# EUR-Lex - 52013PC0703 - EN

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# 52013PC0703

**Proposal for a DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the mobilisation of the European Globalisation Adjustment Fund in accordance with point 28 of the Interinstitutional Agreement of 17 May 2006 between the European Parliament, the Council and the Commission on budgetary discipline and sound financial management (application EGF/2012/011 DK/Vestas from Denmark) /* COM/2013/0703 final */**

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EXPLANATORY MEMORANDUM

Point 28 of the Interinstitutional
Agreement of 17 May 2006 between the European Parliament, the Council and the
Commission on budgetary discipline and sound financial management[1] allows for the mobilisation of
the European Globalisation Adjustment Fund (EGF) through a flexibility
mechanism, within the annual ceiling of EUR 500 million over and
above the relevant headings of the financial framework.

The rules applicable to the contributions
from the EGF are laid down in Regulation (EC) No 1927/2006 of the European
Parliament and of the Council of 20 December 2006 on establishing the European
Globalisation Adjustment Fund[2].

On 21 December 2012, Denmark submitted application EGF/2012/011 DK/Vestas
for a financial contribution from the EGF, following
redundancies in Vestas Group in
Denmark.

After a thorough
examination of this application, the Commission has concluded in accordance
with Article 10 of Regulation (EC) No 1927/2006 that the conditions for a
financial contribution under this Regulation are met.

SUMMARY OF THE APPLICATION AND ANALYSIS

Key data: ||

EGF Reference no. || EGF/2012/011

Member State || Denmark

Article 2 || (a)

Primary enterprise || Vestas Group

Suppliers and downstream producers || 0

Reference period || 18.9.2012 – 18.12.2012

Starting date for the personalised services || 1.3.2013

Application date || 21.12.2012

Redundancies during the reference period || 611

Redundancies before and after the reference period || 0

Total eligible redundancies || 611

Redundant workers expected to participate in the measures || 611

Expenditure for personalised services (EUR) || 12 151 287

Expenditure for implementing EGF[3] (EUR) || 578 000

Expenditure for implementing EGF (%) || 4,54

Total budget (EUR) || 12 729 287

EGF contribution (50 %) (EUR) || 6 364 643

1.           The application was
presented to the Commission on 21 December 2012 and supplemented by additional
information up to 16 July 2013.

2.           The
application meets the conditions for deploying the EGF as set out in Article
2(a) of Regulation (EC) No 1927/2006, and was submitted within the deadline of
10 weeks referred to in Article 5 of that Regulation.

Link between the redundancies and major structural changes in world trade patterns due to globalisation or the global financial and economic crisis

3.           In order to establish the
link between the redundancies and major structural changes in world trade
patterns due to globalisation, Denmark argues that the wind turbine
manufacturing industry in the EU, which is included in NACE Revision 2 Division
28 ('Manufacture of machinery and equipment'), has been seriously affected by
changes in world trade patterns, leading to a significant reduction of the EU
market share. Denmark explains that while the demand for wind turbine
installations is stagnating in Europe, the global market, especially in Asia, has been rapidly developing. For the first time in 2010, more than half of all new
wind power capacities were added outside the traditional markets of Europe and North America. This development was mainly driven by the continuing economic boom in China, which accounted for half of the new global wind installations[4]. Chinese wind turbine
manufacturers, which are becoming more competitive in terms of quality and
price, not only supply solutions to their own expanding markets, but are also penetrating
the European market. Resulting from the dynamic global growth of the sector, Europe's share in total capacity was reduced from 66% in 2006 to 27,5% in 2012[5].

4.           Furthermore, Denmark argues that this is a permanent trend. The demand for renewable energy, including
wind power, will be growing dramatically, however the markets will shift.
Whereas wind energy was a Europe dominated industry until 2006 and there was
balanced growth between Europe, Asia and the USA up to recently, there is
surging demand for wind power in Asia and North America today, in South America
tomorrow and in Africa in the long-term future. Manufacturing and servicing
will move to places where they are demanded and to regions with rapid economic
growth. In addition to considerably lower labour costs, the cost of
transporting the large parts of wind turbines has pushed European producers to
move their production closer to the most dynamic end-user markets in order to
ensure their competitiveness and market position. As a result production has
been progressively migrating out of the EU.

5.           Vestas Group has been part
of the trend described above. In order to maintain their leadership on the
market, Vestas has recently implemented a new strategy led by the principle
"In the region for the region" with the aim of reducing production
and transport costs, ensuring shorter distances to customers and markets and
making Vestas more robust towards exchange rate fluctuations[6]. Following the globalisation
process, wind turbines will be manufactured where they are needed (already in
2011 80-90% of turbines were manufactured regionally). Moreover, whereas most
of the components of wind turbine were produced in-house in the past, component
production will be increasingly outsourced to regional partners and as result,
Vestas will have a lower need for investments and will reduce its staff.

6.           This is the third EGF case
involving the company Vestas Group and the fourth EGF case in the wind turbines
sector. The arguments presented in the previous three cases (EGF/2010/003
DK/Vestas[7],
EGF/2010/022 DK/LM Glasfiber[8],
EGF/2010/017 DK/Midtjylland Machinery[9])
remain valid.

Demonstration of the number of
redundancies and compliance with the criteria of Article 2(a)

7.           Denmark submitted this
application under the intervention criteria of Article 2(a) of Regulation (EC)
No 1927/2006, which requires at least 500 redundancies over a four-month period
in an enterprise in a Member State, including workers made redundant in its
suppliers and downstream producers.

8.           The application cites 611
redundancies in Vestas Group during the reference
period from 18 September 2012 to 18 December 2012. All
of these redundancies were calculated in accordance with the third indent of
the second paragraph of Article 2 of Regulation (EC) No 1927/2006. The
Commission has received the confirmation required under the same Article that
these redundancies have actually been effected.

Explanation of the unforeseen nature
of those redundancies

9.           The Danish authorities
argue that the approximately 800 redundancies made by Vestas Group in the municipality of Ringkøbing-Skjern in 2009/2010 were already unforeseen because of the
rapid expansion of the global wind energy sector. On January 2012, Vestas
announced its plan to make other 1 300 workers redundant. By mid-2012
Vestas reached the number of 1 300 dismissals in Denmark, 788 of whom were
included in the previous case EGF/2012/003 DK/Vestas, presented to the
Commission in May 2012. The Danish authorities did not therefore expect any
additional redundancies and were surprised about the announcement of Vestas in
September 2012 that the company would be dismissing 611 further workers.

10.         In 2009 mostly low- and
unskilled workers were affected following the new global trading pattern to
outsource manufacturing to countries with lower labour costs. Meanwhile in 2012
the dismissals in the Vestas Group affected to a large extent highly skilled,
specialised and well educated workers. This was not anticipated since Denmark has made considerable investments in research and development in the renewable and
wind energy sectors. Moreover, the Danish government had been negotiating an
ambitious energy policy for the years 2012-2020 with plans to promote the
development of more wind turbines. Finally the municipality of Ringkøbing-Skjern had made considerable investments into transport facilities for Vestas
windmills. It was expected that the new generation of Vestas windmills would be
produced in the municipality.

Identification of the dismissing
enterprises and workers targeted for assistance

11.         The application relates to 611
redundancies in Vestas Group, all of whom are targeted for assistance.

12.         The break-down of the
targeted workers is as follows:

Category || Number || Percent

Men || 394 || 64,48

Women || 217 || 35,52

EU citizens || 596 || 97,55

Non EU citizens || 15 || 2,45

15-24 years old || 2 || 0,33

25-54 years old || 518 || 84,78

55-64 years old || 88 || 14,40

> 64 years old || 3 || 0,49

13.         In terms of occupational
categories, the break-down is as follows:

Category || Number || Percent

Directors, CEO Production and operations department managers || 13 || 2,13

Engineers, including project managers, heads of departments || 136 || 22,26

Engineering science technicians || 141 || 23,08

Clerks, office staff || 10 || 1,64

Service Workers || 36 || 5,89

Metal, machinery and related trade workers || 3 || 0,49

Machine operators and assemblers || 132 || 21,60

Manufacturing labourers || 140 || 22,91

14.         In accordance with Article
7 of Regulation (EC) No 1927/2006, Denmark has confirmed that a policy of
equality between women and men as well as non-discrimination has been applied,
and will continue to apply, during the various stages of the implementation of
and, in particular, in access to the EGF.

Description of the territory
concerned and its authorities and stakeholders

15.         The redundancies affect six
municipalities located in the bordering regions of Midtjylland
(Ringkøbing-Skjern, Randers, Favrskov, and Aarhus) and Syddanmark (Esbjerg and Varde). There are also a few redundancies in the region of Sjælland and the
Capital region - Copenhagen. What all the municipalities affected have in
common is a rapid rise in unemployment (especially long-term), with an average
net increase of more than 3 points[10],
and a steep decline in job vacancies (especially in industry and production).

16.         Ringkøbing-Skjern invested
considerably in infrastructure for Vestas and the wind energy sector. Other
major employment sectors are tourism, agriculture, construction and the public
service.

The principal stakeholder is the municipality of Ringkøbing-Skjern. The municipality has responsibility for supporting the
unemployed in their search for new employment, including making arrangements
for activities to upgrade workers' skills, to aid job-seeking skills and to
help with the goal-setting process. Other stakeholders are: the municipalities
of Varde, Esbjerg, Favrskow, Randers, Aarhus, Roskilde and Copenhagen; trade
unions, unemployment insurance funds (A-kasser), employers' representatives,
the regions Midtjylland, Syddanmark, Sjælland and the Capital region; the
regional Employment Councils; the Ministry of Employment, Enterprise and
Growth; local enterprises.

Expected impact of the redundancies
as regards local, regional or national employment

17.         Following the large scale
redundancies in 2009/2010 and from February to September 2012, which affected approximately
2 000 Vestas employees in Ringkøbing-Skjern and surrounding
municipalities, this new wave of redundancies is a great challenge for the
affected municipalities. Approximately 50% of the redundant workers are well-educated;
the other 50% are skilled or semi-skilled workers.

18.         Attracting an innovative enterprise
such as Vestas which provided many high-skilled and high-quality industrial
jobs was a great success for the municipalities concerned. The loss of these
has put the regions into difficulties. All the municipalities concerned have
reported that there are no suitable job openings for the well-educated
engineers and specialists and as a result, they will have to move away in
search for a job and it will therefore be even more difficult to attract new businesses.
For the semi-skilled and skilled workers the chances to find industrial jobs
are low, as the number of industrial jobs have been rapidly declining in Denmark since 2008 due to globalisation. With the high-quality industrial jobs, other local
service jobs and infrastructures disappear.

19.         The redundancies happen at
a time when unemployment is rising rapidly. In 2012, it was 34 804 in
Syddanmark and 32 571 in Midjylland (compared with 14 030 and 13 132
respectively in 2008)[11].

Co-ordinated package of personalised
services to be funded and a breakdown of its estimated costs, including its
complementarity with actions funded by the Structural Funds

20.         As for the case
EGF/2012/003 DK/Vestas, Denmark proposes a package of measures in support of
the redundant workers that is in coherence with the Europe 2020 strategy to
promote smart, sustainable and inclusive growth. The package will offer individualised,
targeted, flexible and innovative help to prepare the redundant workers for new
jobs in the future growth areas:

– 
Counselling, mentoring and coaching: It is estimated that all targeted workers will benefit from this
action throughout the project. The action aims to support workers as they
define their needs, manage their own learning, select the right up-skilling
packages to maximise their potential and develop their personal, social and occupational
skills. The general objectives are to screen and map the competences of
participants, provide individual counselling, maintain motivation throughout
the project by means of on-going coaching, develop and identify the best
practice cases, communicate with the training providers and enterprises. The
measure will start with an in-depth information session which will be followed
by individual counselling sessions during which competences of the participants
will be screened and mapped. The process will be constantly monitored to assess
its impact through questionnaires and interviews.

– 
Individualised targeted training packages: These packages will be available to all the workers in the target
group. However, a number of dismissed workers are likely to find new employment
after the coaching process, thus it is estimated that a reduced number of about
500 workers will participate in this measure. The training packages designed by
the project team in cooperation with the redundant workers and provided by
educational institutions throughout Denmark include:

– 
(a) intercultural competencies courses (one-day
workshops to make participants aware of the need to acquire intercultural
skills in a globalised environment);

– 
(b) language courses (including business
skills in English, the language of meetings, discussions and presentations;
technical languages, possibility to develop tailor-made language training
packages);

– 
(c) entrepreneurship training (an
introductory entrepreneurship workshop with the aim to motivate participants to
become self-employed or start up their own businesses; the participants will
learn how to develop a business plan and will receive information on legal
issues, tax and VAT, sales and marketing, e-business);

– 
(d) off-the-shelf courses and training
programmes (all the participants will have an opportunity to register for
courses and training programmes of their own choice).

– 
Entrepreneurship allowances: up to EUR 25 000 per business start-up will be made available
after an intensive screening of 40 persons following their participation in the
entrepreneurship courses and their development of a solid business plan. Criteria
for an assessment of the business plans will be: creativity, innovation and
sustainability. All the beneficiaries will be required to attend monitoring
sessions on a regular basis and to prepare a status report at the end of the
EGF project. The progress of the start-up will be closely monitored.

– 
55+ Measures with special mentoring and
outplacement: Approximately 80 people in the target
group aged 55 years or older will receive special mentoring, coaching and
counselling and a special effort will be made to find them outplacements. Being
potentially disadvantaged due to their age, the job centres and collaboration
partners will offer them internships in selected companies which could provide
employment after the internship phase. Intensive mentoring and counselling will
be proposed to people placed in the companies. If needed, special support and
training will be also provided to help them to start up as entrepreneurs.

– 
Subsistence allowances of EUR 109 per worker per day of participation in the active labour
market measures, with an estimated average of 95 days of participation per
worker (EUR 10 400).

21.         The expenditure for
implementing the EGF, which is included in the application in accordance with
Article 3 of Regulation (EC) No 1927/2006, covers preparatory,
management and control activities as well as information and publicity. The municipality of Ringkøbing-Skjern and the administrative project team involving all the
municipalities concerned will deploy various instruments to promote and
communicate the contribution from the EGF. Websites will be established on the municipalities'
portals. There will be regular press releases, press meetings and newsletters.
A final impact workshop will be organised with all project participants and
stakeholders. Promotion materials will be made available.

22.         The personalised services
presented by the Danish authorities are active labour market measures within
the eligible actions defined by Article 3 of Regulation (EC) No 1927/2006. The Danish
authorities estimate the total costs at EUR 12 729 287, of which
the expenditure for personalised services at EUR 12 151 287 and
the expenditure for implementing the EGF at EUR 578 000 (4,54 %
of the total amount). The total contribution requested from the EGF is EUR 6 364 643
(50 % of the total costs).

Actions || Estimated number of workers targeted || Estimated cost per worker targeted (EUR) || Total costs (EGF and national cofinancing) (EUR)

Personalised services (first paragraph of Article 3 of Regulation (EC) No 1927/2006)

Counselling, mentoring and coaching || 611 || 1 500 || 916 500

Individualized targeted training packages || 500 || 7 500 || 3 750 000

Entrepreneurship allowances || 40 || 25 000 || 1 000 000

55+ Measures with special mentoring and outplacement || 80 || 1 500 || 120 000

Subsistence allowances || 611 || 10 417 || 6 364 787

Sub total personalised services || || 12 151 287

Expenditure for implementing EGF (third paragraph of Article 3 of Regulation (EC) No 1927/2006)

Preparatory activities || || 28 000

Management || || 220 000

Information and publicity || || 80 000

Control activities || || 250 000

Sub total expenditure for implementing EGF || || 578 000

Total estimated costs || || 12 729 287

EGF contribution (50 % of total costs) || || 6 364 643

23.         Denmark confirms that the
measures described above are complementary with actions funded by the
Structural Funds and that all double financing will be prevented.

Date(s) on which the personalised
services to the affected workers were started or are planned to start

24.         Denmark started the
personalised services to the affected workers included in the co-ordinated
package proposed for co-financing to the EGF on 1 March 2013. This date
therefore represents the beginning of the period of eligibility for any
assistance that might be awarded from the EGF.

Procedures for consulting the social
partners

25.         Social partners were
consulted during the preparation of the EGF application. The employment
departments of the municipalities of Ringkøbing-Skjern, Aarhus, Randers, Favrskov, and Varde consulted their local and regional employment commission (LBR
and RBR), where all major social partners are represented, including trade
unions (LO) and the Danish employer representatives (DA). The social partners
are continuously informed about the status of the case via the employment
committees of the municipality of Ringkøbing-Skjern and the cooperating
municipalities. The Employment Region of Midjylland, which is in charge of
communicating with all relevant social partners, is officially represented in
the board of the case.

26.         The Danish authorities
confirmed that the requirements laid down in national and EU legislation
concerning collective redundancies have been complied with.

Information on actions that are
mandatory by virtue of national law or pursuant to collective agreements

27.         As regards the criteria contained
in Article 6 of Regulation (EC) No 1927/2006, the Danish authorities in their
application:

· confirmed that the financial contribution from the EGF does not
replace measures which are the responsibility of companies by virtue of
national law or collective agreements;

· demonstrated that the actions provide support for individual workers
and are not to be used for restructuring companies or sectors;

· confirmed that the eligible actions referred to above do not receive
assistance from other EU financial instruments.

Management and control systems

28.         Denmark has notified the
Commission that the financial contribution will be managed and controlled by
the same bodies as the European Social Fund, which also has the Danish Business
Authority as Managing Authority . The Certifying Authority will be vested in a
different department of the same body. The Auditing Authority will be the EU
Controllerfunction in the Danish Business Authority.

Financing

29.         On the basis of the
application from Denmark, the proposed contribution from the EGF to the
coordinated package of personalised services (including
expenditure to implement EGF) is EUR 6 364 643,
representing 50 % of the total cost. The Commission's proposed allocation
under the Fund is based on the information made available by Denmark.

30.         Considering the maximum
possible amount of a financial contribution from the EGF under Article 10(1) of
Regulation (EC) No 1927/2006, as well as the scope for reallocating
appropriations, the Commission proposes to mobilise the EGF for the total
amount referred to above, to be allocated under heading 1a of the financial
framework.

31.         The proposed amount of financial
contribution will leave more than 25 % of the maximum annual amount
earmarked for the EGF available for allocations during the last four months of
the year, as required by Article 12(6) of Regulation (EC) No 1927/2006.

32.         By presenting this proposal
to mobilise the EGF, the Commission initiates the simplified trialogue
procedure, as required by Point 28 of the Interinstitutional Agreement of 17 May
2006, with a view to securing the agreement of the two arms of the budgetary
authority on the need to use the EGF and the amount required. The Commission
invites the first of the two arms of the budgetary authority that reaches
agreement on the draft mobilisation proposal, at appropriate political level,
to inform the other arm and the Commission of its intentions. In case of
disagreement by either of the two arms of the budgetary authority, a formal
trialogue meeting will be convened.

33.         The Commission presents separately
a transfer request in order to enter in the 2013 budget specific commitment
appropriations, as required in Point 28 of the Interinstitutional Agreement of
17 May 2006.

Source of payment appropriations

34.         Appropriations from the EGF
budget line will be used to cover the amount of EUR 6 364 643 needed
for the present application.

Proposal for a

DECISION OF THE EUROPEAN PARLIAMENT
AND OF THE COUNCIL

on the mobilisation of the European
Globalisation Adjustment Fund in accordance with point 28 of the
Interinstitutional Agreement of 17 May 2006 between the European Parliament,
the Council and the Commission on budgetary discipline and sound financial
management (application EGF/2012/011 DK/Vestas from Denmark)

THE EUROPEAN PARLIAMENT AND THE
COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the
Functioning of the European Union,

Having regard to the Interinstitutional
Agreement of 17 May 2006 between the European Parliament, the Council and the
Commission on budgetary discipline and sound financial management[12], and in particular point 28
thereof,

Having regard to Regulation (EC) No
1927/2006 of the European Parliament and of the Council of 20 December 2006
establishing the European Globalisation Adjustment Fund[13], and in particular Article
12(3) thereof,

Having regard to the proposal from the European
Commission[14],

Whereas:

(1)       The European Globalisation
Adjustment Fund (EGF) was established to provide additional support for workers
made redundant as a result of major structural changes in world trade patterns due
to globalisation and to assist them with their reintegration into the labour
market.

(2)       The Interinstitutional
Agreement of 17 May 2006 allows the mobilisation of the EGF within the annual
ceiling of EUR 500 million.

(3)       Denmark submitted an
application to mobilise the EGF, in respect of redundancies in the enterprise Vestas
Group, on 21 December 2012 and supplemented it by
additional information up to 16 July 2013. This
application complies with the requirements for determining the financial
contributions as laid down in Article 10 of
Regulation (EC) No 1927/2006. The Commission, therefore,
proposes to mobilise an amount of EUR 6 364 643.

(4)       The EGF should, therefore,
be mobilised in order to provide a financial contribution for the application
submitted by Denmark,

HAVE ADOPTED THIS DECISION:

Article 1

For the general budget of the European
Union for the financial year 2013, the European Globalisation Adjustment Fund
(EGF) shall be mobilised to provide the sum of EUR 6 364 643 in
commitment and payment appropriations.

Article 2

This Decision shall be published in the Official
Journal of the European Union.

Done at Brussels,

For the European Parliament                       For
the Council

The President                                                 The
President

[1]               OJ C 139, 14.6.2006, p. 1.

[2]               OJ L 406, 30.12.2006, p. 1.

[3]               In accordance with the third paragraph of Article 3
of Regulation (EC) No 1927/2006.

[4]               'World Wind Energy Association', World Wind Energy
Report 2010, Bonn, April 2011. http://www.wwindea.org/home/images/stories/pdfs/worldwindenergyreport2010_s.pdf

[5]               'World Wind Energy association' The World Wind Energy
Association 2012 Annual Report', Bonn, May 2013. http://www.wwindea.org/webimages/WorldWindEnergyReport2012_final.pdf

[6]               Vestas Annual Report 2011

[7]               COM(2012) 502 final.

[8]               COM(2011) 258 final.

[9]               COM(2011) 421 final.

[10]             Danmarks Statistik, www.statistikbanken.dk/AUP02

[11]             www.dst.dk

[12]             OJ C 139, 14.6.2006, p. 1.

[13]             OJ L 406, 30.12.2006, p. 1.

[14]             OJ C [...], [...], p. [...].