Polish Shipyards
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018 – June 2005 POLISH SHIPYARDS General The European Union had given Poland permission to grant aid to shipbuilders in order to The shipbuilding industry still ranks high in the counterbalance competition from South Korean Polish economy and holds the fifth place in the shipyards. On January 25th 2005 the Council of world’s shipbuilding league well behind South Ministers voted for the project of a resolution on Korea, Japan, China and Germany. subsidies to contracts for certain types of seagoing When considering Poland’s great trade deficit, the vessels.The resolution is to bring into effect TDM industry was the third major Polish exporter in Temporary Defence Mechanisms for Polish 2001 and it still contributes a certain share to the shipyards in the way of extending direct subsidies improvement of the country’s balance of trade. to contracts for building four types of ships, After the breakdown of the communist regime and i.e. chemical tankers, container carriers, product the collapse of the COMECON and the Warsaw carriers and LNG gas carriers.The TDM system is Pact, Poland had to encounter severe problems financed by the State Treasury through the Agency caused by the fading away of traditional customers of the Ministry of Economics and Labour. and not clarified payments from clients in the The subsidies reach 6 % of a contract’s value. former Soviet Union.Almost all shipyards have The proposed resolution assumes that within 3 been facing the threats of bankruptcy and those years i.e. from 2005 – 2007, the payments will that survived so far have been given repeatedly amount to 375 million Polish zloty. massive direct and indirect financial aid by the Polish Government.There is evidence that a last Although developing appropriate understanding minute state aid to the ailing industry was granted for the huge potential of social unrest in the Polish on the 30th of April 2004, a couple of hours before shipbuilding industry, the historical role of the the accession to the European Union. country and Solidarnosc as the birthplace of the www.amem.at 018 – Polish Shipyards Seite 2 worker’s movement, the role they have played in bringing the communist regimes in Eastern Europe to a temporary end, and the brutal challenge of unfair competition from the Far East, Poland at the end of the day will not be able to avoid the Opening of Procedures by the Commission according to Article 87 of the Treaty because of sustained subsidies apart from the EU Temporary Defence Mechanisms. Despite a drop in employment, going down from 70.000 people in the 1980s to 37.000 by the end of the 1990s and 16.000 in 2004, the shipbuilding industry remains an important segment of the national economy, with another 80.000 employees in the marine equipment supplier’s industry.The shipbuilding sector is almost fully export-orientated, with more than 90 percent of the production being Over the period of 1996 – 2000 Polish shipyard designated for export – a unique situation in the production was relatively stable at a level of Polish economy – of which 80 percent go to the approximately 500000 cgt.This was the first European Union countries, Germany and the period of an attempt to restructure and consolidate Scandinavian countries being the biggest customers the Polish shipbuilding industry.From 2000 onwards and supporters of the Polish economy. the sector had considerably deteriorated as the industry was adversely affected by domestic and The industry’s major weaknesses were and external factors.When newbuildings were unfortunately still are: contracted in 2000, prices were extremely low and the complexity of orders was relatively high. 1 overcapacities This and the excessively high exchange rate of 1 lack of state of the art production technologies the zloty and a slowdown of the economy in 1 lack of financial capabilities Europe and the USA, negatively influenced the 1 low productivity due to poor labour efficiency financial situation of the enterprises. Paired with 1 unproportionally high labour force high prices for raw materials and energy, plus the 1 non compliance with Western European (EU) aggressive marketing campaigns of the Asian environmental standards shipbuilders spearheaded by the Koreans, this 1 no covered dry docks resulted in a very difficult situation which hit almost all shipyards and culminated in the 2002 In other words the legacy of a state owned industry bankruptcy of Stocznia Szczecinska Porta Holding being part of a planned, communist economy. when the shipyard lost its financial liquidity. In addition to that, the elite of the labour force is Financial problems also affected the Gdynia migrating from Polish shipyards into Western Shipbuilding Group and forced the diesel engine Europe. manufacturer H. Cegielski to temporarily stop production because of liquidity problems The strengths of the Polish shipbuilding (i.e. unpaid invoices from the Polish shipyards). community are A second phase of restructuring and consolidating 1 good R&D capabilities was initiated during the EU accession phase, but 1 cheap labour costs and a again no serious genuine private investors were 1 strong, domestic equipment suppliers industry willing to take stakes in this ailing industry. www.amem.at 018 – Polish Shipyards Seite 3 So in principle the industry remained under the Consortium.A platform for increased internet-based ownership, influence and responsibility of the communication of shipyards and marine equipment Polish Government.Although under completely suppliers is available to the Gdynia and Szczecin different legal bankruptcy systems, the pattern of Shipyards as well as to the Technical Universities “restructuring” in Poland is to a very high extent of Gdansk and Szczecin based on the AVEVA-Tribon similar to that of Korea. Shipyards go repeatedly portal allowing for further standardization of bankrupt, each time being given massive aid by production and materials/equipment.This Tribon the Government and generous debt forgiveness data base will be accomplished by the Polish by the state owned banks in order to be finally marine equipment suppliers data base developed re-established under a slightly changed company by CTO. name, but with almost no improvement of the production technologies because of financial shortages. Co-operation with Vietnam In 2004 the situation of the Polish shipbuilding Poland has been taking a very active part in the industry changed a little when in a partly development of the shipbuilding industry in speculation driven order boom, Korea and China communist Vietnam.The Vietnam shipbuilding were not willing anymore to add low priced Industry Corporation Vinashin has imported contracts to their bulging order books and equipment worth more than 50 million USD from shipowners started to buy ships progressively in Polish companies.The equipment was part of a Poland, where capacities seemed to be available – 70 million USD credit agreement between Poland but reality was teaching a different story in the end. and Vietnam which will expire by the end of 2005. Many projects were delayed with all the financial and commercial consequences questioning the Apart from Poland, massive support is given by reliability of the Polish shipbuilding industry. Korea (Hyundai) and Japan to develop management know how and production technologies. Boosted Now the industry might be facing the third major by the current boom in shipbuilding and strongly attempt to consolidate the shipbuilding activities assisted by the leading equipment supplier countries in Poland. Szczecin New Shipyard, the Gdynia from Europe, the Vietnamese shipbuilding industry Shipbuilding Group and some selected Polish soon will reach the declared goal of an increased equipment suppliers shall form the Polish Shipyard domestic share in production. Statistics In comparison – the order book of the Korean shipyards at the end of the last year is almost ten times bigger – 918 ships – valued at USD 57.7 billion, enough to keep the yards in Korea busy until early 2008! In 2003 Polish shipyards have built 14 ships, 16 less than in 2002, with a total of 478000 dwt and a value of 415 million USD, 300 million down on 2002. In 2004 Polish shipyards have built 25 ships with a total of 545700 dwt equivalent to 448700 cgt. www.amem.at 018 – Polish Shipyards Seite 4 Production output in cgt 1999 2000 2001 2002 2003 2004 Gdynia Group 240.000 330.000 325.000 360.000 110.000 240.000 Szczecin New 200.000 140.000 135.000 90.000 175.000 184.000 Others 18.000 24.000 17.000 45.000 1.100 26.000 Total 458.000 494.000 477.000 495.000 286100 450.000 Production output number of ships 1990 2000 2001 2002 2003 2004 Gdynia Group 11 21 17 16 4 9 Szczecin New 17 9 8 5 9 8 Others 6 4 3 9 1 8 Total 34 34 28 30 14 25 Order book newbuildings in cgt 1990 2000 2001 2002 2003 2004 Gdynia Group 460.000 1,350.000 1,160.000 870.000 1,000000 1,140.000 Szczecin New 600.000 670.000 720.000 350.000 570.000 900.000 Others 15.000 17.000 28.000 9.500 50.000 65.000 Total 1,075.000 2,037.000 1,908.000 1,129.500 1,620.000 2,105.000 Order book number of ships 1990 2000 2001 2002 2003 2004 Gdynia Group 34 57 46 32 36 42 Szczecin New 31 35 32 15 26 40 *) Others 3 5 5 4 13 13 Total 68 97 83 51 75 95 *) included in this number are (2) ships being transported in sections to Vietnam and assembled there. www.amem.at 018 – Polish Shipyards Seite 5 Order Book as per 31st December 2004 Commercial vessels Naval vessels Gdynia Shipyard Group SMW Stocznia Marynarki Wojennej (2) LPG carriers;78500 m3 (6) Gavron Class Multipurpose Meko Type (12) Car carriers; 6600 cars Corvettes; 1600 tons full load, (4) Car carriers; 2000 cars Project 621.