Government ready to help struggling shipyards to make it through recession

Turku yard hit worst by economic downturn

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By Kristiina Yli-Kovero
     
      The Finnish government intends to take steps to secure the survival of the country’s shipbuilding industry past the present crisis.
      As ways of doing this, for example innovation and investment support payments and the advancement of pending orders are being suggested.
      Smaller shipyards could be helped by advancing vessel procurements by the state.
      On the order list there are four support and transport vessels, for which no funds have been allocated in this year’s budget.
      According to Minister of Economic Affairs Mauri Pekkarinen (Centre Party), the shipbuilding sector is of such importance to Finland that there is no other alternative but to secure its future. Pekkarinen believes that the government will reach a decision within the next couple of weeks as to what type of support measures to introduce.
     
The aim of the state support is to reduce the overheads to Finnish shipyards and to increase their competitiveness in the price war against South Korean and Chinese players. Both of the Asian countries subsidise heavily their shipbuilding industries. Within the EU subsidies on such a scale are no longer possible.
      Everywhere in the world, the shipbuilding industry has been driven into great difficulties by the global recession. New orders have dried up almost completely.
     
In Finland the success of the branch has rested squarely on turning out a stream of large cruise liners, for instance the giant vessels delivered to the likes of Royal Caribbean Cruise Lines.
      Of late, however, no massive new orders for these floating palaces have been received.
      Since the summer of 2008, STX Finland has received only one commission.
      The South African Department of Environmental Affairs has placed in an order for a EUR 116 million Antarctic supply and research vessel.
      The order will bring some 600 man-years of work to STX Finland’s Rauma shipyard. The ship is scheduled for delivery in the spring of 2012.
     
Of the three shipyards of the South-Korean-owned STX Finland, the situation is best with the Rauma shipyard and worst in Turku.
      If there are no new assignments forthcoming, all the workers at the Turku shipyard will be left without work once the gargantuan Allure of the Seas cruise liner has been delivered to the client (RCCL) in November of this year.
      In all, there are 2,200 workers at the Turku shipyard, 700 of whom are already temporarily dismissed. Four hundred workers have been given notice.
     
The government initiative is hoped to provide the shipyard with domestic orders worth EUR 500 million, and to help half of the workforce to keep their jobs.
      Among the potential customers in shipping companies, for example the ferry operators Viking Line have announced that they will start renewing their fleet operating between Turku and Stockholm.
     
The Helsinki STX shipyard has not received any new orders, but the oil clearance vessel Halli is currently undergoing a refit there.
      The idea is to prolong the ship’s operating life by a couple of decades.
      After Halli is floated out, the shipyard will receive a Danish car ferry for a refit.
      The shipyards not receiving new orders would also spell significant difficulties for the numerous subcontractors in the field.
      In the Helsinki and Turku areas, around 14,000 jobs would be put in jeopardy.
     
According to STX Finland CEO Martin Landtman, the worst crisis will be over in a year’s time at the earliest, if faith is restored in economic growth.
      Landtman does not believe that the South Korean owner would shut down the expensively-bought shipbuilding activities in Finland, as long as there are orders and the operation is profitable.
      STX bought the European shipyards of the former Aker Yards in Norway, Finland and France.
      In Landtman’s view STX’s strategy was crystal clear: The company wanted to become number one in the world, and the construction of large cruise liners is the Finnish operations’ specific responsibility.
     
According to Minister Pekkarinen, the branch itself carries the largest responsibility for its future success.
      It needs to secure the filling up of order books by improving efficiency and competitiveness.
      Exact sums for subsidising the shipbuilding industry have not yet been put on paper.
     
     
Helsingin Sanomat / First published in print 15.1.2010


Previously in HS International Edition:
  Mega cruise liner Oasis of the Seas completed on schedule (29.10.2009)
  Finnish tax-payers´ largest-ever financial risk is 95% complete (28.8.2009)
  State takes on heavy responsibility for new giant cruise liner (20.4.2009)

See also:
  More than 1,200 jobs to go at UPM and STX (13.1.2010)

Links:
  STX Europe press release 12.1.2010
  STX Europe

KRISTIINA YLI-KOVERO / Helsingin Sanomat
kristiina.yli-kovero@hs.fi