Poland's Gdansk shipyard must slash capacity in return for EU approval to keep Euro 251 million in government subsidies, the European Commission said Wednesday.
Poland's Gdansk shipyard must slash capacity in return for EU approval to keep euro251 million in government subsidies, the European Commission said Wednesday. The yard was threatened with closure during a four-year European Commission investigation into whether government capital injections, tax write-offs, loans and guarantees should be repaid because they might be illegal and damaging to competition. Regulators said that they could now approve the subsidies because a new restructuring plan to reduce capacity would remove the advantage the yard received from years of government help.
The plan will close two of the yard's three slipways and cap production. There was no mention of how many jobs will have to go. Workers have claimed that the work force could shrink by a third with the loss of some 1,000 jobs. The EU executive said shipbuilding capacity has to be reduced to compensate for seven years of government handouts that boosted the yard's output, giving it an unfair advantage over rivals and distorting competition for shipbuilding across Europe. In return, it is authorizing a euro35 million state subsidy and a euro122 million export guarantee until 2012 that the yard must still receive from the Polish government. It also approved an earlier euro94 million subsidy that the yard has already got.
Last year, the EU executive blocked a plan by the yard's owner, Ukraine-based ISD, to merge it with another in Gdynia because it said it would use government money to keep an unprofitable business afloat. ISD bought the yards from the Polish government when they were privatized in November 2007. EU Competition Commissioner Neelie Kroes said it was "one of the longest and most difficult cases" she has dealt with but the outcome would keep the yard viable for many years to come. The docks have played a major role in Polish history. The Gdansk yard is the birthplace of the Solidarity trade union, which launched the nation's peaceful anti-communist revolt in the 1980s.