ARCHIVESHISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(77)542
Vol.1977/0173

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(77)542final.
Brussels ,6December 1977
COMMUNICATION PROMTHECOMMISSION TOTHECOUNCIL
REORGANIZATION OPTHECOMMUNITY SHIPBUILDING INDUSTRY
*".7
•.:j
Ν;·Ν
COK(77)542final.

TABLEOPCONTENTS
Page
I.PROBLEMSOPCOMMUNITY "SHIPBUILDING 1
A.Thecrisis 1
1.Causesofthecrisis 1
2.Theconsequences ofthecrisisforthe
Community 5
B.Currentmeasuresaimedatprovidingwork gforyards
1.Thenationalapproach 6
2.Theinternational approach 7
3.TheCommunityapproach 8
II.THEOBJECTIVES OPCOMMUNITYINTERVENTION 9
A.Adaptionofproductionstructures 10
B.Redeployment oflabour 11
C.Stimulatmg demand 12
III.COMMUNITY ACTION 14
A.Reorganization ofthesector 14
1.Actiontocoordinateaids 15
2.Actionsinthesocialsphere 16
3.Financing 16
B.Stimulating demand 19
C.International action 20
IV.CONCLUSIONS 21
Characteristics ofthecrisisin
shipbuilding
Inventoryoffinancerequirements for
reorganizing theshipbuilding industry
DraftproposalforaCouncilDecisionsetting
upaShipbuilding CommitteeANNEXI
ANNEXII
ANNEXIII

COMMUNICATION FROMTHECOMMISSION
TOTHECOUNCIL
REORGANIZATION OFTHECOMMUNITY SHIPBUILDING INDUSTRY
I.PROBLEMS OFCOMMUNITY SHIPBUILDING
A.Thecrisis
Thedifficulties innewshipbuilding resultfromaworld-widestructural
imbalancebetweenproductioncapacityanddemand;theyarerelatively
worsefortheCommunityindustryonaccountofthecompetitive weakness
ofCommunityshipyardsincomparisonwithnon-European competitors
(seeAnnexI).
1.Causesofthecrisis
a)Asaresultofoptimisticforecastsof'thegrowthoftheworld
economy,togetherwithspeculative demand,orderbooksswelled
unprecedentedly betweeni960and1973*
Inordertomeetthisdemandworld-wideproductionpotential
increasedtosuchanextentthatovercapacity wouldprobably
*haveoccurredevenwithouttheoilandeconomiccrises.
Tomeetordersreceivedin1972-1973»annualworldproduction
intheperiod1974-76grewtoapproximately33»000,000grt"^
(equivalenttosome20,000>t000cgrt^^,
Neworders,whichdeterminethefuturelevelofactivity,have
fallensince1975to13»000,000grt(andthesameincgrt).^
Giventheextentofovercapacity inexistingfleets,neworders
3ETheoilcrisishasmainlyaffectednewbuildingoftankers.
^grtisameasureofvolumetriocapacity
2)£grt(compensatedgrossregisteredton)takesaccountoftheamount
ofworkpergrt.
■^Thevolumeisthesamewhetherexpressedingrtorogrtbecausetherehasbeen
adrastiofallinordersforsimplervessels(tankersandbulkoarriers).

_2-
wilXnotevenrsxinthislevel111tnecorningyears.Japaneseyards
ha/\2forsometinrexperienced asimilarfallinactivity,and,in
jheirturn,arefacingcompetitionfromyardsinnewshipbuilding coun­
tries(oftenestablishedwiththeaidofJapanesecapital).
b)Communityshipbuilders havebeensubjecttothesamephenomena
asothersbut,bydepressingsellingprices,theworldwideover­
capacitybroughtCommunityyardsdowntotheirlimitofcompetit­
ivenessmuchearlierthantheircompetitors .
AlthoughproductionfacilitiesinsomeMemberStateshavebeen
modernized ,Communityshipbuilding ishandicapped byunsuitable
structuresandbyuncompetitive operatingcosts-thelarge
numberofyardsintheCommunitypreventlarge-scale production
asintheJapaneseyards,whicharevirtuallynewandformpart
ofintegratedindustrialgroups,enablingthemtowithstandthe
hazardsoftheeconomiccycle.Theneedforstructuraladjust­
mentisallthemoreurgentsinceCommunityyardshavenohope
ofreducingsocialsecuritychargeswhich,incomparisonwith
certaincountrieswitharecentlydevelopedshipbuilding
industry,areahandicap.
Theconsequences weighparticularly heavilyontheCommunity.
c)Atthesametimetheprospectsforseveralsectorsoftheshipping
industryaregloomy,givinglittlehopeoftheseriousimbalancebet­
weenavailabletonnageandmarketrequirements beingtakenupbefore
1982jthisisespeciallytrueforthetankertrade,butalsoforother
tradessuchasbulkcargo.Thestatisticsshow(seeTablesIandII)
thattheCommunity'sshareoftheworldfleethasfallenfrom25.1$
in1970"to20.jfoin1976.ItistruethattheCommunity'sshipping
industryanditsshipyardsmustremain,orbemade,competitiveinthe
worldmarket.Communityshipownersarenotboundtotheshipyardsof
theMemberStates;nevertheless ,inpractioeourshipownersgenerally
placetheirorderswithouryardsmhencetheimportancetotheseof
theCommunity'shavingcompetitivefleet.

-3-
TABLEI
PRODUCTION INfrrtASAPERCENTAGE OPWORLDTOTAL
1955i9601965197019751976
EtEtC* 70.051.131.325.623.322.6
AWES 80.073.850.840.538.537.5
JAPAN 12.021.441.548.150.646.7
RESTOPTHEWORLD8.04.87.711.410.915.8
FLEETSHfgrtASAPERCENTAGE OPWORLDTOTAL
195519601965197019751976
£•S•C• 35.433.528.625.122.920.7
AWES 47.546.943.037.935-932.9
JAPAN 3.75.37.411.812.211.2
RESTOPTHEWORLD48.847.849.6 1•50.351.955.9
Sources:Productions for1955?I960,19°5–DAFSABtudy;
for1970,1975and1976-Lloyd'sAnnualSummary
Fleets:Lloyd'sStatisticalTables.
N.B.:NeithertheIrishnorthePortuguesefleetwasincludedin1955?19°0,
I965and1970.

-4
A.13I.EIIProduction and Fleets
IN'grt ASAPERCENTAGE CP
WORLD TOTAL' '•
7C% V 70 '
V-·· ... I MEEC
50% V 1Λ
\ 1L
Third countries/ Ifleets
404 \–4\
Jr°' Afleets 7U" 1– : :A
Yv
30'$ 7"~v^\\
T -f .*.\
• :
J.Japanese
VjT^oduction – •'
/ KT
20n–m– -1– –
:_ ι _7\ΐ
.Ι^3ρ^ηβεβ /Ι\
r 'jfleet •H/
>. 1*■+*♦>
fv
10* -i t ; M
J-
rZ : r-n
•T IThird GOUJitrids
production -
ΓΤ
1955 60 65 . 70 75,76 80
Production
Fleets1977
9months

2)Atthepresent time ,theCommunity industry accounts for20%of
world production .Assuming that therest oftheworld 'sshare remains
constant ,andthat theshares oftheworld market held "bythevarious
countries in1975remain thesame ,AWES experts forecast thatCommunity
yards will deliver 2.4million £grt inI98O ,compared with 4.4mil­
lion in1975-i.e. areduction of46%twhile world production for
thesame period will drop byonly 40$ .
1975 PRODUCTION AND 1980 PRODUCTION FORECAST
(BASED ONFORESEEABLE DEMAND )+)
1975 1980
grt cgrtjS™cgrt
I£•£•C» j7.8 4.41
1
REST OFAWES !_5i3 ! 3.2
AWES 13.1 7.6 3.9
JAPAN 17.0 7.7 3.9
REST OFTHE WORLD 4.2 A2I 4.0
TOTAL .WORLD 34.3 19.5 10.4
t11.8
+)SeeAnnex I,page 6*
(l)AWES :Association ofWest European Shipbuilders (Community oountries +
Norway ,Sweden ,Finland ,Spain andPortugal ).

-6-
Totheuncertainties .nherentinanyforecastmust"beaddedtwo
contradictoryfactors,namelythelowcompetitiveness ofsomeshipbuilders
(afactorbecomingmoreimportantasthedownturninworlddemandsharpens
competition)andthehighdegreeofcompetitiveness ofCommunityship­
yardsinbuildingcertainparticularlysophisticated typesofvessels.
ButinthissectoroftheindustrywemustexpecttheJapanese,in
particular,tolaunchanoffensive-accordingtotheJapaneseMinister
forTransportandIndustry,"theJapaneseshipbuildingindustry,whichhas
dependedontankersformorethan70%ofitsproduction,willhaveto
shiftmoreandmoretospecial-purposeshipssuchasliquefiedgas
carriers,etc....havinghighertechnologyandgreatervalueadded.
ConsequentlyshipbuildinginJapanwouldreach14.7milliongrt.inI985,
recoveringtothe1975level.""' "
InthiscontextededevelopmentsinCommunityproductionmustnecessarilyaffect
theworkforce .intheshipyardsandalliedindustries.Itisalreadyestimated
that15000ofthe180000jobsintheshipbuildingindustryin1975
havebeenaffectedbytherundownofproduction.
B.Currentmeasuresaimedatprovidingworkforyards
Awareofthecrisisintheindustry,buthopingforarecovery,the
authorities areresortingtoeverypossibleapproachtoprovidework
forshipyards.Sofar,however,thesemeasureshavemerelybeencostly
palliatives withnomedium-term prospects.
1.Thenationals.pproach
.tlanyfirmshavecutoutvirtuallyallovertime,introduced
short-timeworking,reducedworkinghours,encouragedemployees
toleaveandcutrecruitmenttothebareminimum,butthese
stepsareinadequate and,whatismore,theyaxerarely
partofalong-termstrategy.
Lefttotheirowndevicestheshipbuilding industriestendjust
".okeepgoing,without ,attemptingtoadjusttothenewmarket
concitions ,
Chapter ■IIofLoiig--'tarmvisiononJapan'sindustrialstructure,1976edition

-7-
TheMemberStatesthems6Ivesencouragethisattitudeby
supportingtheirshipyardsinvariousways,mainlyinorderto
keepthelevelofemploymentashighaspossible.
Nationalintervention ofthistypemaytakeseveralforms:
insomeshipyardsworkismaintainedbyplacingordersfor
navalvessels,whensucharenotreservedfornaval
dockyards,butinmostcasesintervention isfinancial.
Comparedwiththelevelofemployment ,thesumsinvolvedare
considerables Aidnowbeinggranted,mainlytoovercomethe
priceadvantageofJapanandothershipbuilding countries ,is
estimatedatnearly600millionu.a.annually(includingaidto
shipownersintheFederalRepublicofGermanyandintheNetherlands ,
butnottakingintoaccountthehiddenorunquantifiablehelp
giveninsomeMemberStates).
Totalaid,whichinitsvariousforms,isessentially aimedat
maintaining employmentintheyards,willnecessarily increase
sincethelevelofactivitywillinevitablycontinuetodropbet­
weennowandthe1980s,andcompetition fromnonmembercountries
willprobablygrow.InmostMemberStatesfinancialhelpforthe
shipbuilding industryissupplemented bymeasurestosupporttheir
own-flagfleets,andthesemayvarywidelyfromoneMemberStateto
another.
2.Theinternational approach
UndertheauspicesoftheOECD,theMemberStates,togetherwith
theotherAWEScountriesandJapan,signedon12May1976the
"Generalguidelinesforgovernmentpoliciesintheshipbuilding
industry"whosefirstpriorityisthereduction,inan
appropriate manner,ofproductioncapacityinordertorestore
inthemediumformthebalancebetweensupplyanddemand;the
principleadoptedisthatofmaintainingfaircompetition.
ThisactionundertheOECDiscoupledwithapproachestoJapan.
TheMemberStateswarnedtheirpartnersagainstthepossibility

-8-
oi'Japan'sfailingtobearasufficientshareoftheconsequences
ofthecrisis,and.threatenedtoadoptunilateralprotectivemeasures.
ThesepressureshaveledJapantoraiseitsexportpricesby5%and
introducesomemeasuresofvoluntaryrestraintvis-a-vissomeEuropean
countries .But-thesemeasuresseeminsufficient torestoretheCom­
munity'sbalanceinthemarket.
3.TheCommunityapproach
TheCommunity'sinterestintheproblemofshipbuilding hastwo
aspects:
–competition :sofarCommunityactionontheindustryhasbeenalmost
entirelylimitedtosuccessivedirectivescoordinating aidsto
shipbuilding .Theirmainobjectivewastoharmonizepublicinter­
ventioninthesectorandreducethelevelofthoseaidsmostdamaging
tointrar-Community competition ;
–financial :sinceitsinception,theRegionalFundhaspaidout
anestimated73-65millionu.a.inregionswherethereisahigh
concentration rfshipbuilding .Thesumcovers225projectsinvolving
atotalinvestmentof1470millionu.a.andthecreationorpreserva ^-
tionof34112jobsinPrance,Germany,Italy,andintheUnited
Kingdomwhere,inaddition,111industrial-infrastructure projects
havebeenaidedinthesaidregions.
Intervention bytheSocialFundtobenefitworkersintheindustry
hasbeenmodestandtheCouncildidnottakeuptheCommission's
proposalforapplyingArticle4ofthedecisionontheuseofthe
SocialFund.

-9-
II.THEOBJECTIVES OFCOMMUNITY INTERVENTION
TheCommunity,astheworld'sleadingtradingpower,90$ofwhosetrade
isseaborne,hasamajorinterestinconductingamaritimepolicywhich
makesitcommercially competitive .
Commercialcompetitiveness dependspartlyonacompetitive Community
fleet.Suchafleetispotentially amarketforCommunityyardsifthey
cansupplyitontermscompe.titivewiththoseofferedbyothers.
ThefirstobjectiveofCommunitypolicyonshipbuilding musttherefore
betomakeouryardscompetitiveintheworldmarket.
TheCommunity'sattentionshouldbedirectedchieflytothenew
buildingofseagoingnon-navalships^,sincethisisthesegment
oftheindustryinwhichthestructuralproblemofovercapacity
andcompetitiveness isacute.Theothersub-sectors ,whileless
affectedbythestructuralproblem,aremoresensitivetotheshort-
termeconomicsituation.
Communitystrategyshouldconcernitselfwithcoordinating themeans
atpresentavailabletotheCommunityandconcentrating themon
achievingapredefinedobjective.Theaimshouldbetoreorganize
Communityshipyards,sothattheyarecompetitiveintheworldmarket
andconsequently abletoprovideasignificantproportionofthe
Communityfleet.Independence ofCommunityshipownersfromyardsin
thirdcountriesisessentialforthesecurityoftheCommunity'ssupply
inviewoftheimportanceofseatransporttoitsexternaltrade-
andforthemaintenance oftheCommunity'sshareofworldtrade.
(l)Atthisstageitdoesnotseemappropriatetoincludewarshipsbecause
thebuildingofthesehighlysophisticated vesselsisnotaffectedby
thecrisis.

-10-
AsthecostoftransportisaveryimportantfactorintheCommunity's
economy,theCommissiondoesnotconsiderthattheinterestsofthe
shippingindustryshouldinanywayhesubordinated tothoseofship­
builders.TheCommissionconsidersthataction "bytheauthorities designed
tooperateinareasofinterestcommontobothindustriesisanessential
elementinimplementing anoverallstrategyforshipbuilding .
Reorganization ofindustryshouldbebasedontherealitiesofthe
market,andtheexpectedlevelofdemandshouldformthedatumforany
actionatCommunityornationallevel.
Onthebasisoftheinformation quotedinPartOneabove,thelevel
ofdemandshouldbeapproximately 2.4million£grtintheearly1980s;
thisestimatemustbecheckedwiththeMemberStatesandregularlyad­
justedtomarketdevelopments .
Inviewofthepresentimbalancebetweensupplyanddemandforcertain
typesofships,theattainmentofageneralproduction aimgearedto
foreseeable demandiscontingent ontheadaptationofproductionstruc­
tures,theredeployment oflabourandthestimulation ofdemand.
A.Adaptionofproductionstructures
Thereshouldbeaquantitative andqualitative adjustmentofstructures
toforeseeable demand;thisshouldalsoextendtodirectlyrelatedin­
dustries.
–Quantitatively ,itwillbenecessary,intheindustry'sowninterests
aswellasintheinterestsoftheworkerswhosejobsintheshipyards
willotherwisedisappearentirely,toadjustproductioncapacitiesto
marketprospectsinanorderlyfashion.
–Qualitatively ,movestoadaptproductioncapacitiesquantitatively
mustbeaccompanied byeffortstoimproveproductionfacilities so
thattheymaysurvivewithoutaidandbecomecompetitive inthe
worldmarket.

-11-
B.Redeployment oflabour
Asitisimpossibletomaintainthepresentlevelof
employmentofsome165000personsanyactiontoreorganize
theindustrythatdoesnottakeintoaccountthesocial
aspectsoftheexerciseandseektolimittheeffectsonthe
labourforcewillbedoomedtofailure.
l)Oncetheobjectiveofreorganization hasbeendefinedfor
theindustry,theconsequences foremploymentmustbe
drawn;thesewillbeoftwokinds:
–theretrainingofworkerswithinyardswherethelatter
undertakeinternalconversionaspartofthe
qualitativeadaptationofproductionfacilities ;
–redeployment outsidetheindustry:
heretheCommunityshouldbringintoplayallits
resourcesforcreatingjobsoutsideshipbuilding ,both
withintheyardsthemselvesand,moreparticularly,for
thosemaderedundant ,everyeffortbeingmadetosite
theactivitiesinthesamedistrictorregionasthe
affectedyards,sothatthesenewactivities maybenefit
fromtheskillsoftheworkersconcerned ;thisprocess
ofcreatingnewjobsmustbeaccompanied bysuitable
socialmeasures.
Inviewofanexpectedlevelofdemandofabout2.4million
cgrtintheearly1980s,theCommissionestimatesthatan
effectiverestructuring operationinthissectorcould
affectapproximately 75000jobs(°),15000ofwhich
itisestimated willbevacatedbynaturalwastage.
Iftheoperationisextendedto'"directlyrelated
industries,thesewouldbeaffectedinthesameproportion
whichwouldmakeapproximately 30000personsredundant.
(°)SeeAnnexII

2)A3suchresultscanonlybeachievedgradually,itwillbe
necessarytocontinuetoresorttoholdingactionswhich
areessentialforthedirectorindirect ;supportof
employment.
TheCommissionconsidersthat,iftheobjectiveistobe
achieved,Communityactionwouldbeacceptabletothe
generalpublicandtotheworkersonlyifittakesfull
accountofthedifferentsituationsintheindustryineach
MemberState,andthepositiontheindustryoccupiesinthe
economyoftheMemberStateorregion.Whetherthis
operationwillbeusedtodemonstratetheCommunity's
solidaritywilldependonthepoliticalwilloftheConseil.
Stimulâtingdemand
Theprospectsgenerallyagreeduponforshipbuildingmthe
Communitypresagethepossibilityoftheindustry'sdwindling
away,leavingtheshipbuilders ofnon-membercountriesina
dominantpositiononthemarketandcapableoftakingactionto
thedetrimentoftheCommunityfleet.Inaddition,thetransfer
ofasignificantproportionoftheworldfleet
toflagsofconveniencehasbroughtintotheshipping
marketvessleswhichpresentbothoperatinghazards
(substandardships)andathreattothemarineenvironment ;and
theyaresubjecttosocialregulationwhichareunacceptable as
farastheCommunity'slabourlawsareconcerned.
l)International bodiesarealreadytryingtodevisemeansof
combatingthisformofunfaircompetition.TheCommunityshould
stepuptheactionitisalreadytakinginthisdirectionby
takingstepstowardstheadoptionofpraticalmeasuresinthe
nearfuture.
–Certainenvironmental protection measurescouldleadtoa
partialreductionoftheexcesscapacityintankerfleets
andalsoappreciablystimulatetheconversionofexistingtankers.

Morestringentsafetyregulations wouldremoveunfair
advantagesenjoyedbyshipsofnon-membercountries,
particularly thoseregisteredunderflagsofconvenience ,.
andthusacttotheadvantageoftheshipbuilding industry,
eitherdirectly(conversionsandrepairs),orindirectly
(shipswouldbescrappedmorequickly,andthiswouldspeed
uptheimprovementofthetransportmarket).Such
regulations couldalsolimitthetrendforourshipowners
toregistertheirvesselsunderflagsofconvenience .
Owingtotheunshakeable advantageofcertaincompetingship­
builders,atleastintheshortterm,marketforceswillnot
ensurethatcertaintypesofshiparecompetitive on
theinternational market–andthisalreadyseemstobethe
casefortankersandbulkcarriers-despiterestructuring and
despitethemeasuresreferredtoabove.
Measuresmaythereforehavetobetakentoforestallthe
potentialdangersofasituationwherecertainshipbuilding
countrieshaveamonopoly '
Theseshouldbesupplemented byotherstocounteractunfair
competitionresultingfromthefreightrateschargedbythe
merchantfleetsofstate–tradingcountries

-14-
III.COMMUNITY ACTION
TheCommissionintendstodirectallappropriate meansofactionto
servetheobjectivesdefinedabove.
Theseobjectiveswillnotbeattainedunless:
–since(privateorpublicinitiativesintheMemberStatesdonotcancel
oneanotherout)theCommissioncontinueswith,andstepsup,its
measurestomaketheseinitiativeslessopaqueandtocoordinate
them;
–theintervention concentrates lessandlessonmaintaining hopeless
situationsandturnsincreasingly tore-establishing maximum
efficiencyintheundertakings and,aboveall,tocreatingnewjobs
inotheractivities ;
–contactswithallthepartiesconcernedaremaintained and
strengthened ;theCommissionisalreadyinregularcontactwith
employermanagerial andtradeunionbodiesandthesecontactsshould
beintensified ;also,toobtainaclearerappreciation ofthe
possibilities ofmeetingthetypelikelytofaceCommunityship­
yards,thesecontactsshouldbeextendedtotheindustrial andtrade
unionorganisations concernedwithCommunityshipping;
–thereisgreater,permanentconcertation betweentheCommunity'spublic
authoritiesunderCommunityauspicesandwithdueregardforthespheres
ofcompetencederivingfromtheTreaty;
–Communityactioncontinues,withappropriateprocedures,throughout
thecrisissituationintheindustry.
A)Reorganization ofthesector
Theobjectiveofreorganizing thesectoriscontingentuponthe
determination ofaquantitative "indicator"ofthelevelofdemand
towhichtheshipbuilding industry'sproductioncapacityshouldbe
geared.

-15-
This"indicator"should "besetgearedtodemand-estimatedatapproxi­
mately2.4million£grtfortheearly1980s;forsubsequentyearsitshould
bedeterminedasthemarketevolvesandinconsultation withalltheparties
concerned.
Theprogressivetailoringofproductioncapacitiestothisoverallillustrative
objectiveoverafive–yearperiodwouldresultfromactionsbytheparties
concernedtoadjusttomarketdevelopments andwillalsodeterminethevarious
stepsrequiredforreorganizing theindustry.
1.Actiontocoordinate aids
Inordertoavoidthesituationwherebynationalaidsgrantedtounder­
takings-intheever-vainhopeofarecoveryinthenearfuture-divert
therecipients'attentionfromtheneedtomodernizetheirproduction
facilities-anecessaryconditionofstabilityinCommunityshipbuilding –
theCommission,initsproposailforafourthdireotive,soughttoco­
ordinatetheseaidswithaviewtoreorganizing thesectorinamanner
consistentwiththequantitative indicator.
WithpreviousdirectivestheCodununitytriedtoremovethosebarriers
tocompetition inshipbuilding whichwerenotinthecommoninterest.
Thedirectivesthereforecoveredaverywiderangeofaidsaffecting
theshipbuilding market..
Againstthecurrentbackgroundofimminentcrisisintheindustrythe
Commissionhasnowmadeproposalsspecifically gearedtoenablingthe
MemberStatestodealwiththesituation.
Suchmeasuresare,however,acceptableonlywithinlimitsandonly
insofarastheydonotworsenconditionsofcompetitiontoanextent
prejudicialtothecommoninterest.
Measuresofthistypemustalsobeinlinewiththereorganization
objectives,theaimofwhichistomaketheindustrycompetitive and
capableoffunctioning withoutaid.

-16-
TheCommission'sproposalforafourthdirective,senttotheCouncilon
4November1977»takesabundantaccountoftheindustry'sstructuralpro­
blemsandshouldthereforenotberegardedsimplyasalegalframeworkfor
limitingthegrantingofaidsbutasanessentialelementofanindustrial
approach.
TheproposalalsocoversMemberStates'aidstoshipowners andprovides
thatsuchaidsmaynotdiscriminate againstshipyardsofotherMember
States.
2.Actionsinthesocialsphere
Althoughitisnotpreciselyknownwhatwillbethesocialimpactof
thecrisisintheshipbuildingsectorandrelatedindustries (parti­
cularlyatregionallevel),specialsocialmeasureswillberequired.
TakingintoaccountexistingnationalandCommunitymeasures,proposals
fornewmeasurescouldbeputforwardoncethesocialproblemscaused
bythecrisisitselfandtheconsequences oftheCommunityprogramme
havebeenstudiedindepthwiththehelpoftheinterestsconcerned.
Socialmeasureswillbedraftedindiscussions heldintheCommunity
institutions .Apartfromanynewaids,theCommunitycanalready
intervenebymeansoftheEuropeanSocialFundwhich,withinthelimits
setbythecurrentrules,cangrantfinancialaidtovocational
retrainingschemesforpersonswhosejobsareaffectedbythe
restructuring orconversionofshipyards.
Wheretheemploymentsituationisaffectedorthreatened ,theEuropean
SocialRindcouldalsointervenethroughspecialmeasuresapprovedby
theCouncilunderaCommunitypolicyforthesector,orbymeansof
specialmeasurestopromotetheachievement oftheindustrialpolicy
objectivesforthesector.
3)Financing
(a)Atentativeestimate,forwhichthedetailsaregiveninAnnexII,
putsthetotalcostoverafive-yearperiodofreorganizing theCom­
munity'sshipyardsandrelatedindustriesspecializing inworkarising
exclusively outofshipbuilding atapproximately onethousand
millionu.a.peryear.

-17-
Most of "this would beforcreating new jobs outside theindustry .
Restructuring andconversion depend inthefirst instance ontheindustry 's
owninitiative ,butthis must beencouraged bytheMember States' making
targeted useofthefunds already allocated bythem toshipbuilding ;the
Community should also use itsfinancial resources toencourage such
initiatives .
b)Community involvement inthese operations would besecured by:
–allocating toshipbuilding aproportion oftheappropriations for
industries undergoing conversion to "beincluded intheCommunities
budgets infuture years ;
–EIBintervention inline with ,andforthepurpose ofachieving ,
Community objectives .TheCommission will use itslinks with the Bank
toensure coordination inthis connection .Coordination with the EIB
would beensured bymeans ofstatutory links ,thecurrent practice
ofinformal working liaison andpossibly byarranging fortheEIB
toberepresented onthecoordinating bodies ;
–Community borrowing ,towhich theCommission attaches great importance
asameans ofstimulating investment !
–theCommunity participating financially inanynewsocial measures
that prove necessary ,andbyusing :
.theSocial Fund forprojects toretrain workers andforvocational
training ;and
.theRegional Fund forschemes tofurther restructuring andconversion ;-
inboth cases within the limits onthe Funds .

-18- 1519/111/77E
Rev2
'theERDFallowsaidtoinvestments inand.outsidetheshipbuilding
'industryaslongasthezonesinvolvedandtheinvestmentsare
alreadythesubjectofnationalaidforregionalends.Scopefor
intervention bytheERDFwouldbeextendedthroughthe"offquota"
sectionproposedbytheCommissionif,inconjunction withthe
MemberStates,itprovespossibletoundertakeschemesspecifically
aimedatcreatingnewjobsinthoseregionsandzoneswherethe
effectofthereductionofshipyardcapacityontheexisting
employmentsituationistocreateaproblemwhichhasalready
sufficiently seriousregionalaspects.
Concertation byalltheauthoritiesinvolved,andregardforlocalsituations,
shouldalsopermitaccounttobetakenofthespecificfeaturesofasituation
andcombinedusetobemadeofallavailableinstrument,thusensuring
maximumcoordination andefficiencyinimp.lementation .
χ
XX
Coordinating thevariousinstruments ,bothwithrespecttotimeandtheir
application–i.e.planningCommunityaction–wouldderivefromthe
concertation neededbetweenthepartiesconcerned ,theauthorities in
particular.However,itwouldappear,particularly inthepresenteconomic
context,thatquiteatimewillelapsebeforeconversion schemescanbe
mature.It.isthereforeessentialthatresourcesforimprovingthe
efficiencyoftheshipyards,particularly partoftheappropriation
enteredinArticle375of"theCommunityBudgetforfinancialyear1978,
shouldbespentimmediately ,andthenecessaryholdingoperationsforpreserving
jobsconductedatthesametime.

B.Stimulating demand
l)Initsenvironmental programmeof17May1977"theCouncilacknowledged
&)theimportanceofstrongeractionagainstmarinepollution.HieIMCO'
andOECDhavedonestudiesonthis,inparticularpollutioncaused
"byships(introductionofsegregatedballasttanks).TheUnitedStates
hasshowngreatinterestintheswiftadoptionofstrictmeasuresof
thiskind.
IftheCommunityfollowedsuitthiswouldcreatemoredemandforthe
yardstomeetwhilehelpingtopreventmarinepollution.
Nevertheless theintroduction ofsuchmeasures,thetimetakentobring
themintoforce,andtheirscope,shoulddependonthecost–benefit
studiescurrentlybeingmade.
2)Inordertopreventunfaircompetition ,actionshouldbesteppedup
againstshipswhichdonotmeetminimumsafetystandardsordonot
observeminimumsocialrulesbyintroduction ,orstrengthening
appropriate measuresatCommunitylevel,eitherunilaterally or
internationally (e.g.banningshipsfromCommunityportsiftheydo
notcomply).
3)TheCouncilisdiscussingvariouspossibleformsofactionatCommunity
levelrelatingtoseatransport.Shouldthesematerialize aspractical
measuresaimedatstrengthening thepositionofthefleetsoftheMember
Statesinworldmarkets,theycouldindirectlystrengthentheposition
oftheshipyards.TheCouncilhasalreadyhelddiscussions ,atthe
Commission'sinitiative,onthepracticesofcertainstate-trading
nations.Anumberofmeasuresarebeingconsidered andwillbe
embodiedinappropriateproposalswhichmayinsomecasesgosofar
astolimittheinvolvement ofthesecountries'fleetsincertain
typesoftransporttoCommunitydestinations .
s)IMCO-Intergovernmental MaritimeConsultativeQrganization

-20-
However,theCommissiondoesnotsuggestthattheinterestsofthe
shippingindustryandshippersshouldbesubordinated tothoseof
shipbuilders .Theshippingindustryexists;tocarrytheworld's
trade,theshipyardstobuildtheshipsitneedsforthispurpose.
ThehealthoftheCommunity'sshippingindustryinworldmarkets,
andofthetradeitcarries,requirethatourshipownersmustbe
freetoordertheirvesselswhereverthetermsappeartothem
tobemostadvantageous ,oncetheCommunity'sshipyardsareagain
competitive .
C.International action
Usingtheeffortstoreorganizetheindustryasastartingpoint,the
Communityshouldstepupactionatinternational leveltogetits
partnerstomakeasimilarefforttowardsthebalancedreductionofthe
world-wideovercapacity andtheelimination offactorsunsettlingthe
market.
TheCommunitymusttakeenevengreaterpartinworkinhandininter­
nationalorganizations concernedwithproblemslikelytohaveadirect
orindirecteffectontheshipyards'levelofactivity.Itmustalso
strengthencooperationwithintheOECDtoensureamoreequitablespread
oforders.
Nevertheless ,itwouldbeunrealistictoexpectsatisfactoryresults
fromorganization ofthemarketbynegotiations withintheOECD.

-21-
IV.CONCLUSIONS
TheCommunityisnowfacingproblemswhichaffectmanyindustrialsectors.
Thereforeactiononshipbuilding musthavedueregardforconsiderations
relatingtoamorecomprehensive approachtotheseproblems.ButtheCom­
missionconsidersthatactiononshipbuilding isnowurgentlyrequired;
itcannotawaittheformulation ofacomprehensive approachtothecrisis,
butmustalsobewithoutprejudicetotheoutcomeofreflectionstothis
end.
ThepointssetouthereinleadtheCommissiontotheopinionthatpresent
practicestosupportshipbuilding willproveinadequateintheverynear
futuretostemtheconsequences ofthestructuralcrisisaffectingthe
industry.
Thepointsinquestionsdonotpermitadetailedactionprogrammetobe
mappedout;thismust,inanyoase,flowfromextensiveconcertation ;
buttheyprovideevennowasufficientbasisforanumberoffundamental
policyguidelines,tobesupplemented atoperationallevelbydecisions
theCouncilcouldbecalledupontotakeatalaterdate.Proposalsfor
decisionswhichmayberequiredwillfallwithinthecontextofthesix-
monthlyreportswhichtheCommissionwillcompilefromJuly1978.
TheCommissionthereforenowrequeststheCounciltoadoptthefollowing
resolution :
THECOUNCIL
–takingnotethatitisnowestimatedthatintheearly1980sdemand
fornewvesselswhichcouldbemetbyshipyardsintheCommunity
willbeapproximately 2.4millioncgrt;
–hasdecidedthatcapacityforthenewbuildingofshipsmustbefixed
withregardtothemarketsituationandthatshipyardsmustbeenabled
toachieveasatisfactory levelofcompetitiveness byconversion
outsidetheindustryand,inanyevent,byimprovingproduction
facilities,managementandresearch:

-22-
requeststhepublicauthoritiesconcernedwiththeproblemsofthe
industryatlocal,nationalandCommunityleveltoputtheemphasis
cnthecreationofnewjobstoreplacethoseprogressively lostinthe
newbuildingofships;
hasdecidedtosetupinordertopermitabetterunderstanding ofthe
sectorandofitsproblemsatCommunitylevel,astandingbodyinthe
formofacommitteeofseniorofficialsbriefedtocontributetothe
progressiveadjustmentofproductioncapacitiestodemand,asfaras
possibleonthebasisofnationalprogrammes,buttakingaccountalso
ofchangesinforecastworld-widesupplyanddemandandofprogress
withthecreationofnewjobs;theprocessofadjustingcapacitieswill
alsotakeaccountoftheresultsofinternational studiesdealingboth
withgeneralproblemsandmattersspecifictoshipbuilding ;
notesthattheCommissionwillsubmitassoonaspossibleproposalsfor
additionalsocialmeasures;
notesthatfromJuly1978"theCommissionwilldrawupsix-monthly
reportsonthestateofandprogresswiththereorganization ofnew
merchantshipbuilding ,havingregardamongotherthingstothepoints
setoutinthisCommunication andwillsubmitappropriateproposals
fordecisionsattheearliestpossibledate.

AÏTNEXI
Characteristics ofthecrisisinshipbuilding
SeaTransport
Since19751in"thewakeoftheworld-wideeconomicrecessionpersisting
since1974»therehas"beenaconsiderable drop-forthefirsttimein15
years-indemandforseatransport.
TRENDSINTHEVOLUMEOFWORLD-WIDE SEATRANSPORT
(inmilliontonnes)
year drycargo oil total
i960 540 540 1080
1965 780 860 1640
1970 1110 1420 2530
1974 1-450 1800 3250
1975 1400 1690 3090
I
l
Thishasleftalargesurplusoftankers.Thesituationhasbeen
furtheraggravated bydeliveriesofsubstantialtankertonnageduring
1975and-1976,againstordersplacedbefore1973whichithadnotbeen
possibletocancelorconvertintoordersforothertypesofvessel.

Thus,despitethemanyordersfortankersthatwereactuallycancelled ,
itisestimatedthatsurplustonnageisatpresentapproximately
140milliondeadweighttonnes(dwt).Inconsequence ,freightrateshave
fallenbelowbreak–evenpointanddonotfullycoveroperatingcosts,
excludingdepreciation .Accordingtothelatestforecastsitistobe
fearedthatthemarketwillbeunabletotakeupthesurplustonnagebe­
forethemid-1980s.
Asregardsgeneralcargo,theincreaseinshipmentstotheNearandKiddle
Easthastosomeextentcompensatedforthedropintrafficbetweenin­
dustrialized countries ,
However,itisthecarriageofdrybulkcargothathasbeenhardesthit
since1975^>y"theeconomiccrisis.Asaresultdrybulkfreightrateshave
alsodroppedtoaverylowlevel.Andduring1975and.1976manyorders
fortankerswereconvertedtoordersforbulkcarriers,deliveriesofwhich
arenowbeginning.
Situationintheshipyards
Theenormoussurplusoftankersandthethreatofseriousovercapacity in
bulkcarriershasledtoanoticeabledropinorderingsincemid-1974 »
particularly oftankers,butannualworldproduction wasstill33to
34milliongrtin1975and.3-976asaresultofordersinhandfrom1972
and1973.In1977productionwillstillbesome30milliongrt.

-3-
Thesituationisthemoreseriousoecau.sethetypesofvesselmost
affectedbytheconsequentdeclineinorder "booksarethosethat
haveprovidedthemainworkloadformostshipyards.Thefollow
tablesmakethisclear.
BREAKDOWN OFTHEWORLDFLEETBYTYPEOFVESSEL
(inmillionert)
xfype
Where
registeredTankers Bulkers(dry
andOBO)Othervessels Total
C. 37.2 17.7 22.4 77.3
Worldtotal 168.2 91.7 112.1 372.0
Source;Lloyd*s Situationon:1July1976
TONNAGEDELIVERED BYTYPEOFVESSEL
VÎ2Lmillionert)
^vType
YearTankers Bulkers(dry
andOBO)Othervessels Total
1975 22.7 6.2 5.3 34.2
1976 19.9 7.9 6.1 33.9
Source:Lloyd's Situationon:31.12.75/76
Thishasforcedshipyardstocutpricesconsiderablytoobtainanessential
minimumoforders.TheJapanesehavebeenbetterabletocutpricesthan
Europeanshipyards,whichhasaddedanewelementofcompetition.

Thevarious forms ofaidcurrently granted bymost governments toenable
their countries' yards toaccent orders ,atprices which doless andless to
cover costs ,have hadtheeffect ofmaintaining temporarily anartificial
level ofdemand .Moreover ,the impression isthat not afewrecent orders
have been placed simply because prices are solow ,thus ,infact ,
anticipating theshipping market 'sfuture needs ,particularly forbulk
carriers .
Compared with anannual world production inrecent years ,ofupwards of
30million grt (approximately 20million crgt ),orders since 1975 have dropped
to13million grt (approximately 13million _crgt because thetypes ofvessel
aredifferent ).Itishighly probable that orders will noteven reach this
level in1977 »and -will fall further inthefollowing three orfour years .
According totheavailable data ,demand will probably besolowuptothe
beginning ofthe1980s that theshipyards' level ofactivity will tend to
settle attwo thirds tohalf that of1975 *
Forecasts
Assuming anaverage GDPgrowth of4$fortheperiod 1976 to1985 »"themarket
will probably recover towards 1984 .If "thegrowth rate islower ,recovery
will bedelayed afewyears .IntheCommunity ,this recovery will bring
anupturn inactivity inshipyards ,butatwhat level itstays will depend largely
onthedetermination with which theindustry andtheauthorities face up
tocompetition ontheworld market .
Onthesubject ofcompetition ,itistobeexpected that Japanese
shipyards will make every effort toadapt their advanced production tech­
nology (developed forseries production oftechnically rather simple
vessels )tothebuilding ofmore sophisticated ships .

-5-
Countrieswhichhaverecentlydevelopedshipbuilding industrieswill
probablykeeptheadvantageofverylowwageratesforaconsiderable
timetocome.Asaresult,theywillbeabletowinordersduringthe
periodI976-I985atpricesunacceptable toCommunityshipyards,and
thereforeconsolidatetheirposition.Consequently anyestimateofthe
limitstowhichtheirshipbuilding industrycanexpandisuncertain.
Finally,ordersfortankers,evenafterthecurrentsurplushasbeen
absorbed,canneverbeexpectedtoregaintheartificially highlevel,
basedonagrossoverestimate oftheexpansionofrequirements ,ofthe
yearspreceding1973.
Inthelightoftheseoomments,theforecastsinthefollowingtable
shouldberegardedasattheupperlimit:

-6-
PRODUCTIONFORECASTS(inmilliongrt/crgt)
I1975production
IIForecastforproductioninI98O,"basedonforseeabledemand
IIIEstimatedproductionin1985,"basedonsomeoptimisticassumptions (AWES)
IVModifiedestirnateof1985production
I II III
(1975 .(I98O) (1985)(1985)
grtcrgtgrtcrgtgrtcrgtgrtcrgt
EuropeanCommunity7.84.4 2.4 3.9 3.1
RestofAWES
I5.33.2 1.5 2.6 2.1
AWES 13.17.6 3.9 6.5 !5.2
Japan 17.07.7 3.9 6.5 5-2
Restoftheworld4.24.2 4.0 7.2 5-8
Total,world 34.319.510.4H.8 20.2 16.2
NOTES
1.Theseforecastsareconsistentwithstudiescarriedout"byAWESinmid
1976.Theyarebasedonanassumed4%growthinGDPduring1976-85.
2.TheforecastforworldproductionincolumnIVismodifiedinlinewiththe
assumptionthatGDPwillgrow"by3»5$p.a.during1976-85.
3.Thegeographical distribution ofworldproductionisthereforebasedon
thefollowingassumptions :
-countriesotherthanAWESandJapan(therestoftheworld),will
notincreasetheleveloftheiractivitiesuntilafterI98O,but
willdosothereafterbothbybetterviseofexistingcapacities ,
andbysomeexpansion.
-AWESyards,andtheJapanese,will,asintherecentpast,have
equalshares,measuredincgrt;itishopedthatinternational
cooperationwithinOECDwillbringthisabout.
-shareswithinAWESbetweentheCommunityandtherestwill,as
before,be60/40.

ANTrEXII
Inventoryoffinancerequirements
forreorganizing theshipbuilding industry
FinancialinstrumentsavailabletotheCommunityshouldmakearealcontri­
butiontowardsprovidingthefinancialstimulusneededtoadaptorconvert
productionfacilities.
Inviewofthepresentsurplusofproductioncapacity,however,itisout
ofthequestionthatthesefinancialinstruments shouldbeusedforpro­
ductionsupportschemes.
Anyrestructuring oftheshipbuilding industrywillmeanheavyinvestment
forrationalizing andthemodernizing equipment,productiontechniques,
management andsalesand,aboveall,fortheredeployment ofthelabour
maderedundantbythecrisiseitherinthesameoranotherindustry.
Itisthereforenecessarytoestimate*)-eventoafirstapproximation
fromtheoveralldatanowavailable-thepossiblecostoftheschemeand
thenoutlinehowitcanbefinanced.
1.Costofreorganization schemes
Giventheuncertaintyinthesectorandtheneedtocheckallthe
factorsanddatawiththeMemberStates,theindustryand
tradeunions,itisparticularlydifficulttoproduceanestimate
amountingtoanythingmorethanafirstapproximation oftheorders
ofmagnitude.
: ./•
*)'Allestimatesarebasedon1977values.

-2-
Thedifficulties areallthegreatersincetheestimatescoveralarge
numberofpeoplewho,itisrealised,will"beencountering difficulties
intheirworkinglifewithouttheCommissionbeingabletodomuchat
presentbeyonddisplayingitsfirmintentiontoseeksolutionscausing
theleastpossibledifficulties .
Intervention willvaryinamountaccordingtothetypeofschemeand
theindustryattractingit.
a)Intheshipyardsthemselves:
-Overfiveyearsestimatednaturalwastagewillreduceemploymentby
15000,bringingthetotallabourforcedownto150000.Ifproduc­
tionlevelsoutataroundtheexpectedvolumeofdemand(2.4million
cgrt),a45$reductioninproductioncapacitywouldresult;this
wouldprobablymeananevengreaterreductioninemployment owingto
thehoped-forincreaseinproductivity .Consequently ,itishardto
seehowthe(bythen)soundcompaniescouldemploymorethan90000
personsattheendofthefive-yearperiod,whichmeansthatabout
60000job3forredundantshipyardworkerswouldhavetobecreated;
jlnaddition,underregionaleconomicpolicies,provisionshouldbe
madeforreplacingthe30000jobslostsince1975throughnaturalwastage
Whereemploymentintheshipyardsisconcerned,itcanbeestimated
fromexperiencethattheaveragecostofcreatinganewjoboutside
willbe50000u.a..The60000jobstobecreatedforredundant
shipyardworkers,then,wouldcost3000millionu.a.
-Onthebasisofinvestmentinreoentyears,bothinMemberStates
andSweden(whereithasbeenparticularly heavy)itispossible
toestimatethecostofshipyardrestructuring andinternalconversion
at900millionu.a.(lO000u.a.x90000jobs).

-3-
b)Inthealliedindustries,itisdifficulttoestimatethesplit
betweenconversioninsideandoutsideanindustry,asitwill
dependpartlyontheindustrytowhichtheyareconverted.Never>-
theless,thecostofconvertingtheseindustries maywellbe
proportionately lowerowingtoagreatereaseofconversionto
otheractivities.Usingacostof25000u.a.perjobcreated
asabasis,theestimatedcostofconvertingapproximately
30000jobswillbe750millionu.a.
Overaperiodoffiveyearsfrom1978»therefore,thecost
ofconversion andrestructuring sohemeswouldbeofthe
orderof4650millionu.a.,i.e.aboutonethousandmillionu.a.
peryear.
2)Methodsoffinancing
Theoostoffinancingtheseschemesmustbesharedbetweentheauthorities'
budgetaryresourcesandcompanies' ownresourcesorsuchfundsasthelatter
oanraiseonthemarket.

-4-
i)AtpresenttheMemberStatessupportthesectortothetuneof600mil­
lionu.a.peryear.Moremightbeneededoverthenextfewyears.
Moreover,theoutlookissuchthatintervention byStatesshouldpro­
gressivelybedirectedtowardsattainmentofthecommonobjectivesof
reorganizing theshipyards.WhereMemberStatesapplytotheRegional
5\indforthecreationofjobstoemploylabourmaderedundantbythe
shipyards,Communityresouroeswouldbeaddedtonationalaids.Again
attherequestoftheMemberStates,theSocialFundcouldhelpwith
vocationaltraining.
Theestimatedcontribution frompublic-authority budgetstothecreation
ofjobsoutsideshipyardsandalliedindustrieswillaveragesome30/-,
entailingexpenditure of1150millionu.a.spreadoverfiveyears.The
contribution frompublicfundstointernalschemeswouldbeatahigher
rateinviewofthefinancialdifficulties oftheindustry.
Thefinancialcontribution forwhichtheshipbuilders areresponsible
cannotbesignificant inviewoftheirliquiditypositionandtheir
considerable burdeninmaintaining productionfacilitiesbutitisto
behopedthattheycanparticipateinfinancingathird(300millionau.a.)
oftheestimatedexpenditure necessarytobringaboutoveraperiodof
fiveyearstheirmodernization andinternalreconversion toothertypes
ofproduction,thebalance(900–300)of600millionu.a.beingborneby
theStates.
Takeasawhole,therefore,thecontribution fromthepublicpursetothe
rationalization ofthesectormaybeestimatedatabout1750millionu.a.

-5-
ii)Thefinancialcontribution madeinthecompaniesmay"beassessed,
"bydeduotion,at2900millionu.a.suppliedbytheirfunds.
TheCommunitycouldparticipate inthiscategoryoffinancingby
turningtothefinanoialmarket,boththroughtheEIBwith
itsownproceduresandmethods,andbyrecoursetoCommunityborrowing.
(l)Theinterventions oftheEIBwouldbemadeonthebasisofprojects
whicharetechnically andfinanciallyviableandinaccordancewith
availableguaranteesandthewayinwhichexchangeriskscanbe
coveredifnecessary.

SLT1TEX .III
DRAPT
PROPOSALFORACOUNCILDECISION SETTING
UPASHIPBUILDING COMMITTEE
TheCounciloftheEuropeanCommunities ,
HavingregardtotheTreatyestablishing' theEuropeanEconomicCommunity,
HavingregardtotheproposalfromtheCommission,
Whereason 1977»theCounciladoptedaResolutionconcerningthe
reorganization oftheshipbuilding industry,
Vfnereasitisnecessarytoensuretheimplementation ofcommonobjectives
bycoordinating nationalandCommunityactioninthisfield,andtoestablish
astandingconcertation procedureonmattersaffectingshipbuilding ,
WhereasaShipbuilding Committeeisrequiredforthispurpose,
HASDECIDEDASFOLLOWSi
Article1
AShipbuilding Committee,hereinafterreferredtoasthe"Committee,is
herebyestablishedtoadvisetheCouncilandtheCommissionandtocontri­
butetowardsthecoordination ofnationalandCommunitypolicies.
Article2
1.PursuanttotheCouncilResolutionadoptedon theCommittee
shallmonitortrendsinthelevelofdemandandcontribute towardsor­
ganizingtheadjustmentofproductioncapacitiestothatlevelandim­
provingproductionstructures .
2.AttherequestoftheCouncilortheCommission,
andwithoutprejudicetotheauthorityconferredonotherbodies
bytheTreatyorac+-nderivingtherefromandparticularly thecompetences
oftheCommissionundertherulesoncompetition ,theCommitteeshall
alsoundertakestudiesrelatingto:
./•

-2-
a)trends intheeconomic ,social andfinancial situation intheCommunity
shipbuilding industry ;this study shall hecontinuous andcomprehensive 5
b)anycriteria likely topersuade theMember States topractise solidarity
incarrying outtherequisite reduction ofcapacities and toensure
that market trends andtherelevant guiding principles laid down bythe
Council are taken into account intheprocess ;
c)national andCommunity means andmethods ofenhancing thecompetitive­
ness arid resilience ofthesector and forpromoting theredeployment
ofpersonnel having tobedirected toactivities outside thesector ;
d)developments inother fields that mayinfluence production .
3.TheCommittee shall report itsfindings totheCommission and theCouncil .
Article 3
1.Member States and the Commission shall each nominate one full member and one
alternate .Members ofthe Committee and their alternates shall bechosen
from among senior officials responsible for shipbuilding policy ;the full
member representing theCommission shall beaMember oftheCommission
nominated bythe latter .
2.Unless otherwise decided bytheCommittee ,members may call ontheassis­
tance ofqualified persons representing theinterests concerned .Repre­
sentatives oftheCommission departments may take part inmeetings of
theCommittee oritsworking groups onsubjects within their responsibi­
lities .
3.TheEuropean Investment Bank mayappoint anobserver .

-3-
Article4
1
1.TheChairmanoftheCommitteeshall "betheCommissionrepresentative .
♦
2.TheCommitteemayremitspecificquestionstoworkingpartiescomprisii
certainofitsmembersassistedbyalternatesorexperts.
3.TheCommissionshallprovidetheCommitteesecretariat .
4.TheCommitteeshalllaydownitsownrulesofprocedure.
Article 5
Onspecificquestions,andmaccordancewithitsrulesofprocedure ,
theCommitteemayseektheopinionoftheinterestsconcerned.
DoneatBrussels,
FortheCouncil