Sinking fast

The Gdańsk Shipyard has complied with the European Commission (EC) demand to put forward plans for the reduction of production capacity. The reduction is a trade-off for aid the shipyard has received from the Polish government and the resulting advantage it may have gained over other European shipyards, according to the EC. The plan includes the closing of two of the shipyard's three slipways, which should begin next year.

"We want to minimize the distortion of competition caused by state aid," the EC said in a statement sent to WBJ.

However, complying with the demand to reduce production capacity in such a short period of time will be harmful for the plant, shipyard representatives said. "The analysis that we have put forward to the EC shows that in operating on one slipway only, the shipyard will bring a loss and will have to lay off two thirds of the 3,000 people  in its workforce," says the shipyard's vice president Andrzej Buczkowski. He added that the zł.36 million which the shipyard has received so far (out of a planned zł.192 million), went to paying off debts rather making any upgrades.

New investments, which include building a new assembly site, are to be carried out when the shipyard is privatized, which is expected to occur next year. A private investor is to take over 75 percent of the shipyard's shares and so far two companies have expressed their interest to do so: Ukrainian Donbas, who already has five percent, and Italian FVH. The decision will be made in three months' time.

According to Tomasz Teluk, an economic expert from the Centre for the New Europe, a Brussels-based think tank, a better option might be Donbas, who is said to be interested in buying the Gdynia Shipyard too. Under one owner the shipyards might have a stronger position, he said.