- Published: 13.09.2018.
We are trying to find a solution for maintaining jobs, production and shipbuilding industry in Pula and Rijeka
Prime Minister Andrej Plenkovic said in Pula on Thursday that it was the government's political will to do all it could in its power to help the Uljanik shipyard and the final solution required the cooperation of the company itself and the local community and a political consensus.
The destiny of the shipbuilding sector is essential, Plenkovic said at the start of a government session, saying that that is why some cabinet members, along with the county prefect and mayor, visited the Uljanik dock before the cabinet meeting and spoke with the management board, unions and workers.
"We are aware that maritime affairs and shipbuilding have a long tradition in Croatia, and how they connect our people, our economy, our cities, our culture, our identity with the sea and shipbuilding," Plenkovic underscored.
He mentioned that in the late 1980s, Croatia ranked 3rd on the global scale of shipbuilding countries whereas today it ranks 9th, accounting to to 0.23% of so-called compensatory gross tonnage. In European standards, he added, Croatia is in the second place with 17.1%.
Shipbuilding accounts for 2% to 5% of the total number of people employed and directly employs 7,500 workers, and accounts for 0.8% to 1.8% of GDP and for 10% to 15% of exports.
"All that is important to have a broader picture of shipbuilding and its place," Plenkovic said, recalling that prior to its admission to the EU, Croatia's shipbuilding went through the process of restructuring and at that time, Uljanik was the only dock that did not have any difficulties and it even assisted in the restructuring process in the 3. Maj dock.
"Unfortunately, today Uljanik is in hardship and the journey forward primarily depends on a quality restructuring plan, finding a sustainable plan for a strategic partner whose objective is to preserve jobs, maintain production and the shipbuilding industry in Pula and Rijeka," he said.
Recollecting the government's role, he recalled that in January the government issued a guarantee of HRK 716 for the shipyard's overhaul which was approved by the European Commission and that with its decisions, the government had enabled wages to be paid to workers for July and August. The government expects the management board to revise the restructuring plan so that a solution that is sustainable in the long-term can be found, Plenkovic said.
He noted that over the past 25 years or so, shipbuilding in Croatia was granted about HRK 31.7 billion in state aid other various ways. After entering the EU, over the past 5 years, another context has existed and all government decisions have to be in accordance with Croatian and EU regulations and taking account of the fundamental principles of a market economy.
We are trying to find a solution for a better future as the principle that is important for us and we are less interested in seeing who is more guilty or less for something that happened before. I think that that is the only approach that will bring a solution because that is what we have to insist upon," he concluded.
Prime Minister Andrej Plenkovic said on Thursday there were three scenarios for the Uljanik shipbuilding group - insolvency, a restructuring plan acceptable to the European Commission and the government, or a new strategic partner.
The first scenario is the worst one and envisages applying an insolvency procedure envisaged by Croatian law. This does not mean the end, but some kind of restructuring, as prescribed, he said at a cabinet session in Pula.
The second scenario is modifying the current restructuring plan to make it viable and acceptable to the European Commission and the government, while the third envisages another potential strategic partner finding a new solution.
"The government has a lot of good will to help in finding a solution," said Plenkovic.
The government is interested in the survival of profitable shipbuilding in the cities of Pula and Rijeka and the counties of Istria and Primorje-Gorski Kotar, but it is necessary to find a new model which will not generate the problems the Uljanik Group is faced with, he said. "That's our objective and our political will."
Plenkovic said the dialogue with the European Commission was constant and detailed, and that the impression was that there was good will in the Commission. The government will continue with its engagement based on that, he added.
Shipbuilding is also a political issue, resulting in discussions on who is more and who is less to blame, but the incumbent government is not to blame as this year it approved a guarantee for a loan which kept the Uljanik Group alive and it is making a lot of effort to help the group weather the current crisis, which it will continue to do, Plenkovic said.
Today we are here to ensure a positive scenario for the Uljanik Group, he added.
One in four kuna of docks' revenues was at taxpayers' burden
At the cabinet session, Sinisa Ostojic of the Croatian Shipbuilding Corporation Jadranbrod presented the state of Croatia's shipbuilding. The docks employ 7,500 people and 2,000 subcontractors, which is 60-70% less than in the 1990s.
The docks have lost a large part of their professional workforce as well as their presence on the global market, and instead of being oriented to big series and relatively simple ships, they have turned to products with higher added value, Ostojic said.
To a large extent, Croatian shipyards share the same fate as those in the rest of the world as 90% of ships are intended for export, and aside from LNG tankers and cruise ships, other products are much less in demand, he added.
Croatian shipyards have 34 vessels in their order books worth US$ 1.3 billion whose delivery is expected over the next three years, Ostojic said.
Between 1992 and 2017, state subsidies amounted to a total of HR 31.7 billion which helped build 442 vessels, with the cost of building amounting to HRK 115 billion, but their sale generated an income of HRK 83 billion. This means that 22% of the value of the delivered ships has been secured through state aid, Ostojic said.
"One in every four kuna of the shipyard's income was at taxpayers' burden," he stressed.
Commenting on reasons for the bailout of the Uljanik Group, Ostojic said the reaction of the management was inappropriate and the reaction towards the owners was late.