investment companies and real estate developers will also be allowed to bid in these tenders.


Trying to sooth the frayed nerves of shipyard workers, Commissioner Kroes told journalists, "The Commission can help workers at these yards to find alternative employment. My colleagues Commissioners Vladimir Spidla and Danuta Huebner have offered assistance in devising flanking measures under existing EU programmes to find solutions for the shipyards' workers and these regions that will help them through the potentially difficult times ahead."


Regarding the Gdansk shipyard, the Commissioner said, "we have not yet taken a decision. Gdansk is in a slightly different situation than the two other yards because it is smaller, it is already privatised and the level of subsidies received is considerably lower than in the case of Gdynia and Szczecin. Moreover, the new owner has already invested considerable sums in the Gdansk yard."

Throwing the ball back into the court of Warsaw, Kroes said, "The Polish authorities now have an opportunity to submit a restructuring plan for Gdansk alone for the Commission to examine."


Since 2002, Gdynia Shipyard benefited from various aid measures (in particular capital injections, loans and tax write-offs) amounting to 700 million Euro and from production guarantees of 916 million Euro, the Commission stated, adding, "Szczecin Shipyard received aid of one billion Euro as well as production guarantees of 697 million Euro."

The Commission concluded, "the decisions require that Poland recovers from the yards all state aid unlawfully granted since May 2004."

Adding his voice to the decision, Commission President José Manuel Barroso said in a statement, "We have worked long and hard to find a solution that is fair and sustainable. For the workers and businesses in Poland, but also for people working and doing business elsewhere. The solution that we have agreed with the Polish authorities offers the best possible prospects for future jobs and viable activities at these historic sites."


Comparing the decision with the approvals that the Commission has given to rescue aid in the banking sector, the Commissioner said, "we have been authorising rescue aid for banks whose failure could have had catastrophic knock-on effects on Member States' financial sectors, and in turn Member States' economies as a whole, potentially harming seriously every citizen and every business in Europe."

"The rescue aid for banks has been authorised for relatively short periods. If the banks concerned receive aid going beyond pure rescue, they too will have to undergo restructuring to restore their viability, just as the shipyards were supposed to do," Kroes, the competition Commissioner concluded.

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