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COM (84) 236 
 
 
 
Vol. 1984/0 115 
  
 
Disclaimer  
Conformém ent au règlement (CEE, Euratom) n° 354/83 du Conseil du 1er février 1983 
concernant l'ouverture au public des archives historiques de la Communauté économique 
européenne et de la Communauté européenne de l'énergie atomique (JO L 43 du 15.2.1983, 
p. 1), tel que modifié par le règlement (CE, Euratom) n° 1700/2003 du 22 septembre 2003 
(JO L 243 du 27.9.2003, p. 1), ce dossier est ouvert au public. Le cas échéant, les documents 
classifiés présents dans ce dossier ont été déclassifiés conformément à l'article 5 dudit 
règlem ent. 
In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983 
concerning the opening to the public of the historical archives of the European Econom ic 
Communit y and the European Atom ic Energy Communit y (OJ L 43, 15.2.1983, p. 1), as 
amended by Regulation (EC, Euratom) No 1700/2003 of 22 September 2003 (OJ L 243, 
27.9.2003, p. 1), t his file is open to the public. Where necessary, classified documents in this 
file have been declassified in conformity with Article 5 of the aforementioned regulation.  
In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom  1. 
Februa r 1983 über die Freigabe der historischen Archive der Europäischen  
Wirtschaftsgemeinschaft und der Europäischen Atomgem einschaft (ABI. L 43 vom  15.2.1983,  
S. 1), geändert durch die Verordnung (EG, Euratom) Nr. 1700/2003 vom 22. Septem ber 2003  
(ABI. L 243 v om 27.9.2003, S. 1), ist diese Datei der Öffentlichkeit zugänglich. Soweit  
erforderlich, wurden die Verschlusssachen in dieser Datei in Übereinstimmung mit Artikel 5  
der genannten Verordnung freigegeben.  
COMMISSION OF THE EUROPEAN COMMUNITIES
COM(84) 236 final  
Brussels, 26 April 1984
COMMISSION REPORT TO THE COUNCIL
State aids for shipbuilding in the first half of 1983
COM(84) 236 final

Report of the Commission to the Council
1. In approving Directive 81/363/EEC on State aid to shipbuilding,  
the Council asked the Commission to lay before it regular reports  
on the aids given to this sector (Articles 3, 6, 7 and 8 of the  
Directive).
2. The report for the first half of 1983 is attached as Annex I.
3. Also attached (Annex II) is a schedule of current aid schemes in  
favour of shipbuilding.

Foreword
1. This report on aid to the shipbuilding industry covers the first half  
of 1983, a period which saw an acute deterioration in the industry's  
situation. To give some idea of this situation, the report for the first  
time includes data on the output and order books of the yards (Annex I,  
page l). Comparison with the figures for the same period of 1982 shows a 
y y )o fall in new orders for the Member States overall. A similar fall is  
seen in the level of order books at 30 June 1983 as compared with a year  
earlier.
Taking the figures by countiy, it is seen that the dererioration in order  
books was practically identical for each country except Belgium where they  
were stable and Denmark where there was a slight increase.
2. The acute worsening of the industry's problems, compounded by the general  
world recession and the pessimistic projections of shipowners(see the  
Commission's report "Outline of a restructuring policy for shipbuilding",  
COM(83) 65 final), makes it a matter of urgency to cut back the substantial  
overcapacity in the industry. Following information given by Member States the  
unused capacity is put at something in the region of 50%, especially in the large yards.
3. The table on investment aid on page 2 of Annex I shows that with the excep­
tion of Germany such aid was non-existent over the reporting period, re­
flecting a lack of major investment. This situation reflects the financial  
weakness of the yards, forced to keep open huge installations much of  
which are idle. There is little incentive to commit new capital to the  
yards until they have been rationalized and slimmed down to a size matching  
that of their potential market, in viable units capable of yielding a  
return on the investment.

-  2 -
4· A look at the level of aid to shipowners points to conclusions on the  
same lines as the above observations on order books, although, it would  
be unwise to relate the figures in these two tables too closely as the  
information supplied on aid to shipowners does not distinguish between  
that relating to commitments to order and that relating to payments on  
account of building work already in progress. The figures for aid to  
shipowners can however be compared with those for the same period of  
1982.^ It is seen that the tonnage aided in Denmark quadrupled. In  
Belgium, for which there were no data in GRT or CGRT, a comparison of  
expenditure in national currency indicates a ^Offo increase.
The tonnage aided or now being aided by assistance to shipowners in the  
other Member States showed a fall of about 50$. These observations may  
be related to the fact that Belgium and Denmark do not give production  
aid but only aid to shipowners, and that, as shown in para. 1 above,  
they have increased or stabilized their order books. The relatively  
healthy shape of the Belgian and Danish yards' order books perhaps reflects  
the results of the structural improvements carried through in 1981 and 
1982 (restructuring of the Belgian industry following the bankruptcy of  
a group, and yard closures and major modernization of other yards in  
Denmark) as well as the advantage of the close relationships between  
shipowners and shipyards in the two countries.
It cannot be claimed that aid to shipowners as such is more effective  
than aid to builders, however, for in other Member States (Italy, Prance)  
both systems exist and can be cumulated. The inventory of credit facilities  
for ship purchases on page 4 of Annex II confirms that the majority of  
Member States grant substantial aid to shipowners in conjunction with  
production aids.
The crux of the problems of the Community shipbuilding industry can be  
be said to be one of competitiveness, although one would not wish to  
underestimate the severity of the competition the yards are facing from  
some third countries. Whilst some small or medium—sized yards specializing  
in high value-added products are able to hold their own in such segments  
of the market, in the present market sitiation it is virtully impossible  
for the majority of yards in the Community, and especially the large ones,
(l) COM(83)53.

- 3 -
against competition from the yards of newly industrialized or developing  
countries building common types of vessel at low prices, to win orders  
at prices covering their production costs. On the other hand the well-known  
links between shipowners and yards such as exist in Denmark, for example,  
facilitate either a high degree of specialization or greater flexibility  
making for a more even supply of work.
5. The table showing production aid (Annex I, page 4) concerns only France,  
Italy, the Netherlands and the United Kingdom. If the figures are compared  
with those for the first half of 1982, a more or less marked fall is found  
in the levels of aid granted by the various countries. A fall in terms of  
the weighted average rate of aid per tonne only occurred in the Netherlands  
and the UK, however. In the Netherlands a 3.5 1° decrease in the rate of  
aid was accompanied by a drop in the tonnage assisted. In the UK a rate  
decrease of a similar amount was combined with a fall in assisted tonnage  
of 40$. However, it should be noted that British Shipbuilders made a  
loss of UK£ 127 million in 1982-83.  Taking only that part of this figure  
relating to the losses of the yards building merchant ships, it is found  
that the writing off of these losses is equivalent to a further 6^ on  
the aid level.
In France and Italy, although the minimum aid levels decreased, the  
weighted average rate by CGRT rose sharply. These two countries showed  
marked differences in the number of vessels built, however.
In France, whilst the tonnage aided was unchanged, this figures related to  
only 5 ships as against 16 in 1982.  The increase in the weighted average  
rate per tonne is due to the fact that the aid rates are higher for large  
vessels.
In Italy, for the same tonnage there was a triping in the number of units  
built, showing perhaps that the large yards had gone over more and more to  
building small or medium-sized ships. The last two observations should be  
qualified in that the information the Commission has does now allow it  
to discern the incidence of aid, either as regards the type of vessel built

- 4 -
or as regards the size of the yards building them. Given that the pu:r-  
pose of aid within the framework of the restructuring of shipbuilding  
in line with the objectives of the Fifth Directive is to restore its  
competitiveness by favouring the yards that have the best prospects of  
becoming profitable again (often medium-sized or small yards) and steering  
them towards the most profitable segments of the market, generally  
medium-sized or small ships with high value-added, there is a need to  
think carfully about how aid can be made more effective. This is all  
the more urgent since the production aids that have been given during the  
reporting period, even when very generous, have been unable to bridge the  
gap between the costs of Community yards and the prices quoted by third  
countries, particularly Korea, for large vessels.
6. In accordance with Article 10 of the Fifth Directive, the Commission  
proposes to discuss this report with the national experts.
This discussion should yield some useful insights into the effectiveness  
of aid, the performance of yards and the progress of restructuring.
Sharing as it does the concern repeatedly expressed by the European  
Parliament about the shipbuilding industry and its indispensable restruc­
turing, the Commiission needs to acquire a deeper knowledge of the  
problems of the industry by gathering the fullest possible data on  
the yards and the public aid they receive.
Hiring the period covered by this report the Commission sent the Member  
States a questionnaire asking for certain data on the shipbuilding industry  
and public aid to it. It is essential that the Member States should send  
full replies to the questionnaire as soon as possible to facilitate a  
judgment of the effectiveness of aid and a review of the progress of  
restructuring.

SITUATION OF THE ORDER BOOKS OF THE SHIPYARDS IN THE COMMUNITY  
1.0000 GRT .. 1st half 1982/1st half 1983ANNEX I
BELGIUM
DENMARK
F.R. of 
GERMANY
GREECE
FRANCE
IRELAND
ITALY
NETHERLANDSNew orders State of the order book
1st half 1982-
89,6
434,9
4,5
78
82
228,5
JNITED KINGDOM 139,2Ships completed
1st half 1983 I on 30.6.1982
56,0
181,9
236,1
1,8
100,8
20
123,0
47,6213,2
556,0on 30.6.1983
216,71st half 1982
79,2
620,1
1.151,7
203,5V-
1.052,9
18,7672,8176,4
304,4
163,1
674,3
2,1
425,2
628,8
709,3347,443,5
168,0
71,8
417,9
518,4178,7
203,51st half 1983
93,1
200,6
515,9
15,9
252,6
18,9
161,9
198,9
201,8
TOTAL t t t 1.056,7 767,2 4.959,3 3.632,8 1.225,5 1.659,6
Source :  Lloyd's

2
ANNEX I
Aid to investment :  \rticle 3 of tfje 5th Directive on aid to
shipbuilding.
Period :  Janfcary-June 1983
MEMBER
STATE
Belgium
Denmark
F.R. of 
Germany
France 
Greece 
Ireland 
Italy
Netherlands  
United KingdonAmount of 
investment
28,020 Mio  
DM— v------Na
ture of .aid Effect on production  
capacity
10% of investment Replacement of an old  
floating dock. No effect  
on production capacity of  
shipbuildingType of aid  
scheme applied
Project of  
common interest.  
Aid scheme for  
improvement of  
economic and  
regional struc­
tures

ANNEX I
2. Aid to shipowners - Volume of contracts aided.  
Period :  January-June 1983
BELGIUM
DENMARK
F.R. of-, 
GERMANY^
FRANCE'
GREECE
IRELAND
ITALY
NETHERLANDS
UNITED
KINGDOMTotal volume
GRT
162.800
123.000
118.878“1National 
currency 
JLmia)___
37
4.234
69.315
•c
24.2635.834,80
1.972
695,28
9.345
578,70For building in  
national yards _For
 building in other I For building in third  
EEC countries country varc
50,87GRT
162.800
123.000
7,928“
374.234
49.413
24.263National
currency .<mio)iGRTINationaL 
currency <mio
5.834,80
1.972
.224,40
9.345
476,1087.600 324,23GRTNational 
:urrency (mio)
23.250“ 146,65
50,8719.902 102,60
.T P L .
^Decisions on the granting of aids to shipowners are taken .during the second half of the current year.  
,  GRT.
A volume of 10.000 GRT for 93 Mio Hfl did not benefit from any aid. 
5The British schemeGRT for 93 Mio Hfl did not benefit from any aid. , .  .  .
is aimed solely at shipowners who give orders to national shipyards - OECD conditions.

- 4 -
ANNEX I
3. Production aid:  Articles 6 and 7 of the 5th Directive on aid to
shipbuiIding
Period :  January-June 1983.
MEMBER 
STATE
Belgium
Denmark
F.R. of 
Germany
- Greece
c  1, 2- France
I re land 
Italy
Netherlands
United King­
domNumber of  
aided 
cases
5
1 2
18
10GRT
104.970 GRT
7.961
40.035
113.037 GRTEstimated proportion of  
contract price
Large and medium-sized
ships
20%
Small ships  
8 to 11%
13,2% to 22%  
2,2% to 17,5%
7,22% to 15,31%Estimated ave­
rage weighted  
by tonne
19,74%1
18,83%
9,13%
14,40%
Jl unity of 3480 GRT did not benefit from any aid.  
^Plus price guarantee.
^Plus shipbuilders' Relief, 2%.

ANNEX II
LIST OP AIDS AND INTERVENTIONS FOR SHIPBUILDING
a) Aids to shipbuilding January 1984
Description Level of intervention Remarks
PR Germany 1) Hamburg - allocation of DM 35 * ^or 
investment in the port of  
Hamburg and conversion of  
the shipbuilding sector to  
shiprepair and other  
sectors (1 9 7 8 - 1 9 8 3)DM 31 m for investment on  
publicly-owned land* DM 4 ■ 
for investments on private  
land
2) Lower-  
Saxony- subsidies up to DM 3 * For diversification measures  
(out of shipbuilding)
Prance — direct aid for construction 20% of the contract price for large  
and medium-sized yards  
10% of the contract price for the  
small yards.
Cost escalation cover over and aboves.The maximum tonnage to be  
built with production aids  
is limited at 250.000 c.g.rt
Ireland - direct aid for construction 30% of the contract price from 1.7.198  
to 30.6.1984. From 1.7.1984 25 %>
Italy - direct aid for construction  
(budget allocation:
Lit 56O Mrd 1981-1983)25$ of contract price ( 30$ for the  
Mezzogiorno region)The Commission has authorized  
this scheme in 1983 under 
restrictive conditions
Netherlands - direct aid for construction 4.5% to 8% of the contract price  
according to the price of the ships.This scheme has been approved by the  
Commission for 1983 and 1984 taking in  
account that the rates will fall  
respectively-to 3% and 7% in 1984  
Estimated budgetary allocation  
1983 69 mio HFL - 1984 46 mio HFL
United Kingdom - single refund of certain  
taxes (shipbuilders* relief
- direct aid for construction  
5th tranche of Intervention  
Fund of UKL 50 Mio (July  
1982-July 19832$ of the construction cost
Max· 17$ of contract price (incl.  
shipbuilders* relief;
Northern Ireland: 18$ of contract  
prioe (oxol. shipbuilders* relief)July 1982-July 1983
This scheme has been extend to  
jJanuary 1984.

ANNEX II
b) Credit facilities for sales
Description of aid Qualifying transactionsLevel of  
interventionRemarks
Germany - interest rebate All sales - maximum interest re­
bate 2% (limit OECD  
conditions)  (1)special schemeforships
Belgium - interest rebate Sales to other Member  
States and third coun­
tries- OECD conditions special scheme
Denmark - preferential credit All sales - OECD conditions special schemeforships
France - preferential credit Sales to other Member  
States and third coun­
tries- OECD conditions general scheme
Ireland - preferential credit All sales - OECD conditions special schemeforships
Italy - preferential credit All sales - OECD conditions special schemeforships
Netherlands - interest rebate All sales - maximum interest re­
bate 2%
limit OECD conditionsspecial schemeforships
United Kingdom - preferential credit Export sales
__________________________- O
ECD conditions general scheme
(1) Repayment period 8 1/2 years, interest rate 8 % , down payment 20 % .

c) Credit facilities for purchase involving aid to shipbuildingAMEX II
Description of aid Level of intervention Remarks
PR Germany Financing facilities for investment*  
by German owners on purchase of  
ships in a Community yard or in  
third countriesGrant of 12.5% of contract price  
(special grants: max. 5% of contract  
price)
Belgium Credit facilities for Belgian owner*  
on purchase of ships in a Community  
yard or in third countriesCredit at 4 or 5% for 15 years (with  
one year moratorium on repayment) on  
70% of contract price (Law of 23.4»  
1948)
Denmark Credit facilities for Danish owners  
on purchase of ships in a Community  
yardCredit at 8% for 12 years (with 2 
years moratorium on repayment) on  
80% of contraot price
Prance Financing facilities for investment*  
by Prenoh owners on purchase of  
ships in a Community yard or in  
third countriesGrant of max. 7*5% of contract price The total amount of the aid must  
not exoeed FF 30 mio
United Kingdom Credit facilities for the purchase  
of ships by British owners in  
British yards (Home Credit Soheme)- OECD conditions of 18.7.1979»
- in addition, a subvention scheme  
has been introduced under Section  
25 of the Industry Act 1975The application of this scheme  
must not result in conditions more  
favourable than those contained in  
the OECD Understanding
Netherlands Financing facilities for investments  
by Dutch owners on purchase of ships  
in a Community yard or in third  
countries- grant of 12% of contract price
- investment premium of 2.3% during  
5 years
Italy Financing facilities for  
investments by Italian owners on 
purchase of ship in a Community  
yard or in third countries.- Half year grant during 12 years  
of 2.75 % of the contract price '  
(3.20 % for tankers under 5000 DWT  
and for other vessels under  
3000 DWT)•

ANNEX II
d) Price guarantee mechanism
Description of aid Level of intervention Beoaxks
France Insurance scheme against overruns of  
certain costs due to inflation.Intervention relates to
an. increase in excess of  
6.5%.
The prime amounts to 1%.This scheme is applicable  
to all goods export con-  
t racts.
Italy
-The Commie si on has not  
authorized the application  
of the price guarantee  
foreseen by Law 598 for the  
period 19§1  to 1983