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General overview of sector

The shipbuilding sector, an extremely diverse industry, is highly cyclical and has, overall, seen an almost continuous decline in employment. The issue of state aid and international competition, especially from Asia, is key to this sector. The industry has been badly buffeted by the global economic and financial crisis since 2008, with an unprecedented collapse in the demand for new vessels – around 90% – and almost 15,000 jobs under threat across the EU.

The shipbuilding sector – also covering ship repair and breaking – encompasses the construction of commercial vessels, warships, fishing boats, pleasure craft, etc. It is an extremely diverse industry, in terms of both company size (ranging from a few dozen to several thousand workers) and structure: some shipyards specialise in building new vessels, others in repair and maintenance; some work only for commercial clients while others are under contract to governments, etc. Furthermore, given the geographical requirements of shipyards (coastal regions with access to deep water), this industry does not exist in all Member States. It is mainly to be found in what are known as the EU-14 (Germany, Netherlands, United Kingdom, Denmark, Poland, Finland, France, Italy, Croatia, Malta, Spain, Portugal, Greece and Romania).

Business in this sector has traditionally been rather cyclical. Many large oil tankers and bulk carriers were built in the 1970s, then during the 1980s shipbuilding suffered a severe decline around the world and in Europe, but activity picked up again in the 1990s when the fleet needed to be replaced. Over and above this cyclical dimension, employment in shipyards has been shrinking almost continuously since the mid 1970s (down by 70% according to the European Commission, in “Recent developments in the European Sectoral Social Dialogue”, DG Employment 2006). This can mainly be explained by the huge growth in foreign competition, especially from Asia: Japan, South Korea and China. Nowadays there are still approximately 300 shipyards in Europe, directly employing around 150,000 highly skilled workers. (The total number of direct and indirect jobs, including subcontractors, is estimated at 600,000.) Globally, the EU is most competitive in passenger ferries and cruise ships, while the Korean shipyards focus more on oil tankers and container vessels.

The issue of state aid has long been key to this sector, in other words aid granted to shipyards and ship-owners for the building, repair or alteration of vessels. An agreement was reached at the OECD in 1994 on “normal competitive conditions” in merchant shipbuilding but did not enter into force because it was not ratified by all the signatories. The European Commission then decided to push for the adoption of stringent European regulations. In 1998 the Member States agreed, with some difficulty, to put an end to operating aid as from 2001. This agreement divided the EU between countries in favour of the ban on aid (United Kingdom, Netherlands, Scandinavian countries) and those against it, representing 70% of European shipbuilding (Germany, France, Spain, Italy, Greece). But the agreement was reached subject to negotiations then underway with South Korea, accused at the time of unfair competition (a study by the shipbrokers BRS revealed that South Korean shipyards had won 43% of worldwide orders in 2000). Moreover, the agreement was roundly criticised by the social partners in the sector, who had been calling for an extension of the state aid scheme “until such time as the conditions for global competition have been re-established” (Agence Europe, 20 November 2000).

Operating aid did come to an end on 1 January 2001, despite everything, but that was followed in 2003 by the adoption of a "Framework on state aid to shipping" relating to special provisions such as aid for investment in innovation, closure aid, export credits, development aid and regional aid. Ultimately, although the European shipbuilding industry has held on to about 20% of global capacity, there can be no denying that it faces a considerable number of challenges.

A high-level advisory group, LeaderSHIP 2015, was set up in 2003 to address these challenges and the associated need for restructuring. The group comprises business leaders, the social partners and members of the Commission and the European Parliament. In 2006-2007, after many difficult years of orders drying up, the shipyards experienced a real boom in construction work (CESA, annual report 2007). But since 2008 they have been badly buffeted by the global economic and financial crisis, with an unprecedented collapse of around 90% in the demand for new vessels and almost 15,000 jobs under threat across the EU.

ETUI and Observatoire Social Européen (2010) European Sectoral Social Dialogue Factsheets. Project coordinated by Christophe Degryse, online publication available at www.worker-participation.eu/EU-Social-Dialogue/Sectoral-ESD