The European Union on July 22 approved $357 million of government aid to Poland’s Gdansk shipyard, birthplace of the Solidarity trade union that played a key role in the collapse of communism.
But in return, the yard must close two of its three existing slipways to remove capacity that was built with the aid of Polish government subsidies.
“As the continuous subsidies for the yard’s production since 2002 caused a significant distortion of competition on the shipbuilding market, the yard’s shipbuilding capacity has to be reduced substantially,” the EU’s executive Commission said.
The Commission, which has been investigating Gdansk’s state aid for four years, did not say how many jobs would be lost.
The Commission cleared state aid to Gdansk since Poland joined the EU in 2004 as well as $220 million of additional subsidies and export guarantees through 2012.
The EU allows state aid but only on strict conditions, including a viable restructuring program.
The Commission said Gdansk, which was privatized in 2007, had presented a restructuring plan that would be financed from private resources raised by the yard and its owner, Ukraine-based ISD.
The yard faced closure if the Commission found the subsidies constituted illegal state aid and had to be repaid to the government.
“This has been one of the longest and most difficult cases I have had to deal with, but I am very pleased that we have now found a constructive solution,” said EU competition commissioner Neelie Kroes.
“We have made a tremendous effort to make sure that the yard will be viable for many years to come,” she said.
The Szczecin and Gdynia shipyards closed after the Commission rejected their restructuring plans.
But in return, the yard must close two of its three existing slipways to remove capacity that was built with the aid of Polish government subsidies.
“As the continuous subsidies for the yard’s production since 2002 caused a significant distortion of competition on the shipbuilding market, the yard’s shipbuilding capacity has to be reduced substantially,” the EU’s executive Commission said.
The Commission, which has been investigating Gdansk’s state aid for four years, did not say how many jobs would be lost.
The Commission cleared state aid to Gdansk since Poland joined the EU in 2004 as well as $220 million of additional subsidies and export guarantees through 2012.
The EU allows state aid but only on strict conditions, including a viable restructuring program.
The Commission said Gdansk, which was privatized in 2007, had presented a restructuring plan that would be financed from private resources raised by the yard and its owner, Ukraine-based ISD.
The yard faced closure if the Commission found the subsidies constituted illegal state aid and had to be repaid to the government.
“This has been one of the longest and most difficult cases I have had to deal with, but I am very pleased that we have now found a constructive solution,” said EU competition commissioner Neelie Kroes.
“We have made a tremendous effort to make sure that the yard will be viable for many years to come,” she said.
The Szczecin and Gdynia shipyards closed after the Commission rejected their restructuring plans.