ARCHIVESHISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(80)132
Vol.1980/0043

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IW
COMMISSION
OFTHE
EUROPEAN COMMUNITIES
GeneralSecretariatCOM (80)132 final
Brussels,8thApril 1980
FOROFFICIAL USEONLY
REQUEST FOR COUNCIL ASSENT UNDER THE SECOND PARAGRAPH
OFARTICLE 54OFTHE ECSC TREATY TOFINANCE ANINVESTMENT
PROGRAMME TORESTRUCTURE THE SHIPYARDS OF
-BLOHM :&VOSS ANDCANTIERI NAVALI RIUNITI SPA.
(Communication from the Commission tothe Council )
COM (80)132 final

NotetotheCouncil
Subject:RequestforCouncilassentunderthesecond,paragraphofArticle54
oftheECSCTreatytofinanceaninvestment programmetorestructure
theshipyardsofBlohm&VossandCantieriNavaliRiunitiSpA.
A)BlohmandVosspro.ject
BlohmandVosshasappliedtotheCommissionoftheEuropeanCommunities
foralong-termloanamountingtoDM10million(approximately 4.010millionEUA)
tofinancetheprojectdescribedbelow.
Company*BlohmandVossAG,Hamburg
'Sharecapital:DM61.7million
ThyssenAGhasamajorityshareholding inthecompanyof
64.7^.Theremainingsharesareheldbythe"Elbe"managing
company(BlohmGroup)(l?.9/^')>SiemensAG(12.3%)andthe
vonDietleinGroup(4«9?0«
Applicant c
BlohmandVossisoneoftheoriginallargeGermanshipyards.The
companyhasalwaysbeenengagedinspecializedshipbuilding ."iaJhereasit
formerlyproducedmainlypassengerandnavalvessels,theyardhasconcentrated
inrecentdecadesprimarilyonultra-modern cargovesselsandspecialized
ships.However,newbuildingshavebeenofsteadilydecreasingimportance
inthepastfewyears.Inordertoincreaseitsresistancetocyclical
fluctuations thecompanybegantodiversifyitsproductionprogramme,so
thatinrecentyearsactualshipbuildinghasaccountedforlessthan50f
ofproductiontime.Thediversification hastakentheformofshiprepairs,
fittingoutofships,boilermaking ,generalengineering anddefence
engineering .

Description ofthepro.iect
In1979"arid""T9'80thecompanyintendstocarryoutaninvestmentprogramme
foratotalvalueofDM45*8million.Themainobjectiveoftheprogrammeis
tomodernizethenewbuildingssectorandtoexpandthemechanicalengineering
department,itthesametime,consid3rable infrastructrre investmentsare
necessary .
Thetotalinvestments aredividedasfollows °
-newbuildings ■.DM12.7million
-engineering DM9-9million
-shiprepairing DTi2.0million
-infrastructure measures DM16.2million
-othersmallercapitalprojects DM2.0million
-investmentsinsubsidiarycompanies DM3.0million
DM45.8million
Thebiggestsingleinvestment,DM10million,isfortheconstruction
ofanassemblyshopforshipbuilding ,whichshouldmakeitpossibletoreplace
thepreviouslyusedsectionalbuildingmethodbymodularassembly.Inthis
method,severalsectionsareassembledintheshopintoamodulewhichis
thenfittedwiththecompleteequipment,includingtheengineering components.
Theadvantagesofthemodularbuildingmethodovertheconventional ^
sectionalbuildingmethodincludes
-areductioninunproductive -.working :-time,sinceproductionisunaffected
byadverseweatherconditions ^:•'.••••>^
-improvedworkingconditions ?
-ii?steelshipbuilding ,theuseofmoreconvenientweldingprocesses,
abandonmentofassemblyonslipwaysandtheuseofstandardframes$-
-inshipbuilding andingeneralmachineinstallation ,a*reductionin
adaptationworkandthusinmaterialhandlingtimeforpipeworkengineering ,
engineinstallation insituandfitting -work.
However,theshopandpre-assembly areaareequallysuitedtolarge-
scaleweatherproof productionoffullyequippedlivingunitsandotherfully
fittedlargebuildingcomponentsforoffshoreproductionplatforms.
Theinvestmentsintheengineeringsectorareaimedatmodernizing the
existingworksandincreasingproductioncapacityforboilersandturbines
whicharerequiredforthermalpowerstationsandotherindustries .

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Theobjectoftheinfrastructure investmentsistoimproveenergysupplies
andinternalcommunications,aswellastoincreasetheefficiencyofmanagement
andtomakeofficesavailablefornewstaff.
Economicassessment
Throughouttheworldshipbuildingisgoingthroughaperiodofadap­
tationbroughtaboutbythecrisisintheindustry.
Atthebeginningofthe1970's,overestimates byshipownersofworld
tradeandenergyconsumptionledtoasteepriseinorderswhichhasresulted
inexcesstonnage,particularly intheoiltankersector.In1975"the
demandformarinetransportdeclinedsharplyandthetankermarketcollapsed.
InitsResolutionof19September1978,theCouncilincludedacallto
theshipbuilding industrytorenewitseffortstoadapttothenewmarket
situationandimproveitscompetitiveness ,togetherwitharequesttonational
andCommunityauthoritiestoassisttheshipbuilding industryinitsefforts.
TheBlohm&Vossinvestments ,whichaimtomodernizeshipbuilding ,are
suitableforstrengthening competitiveness inthissector.Thecompanybelieves
thatmodularconstruction willhelptomaintainshipbuilding inthelongterra
andpullitoutofthedoldrumsofrecentyears.Themodernization ofthe
engineering department ,whichistosomeextentnecessaryforthecreationof
newoutlets,willalsoassistfurtherdiversification andthusthemaintenance
andexpansionoftheworkforce.
Theinfrastructure investmentsare'rieces'sarytoensurethatproduction
runssmoothly.
.Inthenextfewyears,thecompanyplanstoincreaseitsworkforce,
whichhasbeendrastically reducedinrecentyears.Thiimoveisverywelcome
inviewofthepresentemploymentsituation.
B)CantieriNavaliRitmiti
Loanrequested :Lit25000'million(approximately 21.743millionSUA)
RegisteredOffice;Genoa
Workss Genoa,RivaTrigoso(Sestri),AnconaandPalermo
SharecapitalsLit39000million(approximately 33.9millionEUA)
Principalshareholder sTheholdingcompanyFinanziariaCantieriNavaliSpA
(Pincantieri),holds100$;ofthecapitalofCantieri
NavaliRiuniti.Thisholdingcompanyiswhollyowned
bjrtheIRI(istitutoRicostruzione Industriale).

-4-
Company:
GenoasThecompany'sfieldsofactivityincludeshipbuilding for
civilandnavalpurposesaswellastherepairandrefitting
ofvessels.Inaddition,itproducesequipmentforuseboth
atseaandonlandincludingturbines,reductiongearing,
hydraulicequipment,screwpropellers ,etc.Atpresent,these
fieldsofactivityaredividedasfollows s
Shiprepairsandrefitting(includingmarinedieselengines);
RivaTngoso
andAnconasConstruction ofmerchantandnavalvessels ^
Productionofcomponents ;
Palermo 5Construction ofmerchantvessels;repairsandrefitting;
productionofcomponents .
Description oftheProject
Theaimoftheprojectistorestructure theAnconashipyard.The
companyhasdecidedtocarryoutthisinvestmentinordertoensurethesurvival
oftheyard,ofwhichtheequipmentandproductionprocessesarenolonger
economicorsuitableformoderntechnology .Moreover,theprojectissituated
inanareaofhighuneraploynientwheretheyaidisamajorproviderofjobs.
VJhentheprojectiscompletedtheAnconashipyard,whichformerlyproduced
bothmerchantandnavalvessels,wi1i".c.qiVgeftrateonmerchantvessels;
construction ofnavalvesselswillbetakenoverbytheRivaTrigosoyard.
Theprincipalaimoftherestructuring planistoimproveproductivity
byintroducing themodularconstruction process.Eachvesselwillconsist
ofanumberofmoduleswhichwillbeconstructedintheworkshopsandthen
assembledinthedock.Thismethod,whichdiffersfromthetraditional method
wherethewholeshipwasconstructed ortheslips,willpornitafurther
rationalization ofworkwiththeaddedadvantagethattheworkwillbecarried
outindoors.Thecomponentsinsidethemodulewillbestandardized asfaras
possible(sametubes,sections,doors,etc.)andthiswillresultinasub­
stantialreductioninconstruction costs.
Therestructuring willincreaseAncona 1saverageannualoutputfrom
2.2vesselsto3.4vessels(5200grosstonnes).However,theRivaTrigoso
andPalermoyardswill,atthesametine,ceaseconstruction ofmerchant
vessels,therebyreducingby.50$;'.theproductioncapacityofthecompanytaken
asawhole.
Itwillbepossibletoconstructthefollowingmaintypesofvessels
atAncona:
-roll-on-roll-offvesselsfrom5000to20000tonnesdeadweight;■
-multipurpose vesselsfrom10000to2G000tonnesdeadweight;
-cargolinersfrom10000to25000tonnesdeadweight .

-5-
Thefollowing work will benecessary tocarry outtherestructuring
plans
?-reclamation ofanarea of180000r.from the seainthevicinity ofthe
present yeard ;
-construction ofaworkshop formodule assembly ^
-storage facilities ?
-newdock 240 rainlength and 55oinwidth j
-infrastructures andancillary services .
The cost .ofthis i.7ork isshown below
Lit '000 million
-Buildings andstructures (including dock andland
reclamation ) 46.3
-Equipment andtools 14.9
-Infrastructures and services 6.0
67.2
Lit 17000million hasbeen spent onwork which has already commenced .
Economic aspects •.•••
■1■■■■ ■|»Ai■ ■■M
Throughout theworld ,shipbuilding isgoing through aperiod of
adaptation brought about bythecrisis intheindustry .
Atthebeginning ofthe 1970 'soverestimates byshipowners ofworld
trade andenergy consumption led toasteep rise inorders which hasresulted
inexcess tonnage ,particularly inthe oiltanker sector .In1975 ?demand
formarine transport declined sharply and thetinker market collapsed .
InitsResolution of19September 1978 ,theCouncil included acall to
the shipbuilding industry torenew its efforts toadapt tothenewmarket
situation andimprove itscompetitiveness ,together with arequest tonational
and Cormriunity authorities toassist the shipbuilding industry inits efforts .
Although ,ashasbeen stated above ,theworld shipbuilding crisis affects
alltypes ofmerchant vessels ,oiltankers ,followed bybulk carriers ,arethose
most affected .Ontheother hand ,thesituation isslightly more favourable
forcertain other types ofvessels ,forexample ,general cargo ships (roll-on -
roll-off vessels ,multipurpose vessels ,cargo liners etc )aswell ascertain
other non-merchant ships (e.g. ferries )forwhich demand haseven improved .
40'/•oftheItalian merchant fleet ,obsolete toafairly large extent ,will
have tobereplaced inthe next fewyears .
TheAncona project ,which contains plans forspecialization inthe
general cargo vessel sector ,fits inwell with thegeneral outlook described above .

-6-
C)CONCLUSIONS
Theshipbuilding seexor isone ofthalargest users ofsteel .Amajor
part ofthematerials used inship construction isproduced either directly
(sheet ,sections ,tubes ,etc)orindirectly (engines ,engineering components ,
various types ofinstruments ,etc)bytheiron andsteel industry .
Thecrisis intheshipbuilding industry canbesurmounted ,inthefirst
instance ,only byarestructuring policy toreestablish thecompetitiveness
oftheindustry .Failure tocarry outaprogramme ofrestructuring will simply
result intheclosure ofcertain yards .Theiron and steel industry ,currently
also faced byavery difficult situation ,v-ould feel therepercussions inthe
form ofafurther reduction insteel consumption .Theheavy gauge sheet
sector ,whic --atpresent has thegreatest surplus ofcapacity ,would be
depressed even further .
Theprovisions ofthesecond paragraph ofArticle 54oftheECSC Treaty
provide forthefinancing ofprojects which contribute directly orprimarily
tofcicilitating themarketing ofsteel .
Since the ElohoLVoss andCantieri Naval iRiuniti projects areeligible
under these provisions (inaddition ,thecompanies inquestion obtain their
supplies ofsteel exclusively from Community sources ),theCommission has
agreed inprinciple tothegranting oftheloans requested .
Thegranting ofthe loans onnormal market terms andconditions shall have
noimplications asregards theCommission 'sappraisal ofanyaids that might be
envisaged fortheprojects .
The Commission therefore seeks the assent ofthe Council for the
granting ofthefollowing loans under the se.gond paragraph ofArticle 54
oftheECSC Treaty :
a)K>10million (approximately 4.010 KSIJA )oritsequivalent toBlohm &
Voss :
b)Lit25000million (approxinately 21.743IiE'JA )oritsequivalent to
Cantieri Navali Riuniti .