13. 11. 78 Official  Journal  of the European  Communities No C 269/53 
Opinion  on the communication  from  the Commission  to the Council  entitled  'Reorganization 
of the Community  shipbuilding  industry' 
The text  referred  to the Committee  has been  published  in Official  Journal  of the European 
Communities  No  C 10 of 12 January  1978,  page  5. 
A. LEGAL  BASIS  FOR  THE  OPINION 
On 20 December  1977,  the Council  referred  the abovementioned  proposal  to the Economic  and 
Social  Committee  in accordance  with  Article  198  of the Treaty  establishing  the European 
Economic  Community. 
B. OPINION  OF THE  ECONOMIC  AND  SOCIAL  COMMITTEE 
The Economic  and  Social  Committee  prepared  its opinion  on the above  matter  at its 159th 
plenary  session,  held  in Brussels  on 31 May  and  1 June  1978. 
The full  text of the opinion  is as follows: 
THE  ECONOMIC  AND  SOCIAL  COMMITTEE, 
Having  regard  to Article  198  of the EEC  Treaty, 
Having  regard  to the request  made  by the Council  of the 
European  Communities  on 23 December  1977  for an 
opinion, 
Having  regard  to the decision  taken  by its Bureau  on 
31 January  1978,  instructing  the Section  for Industry, 
Commerce,  Crafts  and Services  to draw  up an opinion  and 
a report  on the matter, 
Having  regard  to the opinion  issued  by the Section  for 
Industry,  Commerce,  Crafts  and  Services  on 10 May 
1978, 
Having  regard  to the oral  report  made  by the rapporteur, 
Mr Evain, 
Having  regard  to the discussions  at its 159th  plenary 
session  held  on 31 May  and  1 June  1978  (meeting  of 
31 May  1978), 
HAS  ADOPTED  THE  FOLLOWING  OPINION 
with no votes  against  and  one  abstention: 
1. The  shipbuilding  industry  throughout  the world 
is suffering  from  a structural  and  cyclical  crisis 
unprecedented  in scale  and duration.  This  crisis  is due to 
an imbalance  between  supply  and  demand  on the new 
building  market.  On the one hand,  demand  has severely 
contracted  owing  to the oil crisis  and the world  recession. On the other,  supply  has increased  enormously  as a result 
of a mis assessment  or new  tonnage  requirements.  Excess-
ive ship  financing  facilities  contributed  to this  mis-
assessment.  Because  of the serious  impact  of the crisis  in 
the various  shipbuilding  countries,  there  has  been 
government  intervention  in the  international  new 
building  market,  with  the inevitable  distortions.  The EEC 
shipbuilding  industry  is consequently  liable  simply  to 
disappear  unless  an appropriate  Community  policy  is 
rapidly  implemented. 
2. The  Committee  notes  with  satisfaction  that  the 
Commission  is aware  of this  danger  and  has proposed 
guidelines  for a shipbuilding  policy  aimed  at reorganizing 
this sector  and  making  it able  to permanently  withstand 
international  competition. 
3. The  Committee  approves  the Commission's  aim of 
coordinated  action  by the  Member  States  and  the 
Community  involving  measures  to make  shipyards 
competitive  and  further  their  restructuring  and,  if 
necessary  their  modernization,  as well  as measures  in the 
social  field  to help  redundant  shipyard  workers.  It notes 
that the  Commission's  proposal  that  a 'quantitative 
indicator'  of the  level  of demand  be determined  is 
intended  merely  to facilitate  achievement  of this  aim.  It 
considers,  however,  that  this indicator  must  not be taken 
as a production  target  for the 1980s. 
The Committee  would  also  point  out to the Commission 
that a difficult  situation  has arisen  in Community  repair 
yards.  Community  policy  must  be designed  to maintain 
their  viability. 
4. While  it agrees  with  the analysis  of the causes  of the 
crisis,  the Committee  would  have  liked  the document  to 
No C 269/54 Official  Journal  of the European  Communities 13. 11. 78 
have  stressed  the role  played  by Japan  in the development 
of the present  overcapacity.  Whereas  Community  yards 
have  increased  their  production  capacity  only  to a very 
small  degree  in recent  years,  Japanese  shipbuilders  have 
pursued  a policy  of expansion,  both  in Japan  and  in 
certain  other  countries,  despite  the consultations  that 
have  been  taking  place  for several  years  with  government 
representatives  and  European  shipbuilders. 
It should  also  be emphasized  that  other  countries  in Asia 
and South  America  have  recently  emerged  as forces  on the 
shipbuilding  market,  adding  to the impact  of Japan's 
activities. 
5. In  stressing  Community  shipyards'  own 
responsibility  for their  inadequate  competitiveness,  the 
Commission  would  seem  not to take  account  of factors 
beyond  their  control.  Mention  can be made,  for example, 
of the fact  that  some  of their  competitors  pay abnormally 
low wages  and social  security  contributions  and operate 
working  conditions  that  would  be unacceptable  in the 
Community;  other  such  factors  are the economic  and 
social  environment  in which  Community  shipyards  find 
themselves,  the  abnormally  low  prices  prevailing  at 
present  on the international  market,  and the advantages 
certain  countries  have  gained  with  their  monetary  policy 
(e.g. the undervaluation  of the yen until  recently)  or their 
pricing  practices  (State-trading  countries). 
6. In  the  section  entitled  'Conclusions'  the 
Commission  calls  upon  the  Council  to decide  that 
'capacity  for the new  building  of ships  must  be fixed  with 
regard  to the market  situation'.  It estimates  that  in the 
early  1980s  demand  for new  vessels  built  by Community 
shipyards  will  be 2 4 million  cgrt. 
This figure  is derived  from  a market  survey  made  in 1976, 
whose  forecasts  were  in fact  out of date  already  in 1977. 
The Commission  figure  is moreover  based  on the 
assumption  that  the distribution  of orders  among  the 
major  shipbuilding  centres  of the  world  will  remain 
constant.  The  distribution  of orders,  however,  changed 
last year  to the disadvantage  of the Community. 
The Committee  accordingly  has  doubts  about  the 
soundness  of the figure  given  by the Commission.  It thinks 
that this figure  should  not at any rate  be used  in fixing  a 
target  for new  building  capacity  in the Community. 
7. The  Committee  considers  it important  that  a 
distinction  should  be made  between  reducing  capacity 
and reducing  activity.  It can be taken  for granted  that 
activity  should  be a function  of current  demand,  which  in 
turn depends  upon  the  economic  situation.  Capacity, 
however,  must  be adjusted  to changes  in the structure  of demand  and  to the long-term  forecast  of the level  of 
demand.  Given  the  recovery  expected  in the coming 
decade,  reducing  capacity  on the basis  of the present  crisis 
would  be liable  to deprive  the Community  shipbuilding 
industry  for good  of the position  it should  have  on the 
world  new  building  market.  It would  also  force  the 
industry  to reduce  its output  of apprentices  for the 
engineering  industry  as a whole  and hence  its contribution 
to the general  level  of skill  of Community  manpower. 
8. The  Committee  therefore  makes  the  following 
suggestions: 
(a) In view  of the strategic  and economic  importance  of 
the shipbuilding  industry,  the Community  should 
endeavour  to maintain  a production  capacity  that is in 
keeping  with  the volume  of its trade  by sea. Account 
should  be taken  of the new  tonnage  required  to renew 
and expand  the Member  States'  fleets,  so as to ensure 
the Community's  security  of supply  and contribute  to 
a satisfactory  balance  of payments  (with  the freight 
earnings). 
(b) This  should  not lead  to the setting  up of a market 
reserved  exclusively  for Community  shipbuilders. 
The aim must  be to make  them  more  competitive  so 
that exchanges  of new  tonnage  between  the 
Community  and  other  countries  can get under  way 
again.  Community  policy  must  aim at promoting  the 
production  of high-technology  vessels  (in which  the 
Community  shipbuilding  industry  is already  largely 
specialized)  which  could  also  be exported  to third 
countries.  The  objective  should  be to achieve  the 
greatest  possible  balance  in trade  in new  tonnage. 
(c) To this  end,  the  Commission  document  should 
provide  for support  for technological  research  on 
design  and  improvement  of construction  methods. 
(d) Where  exports  of technology  are necessary  in the 
context  of international  relations  with  the developing 
countries,  this  activity  should  be conducted  in 
accordance  with  common  rules  applying  to the entire 
Community  shipbuilding  industry. 
9. The  Committee  considers  that  a shipbuilding  policy 
should  have  elements  that  form  part  of a broader 
Community  shipping  policy.  One  should  take  as a model 
here the coherent  policies  adopted  by such  major  shipping 
powers  as the United  States  and Japan  and by the socialist 
and developing  countries. 
It is within  this  framework  that  the problem  of vessels 
which  do not measure  up to international  standards  on 
safety  and living  and working  conditions  of crews  should 
be dealt  with  firmly  and  effectively.  The  Community 
13. 11. 78 Official  Journal  of the European  Communities No C 269/55 
should  as a matter  of urgency  take  steps  to deny  access  to 
Community  ports  to those  vessels  which  do not comply 
with these  standards,  as the Commission  has suggested. 
10. In  the  specialized  international  bodies  the 
Community  should  press  for improvements  in safety,  the 
protection  of human  life at sea and  the prevention  of 
pollution. 
In this connection  specific  requirements  should  be worked 
out, in particular  for oil tankers,  such  as: 
— the  extension  of segregated  ballast  tanks, 
— dual  steering  gear, 
— dual  radar. 
Old vessels  should  also  be withdrawn  more  quickly. 
Rapid  introduction  of such  measures  would  (i) promote 
environmental  protection,  (ii)  help  to safeguard 
employment  (it is easier  to maintain  existing  jobs  than  to 
create  new  ones),  and (iii) make  for an earlier  end to the 
crisis. 
The Community  would  also  be in a better  position 
vis-a-vis  its partners  to negotiate  agreements  on the 
reorganization  of the market.  It is the Committee's  view 
that international  cooperation  must  continue,  in spite  of 
the present  difficulties. 
11. The  Committee  notes  that  the document  does  not 
specify  how  the Commission  considers  that  the sector 
should  be restructured.  This  is no doubt  consistent  with 
the Commission's  view  that  the parties  concerned,  in 
particular  the  shipyards  and  the  governments  of the 
Member  States,  should  play  a major  and  ultimately 
decisive  role  in that  area.  But the Commission  should  be 
more  specific  about  the methods  it intends  to use to 
encourage  and  harmonize  national  policies.  The 
application  of Community  instruments  to Member  States 
should,  for example,  be subject  to certain  conditions 
relating  to the  progress  made  with  a harmonized 
restructuring  process,  bearing  in mind  regional  problems. 12. The  Committee  calls  the Commission's  attention 
to the serious  social  problems  caused  by the present 
shipbuilding  crisis: 
(a) The  figure  of 75 000  jobs  to be lost was calculated  on 
the basis  of market  projections  which  (as already 
stated)  cannot  be regarded  as definitive.  This  is why 
the Committee  thinks  that  the inevitable  loss of jobs 
can only  be assessed  in the light  of the basic  objectives 
to be assigned  to the industry  by the Community. 
Furthermore,  the figure  of 75 000  jobs  does  not take 
into account  the  effect  of the  crisis  on the 
subcontracting  industries.  It is generally  estimated 
that at least  as many  people  are employed  by suppliers 
to the shipyards  as in the shipyards  themselves. 
(b) Since  previous  efforts  to redeploy  shipyard  workers 
within  the industry  have  failed  and there  are very  few 
job openings  in other  sectors,  a thorough  study 
should  be undertaken  right  away  on the creation  of 
new jobs  to absorb  surplus  shipyard  manpower. 
The Committee  considers  that Community  bodies  such  as 
the Regional  Fund  and the Social  Fund  do not at present 
have  sufficient  resources  for effective  action  on the scale 
required.  It is therefore  necessary  to formulate  a policy  to 
deal with  the problems  of the shipbuilding  industry  and to 
allocate  sufficient  resources  to implement  such  a policy. 
13. The  Committee  believes  the Commission  should 
support  the Member  States'  efforts  to keep  the level  of 
activity  in the shipyards  as high  as possible,  so as to avoid 
having  large  numbers  of unemployed  during  the 
restructuring  and modernization  period. 
Where  reductions  in the labour  force  are inevitable, 
priority  should  be given  to redeploying  redundant 
workers  in other  sectors;  they  should  not be simply  laid 
off. The  development  of other  industries  should 
accordingly  be promoted. 
World  economic  recovery  would  of course  greatly 
facilitate  matters. 
Done  at Brussels,  31 May  1978. 
The Chairman 
of the Economic  and  Social  Committee 
Basil  de FERRANTI