2007/255/EC: Commission Decision of 20 December 2006 on State aid No C 5/2006 (ex N 230/2005) which Germany is planning to implement for Rolandwerft (notified under document number C(2006) 5854) (Text with EEA relevance )
Date: 2006-12-20
Institutions: European Commission
Subjects: Germany, State aid, control of State aid, investment aid, regional aid, shipbuilding

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Official Journal of the European Union

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COMMISSION DECISION

of 20 December 2006

on State aid No C 5/2006 (ex N 230/2005) which Germany is planning to implement for Rolandwerft

(notified under document number C(2006) 5854)

(Only the German version is authentic)

(Text with EEA relevance)

(2007/255/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Commu-
nity, and in particular the first subparagraph of Article 88(2)
thereof,

Having regard to the Agreement on the European Economic
Area, and in particular Article 62(1)(a) thereof,

Having called on interested parties to submit their comments
pursuant to the provisions cited above and having regard to their
comments,

Whereas:

I.

PROCEDURE

By letter of 19 October 2005, registered as received on the
same day, Germany, acting in accordance with Article 88(3)
of the EC Treaty and with the Framework on state aid to
shipbuilding (1) (hereinafter the shipbuilding framework),
notified its intention of granting regional aid to the
company Detlef Hegemann Rolandwerft GmbH & Co. KG
(Rolandwerft). The Commission requested further informa-
tion by letter of 16 November 2005, to which Germany
replied by letter of 23 December 2005, registered as
received on the same day. By letter of 18 January 2006,
registered as received on the same day, Germany modified
the notified aid.

(5)

(1)

(2)

(3)

The comments were transmitted to Germany by letter of
17 July 2006. Germany replied to these comments by letter
of 11 August 2006, addressed to the Commission and
registered as received on the same day.

(4) Germany's

the formal
response to the initiation of
investigation procedure was submitted by letter of 6 April
2006, registered as received on the same day. Annexes were
submitted by letter of 11 April 2006, registered as received
on 12 April. The Commission requested further informa-
tion on 17 August 2006 which Germany submitted by
letter of 14 September 2006, registered as received on 15
September. Germany submitted further information by
letter of 20 November 2006, registered as received on the
same day. A meeting with representatives of Germany and
the shipyard took place on 22 November 2006. Following
the meeting, Germany submitted further information by
letter of 24 November 2006, registered as received on the
same day.

II.

DESCRIPTION

1.

The beneficiary

the aid, Rolandwerft,

river Weser, which runs

is a shipyard
The beneficiary of
located in Berne,
in the district of Wesermarsch, Lower
Saxony (Germany), an assisted area pursuant to Article 87
(3)(c) of the EC Treaty. The yard is located on the shores of
into the North Sea.
the
Rolandwerft belongs to the Hegemann group. It is a large
undertaking that does not rank as a small or medium-sized
enterprise under the Commission Recommendation con-
cerning the definition of micro, small and medium-sized
enterprises (2).

By letter of 22 February 2006, the Commission informed
Germany of its decision to initiate in respect of the aid the
procedure laid down in Article 88(2) of the EC Treaty. The
Commission decision was published in the Official Journal of
the European Union. The Commission invited Germany and
the other interested parties to submit comments. By letter
of 28 June 2006, registered as received on the same day, the
‘Verband für Schiffbau und Meerestechnik’
(German
Shipbuilding and Ocean Industries Association) submitted
comments. By letter of 30 June 2006, registered as received
on 7 July, the beneficiary also submitted comments.

(6) Rolandwerft produces sea-going vessels. Its central area of
business is the construction of feeder ships, i.e. the smallest
sub-category of container ships. In addition, the yard builds
specialised ship types such as roro/lolo-vessels or car
carriers.
In 1999, responding to a change in market
demand, it began to produce larger ships measuring up to
[…] (*) m in length, with a weight of […] tonnes and a
cargo capacity of up to 850 TEU. In order to be able to
produce these larger ships, Rolandwerft had to carry out an

(1) OJ C 317, 30.12.2003, p. 11.

(2) OJ L 124, 20.5.2003, p. 36.
(*) Business secret.

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(7)

(8)

investment programme for the adaptation of the yard,
including expansion of the ship lift. An extension of the
fitting-out quay was also planned but had to be postponed
for financial reasons. Rolandwerft is also active in the field
of ship repair. The repair activities are carried out either on
land or in the water.

The ships are produced first in sections in hall 3 and in
larger modules on the outside work area. The sections and
modules are transferred via the outside work area to hall 1,
where they are assembled into ships. The ships are
transported to the ship lift and lowered into the water.
Further fitting-out takes place on a quay which can take
ships of up to 140m in length. It is performed using a 50t
quay crane and an 8t construction crane, both operating on
the crane track.

Since the early 1990s, Rolandwerft has been able to fit out
two ships simultaneously (except at times of low demand).
The original quay allowed both ships, which were shorter at
the time, to be berthed directly at the quay. In 1999, when
Rolandwerft began building larger ships, the quay was too
short. For financial reasons, Rolandwerft did not extend the
quay immediately but, as a transitional solution, berthed the
second ship alongside the ship berthed at the quay (parallel
berth). For each ship fitted out on the parallel berth,
Rolandwerft had to rent an additional auto crane on some
[…] occasions for […] each and a smaller swimming crane
on […] occasions for […] each.

(9) However, the fitting-out or repair of a ship at the parallel
berth was complicated, expensive and not profitable.
Moreover, it increased the risks of accidents.

2.

The investment projects

(10) The objective of the aid is to promote investments in five
different areas of the yard's activity, namely halls 1 and 3,
quay 1, automatic welding machines and the construction
of an additional quay. Most of the investments have already
been carried out. The aid application was submitted before
the investments were started.

(11) According to the information submitted by Germany, the
investments will
lead to the creation of 35 jobs at
Rolandwerft. The yard previously subcontracted some of
the works to a steel company in […] which produces bow
sections for Rolandwerft. The investments will enable
Rolandwerft to integrate bow-section construction into its
own shipbuilding process.

shipbuilding work currently take place outside of hall 1.
After the investment, almost all of the work will be carried
out indoors.

Hall 3

(13) Hall 3 is where the sections are constructed. It originally
had an entrance door that was only 17,4 metres wide,
whereas the ships built by Rolandwerft are normally 22,2
m wide. Therefore, the sections had to be produced not in
the position necessary for assembly but sideways, in order
to be able to pass through the entrance door. This meant
that the sections had to be turned through 90o using auto
cranes to permit subsequent assembly; this was a time-
consuming and expensive process. In addition, the narrow
entrance limited the depth of the sections, which obliged
Rolandwerft to construct more sections than were actually
needed. To remedy this,
it was necessary to widen the
entrance. This part of the project was carried out in 2004.

(14) Another part of the project which was carried out in 2004
is the extension of the hall in a north-westerly direction. In
this part of the hall, sections are welded together into
modules. With the extension, the section welding can be
carried out
the weather
conditions. The crane tracks were lengthened into the new
part of the section-construction hall.

independently of

indoors,

i.e.

(15) The single sections are constructed on keel blocks, which
are also used to transport the sections. Germany explained
that, owing to the fact that Rolandwerft has built larger
ships since the investments made in 1999, the old keel
block system is no longer adequate. Furthermore, to be
welded together, the sections must be accurately lined up.
Before the investment, the positioning of the sections was
done using an auto crane, a time-consuming and cost-
intensive process. And so in 2004 the yard invested in
modern hydraulic keel blocks, which significantly facilitate
the lining-up of the sections.

(16)

In an additional investment project started in August 2005,
Rolandwerft extended hall 3 in a south-easterly direction,
also with a view to the work being carried out indoors.

Extension of the crane track on quay 1

Hall 1

(12) Hall 1 is to be extended by 55m. The Commission was
informed that, at the moment, a significant part of the

(17) The investment project also provides for a 96m extension
of the crane track on the original quay, which is 200m long.
Before the extension, only about half of the ship could be
equipped using the crane. For the other half, Rolandwerft
had to use […] auto cranes. The crane track was extended
so that the ship could be fitted out over its full length using
the rail crane. This investment was also carried out in 2004.

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Purchase of automatic welding machines

(18) Another investment carried out in 2004 was the purchase
of modern and faster automatic welding machines.

Construction of additional quay and purchase of new crane

(19) The investment programme for 2005-06 includes the
construction of an additional fitting-out quay, with the
original quay being extended by about 180m. The
construction of this quay requires, among other things,
excavation of the ground on the riverside, filling-up of the
ground on the land side and a link to the road network. The
crane track has to be extended by a further 150m, an
to be purchased and
additional 35-tonne crane has
installed, and the media connection has to be installed.
The works were started in August 2005.

(20) This investment is the result of the decision to build larger
ships as of 1999. At the time, the yard invested in a further
fitting-out of the ship lift to adapt its facilities. According to
the beneficiary, the investments in the quay were postponed
for two main reasons. First, the financial means available
were needed more urgently for Peene-Werft, which was also
owned by the Hegemann group and underwent a
significant
the time. On
account of the downturn on the market that lasted a few
years, no additional means were available to complete the
investment measures at Rolandwerft. Second, since the
fitting-out and repair of
in parallel was
technically quite feasible (even if not particularly efficient),
it was the investment which could best be postponed.

restructuring programme at

two ships

(21) A further benefit arising from the investment is that the
new quay will enable the yard to participate in shipbuilding
and repair tenders for navy vessels in the future. Given the
risks inherent in handling two ships berthed in parallel,
Rolandwerft was barred from carrying out shipbuilding or
ship-repair activities for the German navy. Because of the
risks and despite the fact that Rolandwerft belonged to a
group of yards which could, in theory, bid for the award of
such contracts, the German navy refused to award contracts
to it.

3

4

5

6

7

8

Modernisation of keel block system in hall
3

Extension in south-easterly direction of hall
3

Lengthening of crane tracks on quay

Purchase of automatic welding machines

Construction of additional quay and purchase of
new crane

Construction of additional quay

Purchase of new crane

[…]

[…]

[…]

[…]

[…]

[…]

Total

13 000 000

3.

The planned aid

(23) Germany intends to grant Rolandwerft state aid amounting
to EUR 1,56 million. Eligible costs are equal to the total
project costs of EUR 13 million and the aid intensity is thus
12 %. The aid will be granted under an approved regional
aid scheme (3). The aid application was submitted before the
start of the investment projects.

(24) The granting authority is the Land of Lower Saxony, acting

through NBank in Hannover.

III.

REASONS FOR INITIATING THE FORMAL

INVESTIGATON PROCEDURE

(25) The Commission initiated the formal investigation proced-
ure as it had doubts as to whether the aid was compatible
with the shipbuilding framework.
the
investments in the new fitting-out quay could be considered
as investments in existing installations.

It doubted that

(26)

In addition, the Commission had misgivings as to whether
the investments of Rolandwerft might lead to an increase in
the yard's shipbuilding capacity that would be incompatible
with the shipbuilding framework and the common market.

IV.

COMMENTS FROM INTERESTED PART IES

(27) The Commission received comments from the beneficiary
Rolandwerft and from the German Shipbuilding and Ocean
Industries Association.

(22) Total project costs amount to EUR 13 million. They can be

broken down as follows:

4.1.

Comments from the beneficiary Rolandwerft

1

Extension of hall 1

Hall 3

2

Prolongation in north-westerly direction,
lengthening of crane tracks, widening of
entrance door

(EUR)

[…]

[…]

(28) According to the beneficiary, the investment project will
not lead to an increase in the yard's shipbuilding capacity.
The beneficiary points out that every increase in produc-
tivity will lead to an increase in the capacity of the existing
installations. This does not, however, necessarily mean that
the capacity of the yard as a whole will also increase. In the

(3)

Joint Federal Government/Länder scheme for improving regional
economic structures — 34th General Plan.

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case of Rolandwerft, the investments will indeed lead to a
productivity increase but will not result
in a capacity
increase of the yard as a whole. Instead, the productivity
increase will be absorbed by a higher level of internal
production activities formerly outsourced. The volume of
production measured in compensated gross tons (CGT)
will, therefore, not increase.

the parallel berth involves an increased risk and that the
navy refuses, therefore, to award contracts to Rolandwerft.
The planned investment measure constitutes a modification
of the existing quay aimed at increasing its productivity.
The beneficiary provides information on how many weeks
per year the parallel berth was used and will be used.

(29) The beneficiary submitted an overview of the ships built in
recent years and of
In 2004
Rolandwerft built […] ships with a total of around […]
CGT. In 2006 the building of […] ships with a capacity of
[…] CGT is planned. For 2007 and 2008 an annual output
of […] CGT is envisaged.

the yard's order book.

(34) The beneficiary also explains that the lengthening of the
crane track and the installation of a crane linked to the quay
extension will replace the inefficient and expensive auto and
swimming cranes which would at present be used for
fitting-out ships in the parallel berth. Fitting out the second
ship directly from the quay after completion of
the
investment project will
lead to greater cost effectiveness
and productivity.

(30) The beneficiary explains

in the past,

the yard
that,
occasionally bought sections or entire hulls from third
companies. However, the output of Rolandwerft could not
be increased further even by buying hulls and sections from
outside because the fitting-out of a ship always took a
certain amount of time and the existing installations did
not allow for an efficient fitting-out of a larger number of
ships. For example, it was possible to build only one ship at
the existing shipbuilding halls. The
a time in each of
assembling of a ship in hall 1 took around […] weeks.

(31) The beneficiary provided information on the production
flow at the yard. It pointed out that the yard was already
being fully utilised and that there was no possibility of
producing more ships on completion of the investment
project. The installations at the yard limited total capacity to
between some […] — […] CGT, which could be achieved
before the implementation of the investment project by
subcontracting some of the work.

(32) The beneficiary explains that the investment project will
allow the yard to participate in tenders for the construction,
repair and conversion of navy ships. This has not yet been
possible since the works would have had to be carried out
at the parallel berth. Consequently, output in CGT would
decline from its current
level as navy vessels are not
regarded as commercial vessels. The beneficiary concludes
that, even if the Commission does not share Germany's
opinion that the shipbuilding framework does not prohibit
investment aid for projects resulting in a capacity increase,
this is irrelevant when assessing the compatibility of the aid
to Rolandwerft as the capacity will not increase.

(33) The beneficiary also argues that the investments relate
solely to existing installations. In particular, the investment
in extending the quay so that two ships can be fitted out
directly from the quay does not constitute a new
installation. The yard already has two fitting-out berths
that are in parallel. The beneficiary stresses that the use of

4.2.

Comments from the German Shipbuilding and

Ocean Industries Association

(35) The German Shipbuilding and Ocean Industries Associa-
tion (the ‘Association’) takes the view that the Commission's
concern about a potential increase in capacity cannot be
justified on the basis of the shipbuilding framework or by
the current market situation and that in particular the
planned aid will not lead to distortions of competition.

(36) The Association argues that the stance of EU policy on state
aid to shipbuilding has changed over
the years. The
shipbuilding framework does not contain any provisions
that prohibit the granting of investment aid designed to
increase capacity. The Association assumes
such
provisions were no longer regarded as being appropriate.
It also points out that sector-specific rules contained in the
shipbuilding framework had, as far as possible, been
removed. The capacity issue is mentioned only in the
types of aid, such as
context of closure aid. Other
restructuring aid, are covered by the general state aid rules.

that

to be

(37) The Association also claims that a restrictive interpretation
of the rules would be at variance with the LeaderSHIP 2015
initiative, which is one of the measures for implementing
the Lisbon Strategy. The competitiveness and productivity
of European industry are
increased through
investments into research, development and innovation,
which also entails
in modern production
equipment. If state aid for investment could not go hand-
in-hand with capacity increases, this would run counter to
the objectives of LeaderSHIP 2015, and in particular the
objective of safeguarding and strengthening presence in
selected market segments. One of these market segments is
that for small and medium-sized container vessels, where
Europe is still exceptionally well positioned vis-à-vis Korea
and China.

investment

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(38) The Association takes the view that the planned invest-
ments do not distort competition. There is no overcapacity
as the world shipbuilding market
is experiencing an
upswing. Demand remains healthy, although a slight
weakening is expected in 2008-09. With world trade
growing steadily, sea transport is also expanding. This is the
case in particular with the transport of industrial goods by
container ships. As a result, the demand for larger vessels of
5 000 TEU to 8 000 TEU that cannot enter smaller ports is
rising. This is leading to an increased demand for smaller
the
feeder
containers. Rolandwerft can build ships of up to 900 TEU.

the subsequent distribution of

ships

for

(39) According to the Association, feeder ships are an important
segment in the portfolio of German yards. Nevertheless, the
main competitors are Chinese yards, which are the clear
market leaders, with 42,5 % of worldwide orders, followed
by Germany with 26,8 %.

(40) Again according to the Association, there are very few
European competitors for ships of up to 900 TEU. These
are located predominantly in Germany and the Nether-
lands. The Association considers that this segment has good
growth potential. Since Chinese yards offer their vessels at
low prices, German and European yards will retain their
market position only if they can guarantee high quality and
steadily increase productivity.

(41) The Association also points out that China and Vietnam
will further increase their shipbuilding capacities and hence
their market shares. This demonstrates that competition in
shipbuilding is worldwide rather than being confined to
Europe.

V.

COMMENTS FROM GERMANY

(42)

In its comments on the initiation of the formal investiga-
tion procedure, Germany argues that paragraph 26 of the
shipbuilding framework does not contain any provisions
relating to capacity. In particular, the paragraph does not
stipulate that investment aid for projects resulting in a
capacity on the back of a productivity increase would be
inadmissible. Germany also stresses that increased produc-
tivity in the shipbuilding industry is one of
the main
objectives of Community policy in this sector. It mentions
that the LeaderSHIP 2015 initiative is aimed at improving
the competitive situation of European yards and at reducing
the disadvantages faced by the European shipbuilding
industry following the subsidisation of shipbuilding in Asia.
According to Germany, this objective can be achieved only
by raising productivity.

(43) Germany also takes the view that it cannot be deduced
from paragraph 3 of the shipbuilding framework that the
impact of an investment project on capacities has to be
taken into account
in assessing compatibility with the
common market. In addition, the shipbuilding sector is no
longer characterised by the factors mentioned in para-
graph 3 of the shipbuilding framework but, above all by a
healthy order book, high prices and capacity shortages.

(44)

In addition, Germany points out that the market share of
the European shipbuilding industry has decreased over the
last few decades and that Japan, Korea and China have
increased their market shares with the help of state
subsidies. Such subsidisation is mentioned in paragraph 3
(c) of the shipbuilding framework as one of the factors
which has to be taken into account. European shipyards
thus have to make every effort to increase productivity.

(45) According to Germany, every increase in productivity
automatically leads to an increase in the output of the
installation. An increase of productivity as defined for the
purposes of the shipbuilding framework cannot, therefore,
mean that the same amount is produced but with less
input. Germany goes on to stress that the purpose of
regional aid should be to contribute to regional develop-
ment and job creation. And so, with this in mind, a
productivity increase should not result in job reduction.

(46) As regards the market situation, Germany observes that
freight transport is increasing and that a trend towards
larger vessels is discernible in the container ship segment.
There are already vessels with a capacity of TEU 5 000 and
recent forecasts point to vessels with a capacity of TEU
8 000. As such larger vessels could enter only a few ports,
smaller vessels would still be needed for subsequent
distribution. There will, therefore, still be a strong demand
for feeder ships of 850 TEU, such as the ones built by
Rolandwerft.

(47) Germany also provides further details of the investments
and photographs illustrating the measures and the situation
at the yard.

(48) The extension of hall 1 will allow the yard to build a ship in
its entirety in the hall, something which is currently not
possible. Covering existing work areas will make for greater
productivity and efficiency.

(49) Germany goes on to explain that, at present, a ship berthed
at quay 1 occupies only two thirds of
the quay. The
southern part of the unused quay will be extended. This
does not lead to the construction of a new installation for
the purposes of the shipbuilding framework. Once the quay
has been extended, it will be equipped with a crane as a
replacement for the existing auto crane.

in the period 2003-05 (including deliveries).

(50) Germany points out that the parallel berth was used […] a
It
year
emphasises once again that
the parallel berth will be
moved to the new quay. The new quay will be used for
approximately the same period of time per year as the
parallel berth in recent years. Germany also explains that
the fitting-out of a ship in the second berth involved an
increased risk as the swimming crane needed would have to
be located in the middle of the river Weser. As a result, no
ships will, in future, be fitted out at the second berth on
quay 1.

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(51) According to Germany, the extension of the fitting-out
quay to allow two ships to be fitted out at the quay does not
constitute the construction of a new installation. It is simply
a minor extension of the existing quay. Even before the
investment, the quay is longer than a feeder ship and so the
yard would, in any case, be able to fit out two shorter ships
at the same time.

(52) Germany argues that Rolandwerft thus already has two
fitting-out slots although one of them is located in the
second ‘row’. As the second ship cannot be reached by the
crane installed on the quay, auto cranes or swimming
cranes have to be used. Fitting-out a ship directly from the
quay once it has been extended will make the work much
more efficient. Germany also points out that the German
navy refused to award contracts to Rolandwerft because it
fitted out ships in the second row.

(53) Germany argues that the relocation of the second berth to
an extended existing quay does not rank as the construction
of a new installation but is instead a measure for increasing
the productivity of the two berths by locating them in a
row instead of in parallel. The new crane to be installed on
the new quay will replace the auto cranes and swimming
cranes used at the moment. Using the new crane will
enhance productivity.

(54) Germany stresses that the measure is necessary because
fitting out a ship in the second row is time-consuming and
inefficient. Moreover, the measure will enable Rolandwerft
to participate in tenders for ship repair and ship conversion
issued by the German navy.

(55) Germany moreover explains that Rolandwerft originally
built smaller feeder ships that could both be berthed at the
quay at
the same time. However, market demand has
increasingly shifted towards larger and longer feeder ships
and two such ships could no longer be berthed at the quay
at the same time. For fitting-out and repair work, therefore,
the yard started to berth a second ship in parallel to the ship
berthed directly at the quay. The extension of the quay is
thus simply an adaptation of the fitting-out facilities to the
needs of longer ships.

(56) Germany explains that,

in the past, Rolandwerft has
occasionally collaborated with Peene-Werft and fitted out
prefabricated hulls from that yard. Lately, however, it has
delivered only ships which were built in their entirety at its
yard. As regards repair work, Germany points out that
these activities cannot be extended if the current level of
new building is maintained. Part of the repair work is
carried out on land, requiring use of the outside work area,
which is already being used for new building.

(58) Germany points out that the Association agrees with its
assessment. It considers that the Association's comments
are important as it represents the political and economic
interests of the German maritime industry, German yards
and their suppliers. Moreover,
the Association, as the
representative of various interest groups, possesses up-to-
date market information. If it concludes that the planned
aid for Rolandwerft will not harm the shipbuilding industry
in Germany, the Commission should take this into account.
Germany also makes the point that the Commission did
not receive any negative comments regarding the aid.

(59) As regards the comments from the beneficiary itself,
Germany stresses that the position taken by Rolandwerft is
that the investment project will not lead to a capacity
increase. Germany reiterates its view that this issue is not
relevant for the assessment of the compatibility of the aid.

VI.

ASSESSMENT

6.1.

Existence of State aid within the meaning of

Article 87(1) of the EC Treaty

(60) According to Article 87 of the EC Treaty, any aid granted by
a Member State or through state resources in any form
whatsoever which distorts or threatens to distort competi-
tion by favouring certain undertakings or the production of
in so far as it affects trade between
certain goods is,
Member States,
incompatible with the common market.
Pursuant to the established case law of the Court of Justice
and the Court of First Instance of the European Commu-
nities, the criterion of trade being affected is met if the
recipient firm carries out an economic activity involving
trade between Member States.

(61) The grant is provided by the Land of Lower Saxony and is
thus imputable to the State. It confers on Rolandwerft an
advantage that the company would not have obtained on
the market. Rolandwerft manufactures sea-going vessels. As
these products are traded, the measure threatens to distort
competition and affects trade between Member States.
Consequently, the grant constitutes state aid within the
meaning of Article 87(1) of the EC Treaty and has to be
assessed accordingly.

6.2.

Exemptions under Article 87(2) and (3) of the

EC Treaty

(62) Article 87(2) and (3) of

the EC Treaty provide for
exemptions to the general prohibition of state aid laid
down in Article 87(1).

(57) Germany goes on to explain that the new crane will not
only be used at the new quay but will also make for optimal
utilisation of the lifting process at the original quay by
increasing the maximum lifting capacity.

(63) For the assessment of aid to shipbuilding, the Commission
has issued the shipbuilding framework. This framework lays
down a set of special rules which apply to aid for the
industry where and in as far as the specificities of the sector

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the repair or

‘shipbuilding’ means

require special treatment. According to the shipbuilding
framework,
the building in the
Community of self-propelled seagoing commercial vessels
and ‘ship repair’
reconditioning in the
Community of such vessels. The activities of Rolandwerft
are caught by these definitions and so the aid to
Rolandwerft has
the
shipbuilding framework. Rolandwerft does not build
Community fishing vessels. According to the Guidelines
for
and
aquaculture, (4) no aid may be granted to shipyards for
the construction of Community fishing vessels.

to be assessed in the light of

aid to fisheries

examination of

state

the

(64) Point 26 of the shipbuilding framework lays down that
‘Regional aid to shipbuilding, ship repair or ship conversion
may be deemed compatible with the common market only
if [the aid is] granted for investment in upgrading or
linked to a financial
modernising existing yards, not
restructuring of the yard(s) concerned, with the objective
of improving the productivity of existing installations;’.

(65) The aid intensity may not exceed 12,5 % or the applicable
ceiling for regional aid under Article 87(3)(c) of the EC
Treaty, whichever is the lower. In the present case, the
ceiling of 12,5 % is applicable. Moreover, the aid must be
limited to eligible expenditure as defined in the applicable
guidelines on national regional aid. (5)

Investments in the extension of halls 1 and 3, in the lengthening
of the crane track on quay 1 and in the welding machines

(66) These investment measures are designed to rationalise the
production process at Rolandwerft by upgrading equip-
ment and by covering the work area located outside. They
can therefore be considered as investment in the moder-
nisation or upgrading of an existing yard.

(67) Part of the project concerns the extension of hall 1 and the
extension of hall 3 in a north-westerly as well as a south-
easterly direction. The Commission considers that these
extensions concern existing installations. The project does
not de facto lead to the construction of an additional hall.
The extension aims merely to provide cover for shipbuild-
ing activities currently taking place outdoors.

this view in its decision to initiate the formal investigation
procedure.

(69) The Commission assumes that the investments have the
objective of
improving the productivity of the existing
installations. The hall extensions will improve productivity
by allowing work to be carried out regardless of
the
weather. The widening of the entrance door of hall 3 will
lead to a significant reduction in costs as the sections will
no longer need to be turned through 90o and it will be
possible to build longer sections. The same applies to (i) the
lengthening of the crane track in hall 3 and on quay 1,
which will dispense with the need for […] auto cranes, (ii)
the acquisition of a hydraulic keel block system, as a result
of which manual positioning of sections using auto cranes
will no longer be necessary, and (iii)
the purchase of
automatic welding machines, which will reduce the time
and costs associated with manual welding.

(70) While there will be a clear effect on productivity, the impact
on capacity will be limited as no new installations are to be
set up in the yard and any increase in capacity would simply
be the result of the productivity increases of the existing
installations. Moreover, the beneficiary pointed out that the
productivity increase will not lead to any increase in the
capacity of the yard measured in CGT because it will be
absorbed by increased performance of activities formerly
outsourced. The Commission therefore considers that there
is no disproportionate capacity increase.

(71) The Commission thus comes to the conclusion that
measures 1 to 6 in the table in paragraph 22 can be
considered as
in the modernisation or
upgrading of an existing yard with the objective of
improving the productivity of existing installations. The
related costs of EUR 8 360 000 can accordingly be
considered as eligible costs.

investments

Construction of additional new quay and purchase of new crane

M o d e r n i s a t i o n

(68) The remaining investments in hall 3 aimed at lengthening
the crane track, widening the entrance door and upgrading
the keel block system also constitute investments in existing
installations. Moreover, the Commission considers that the
lengthening of
the crane track on quay 1 and the
investments in the upgrading of the welding machines are
investments in existing installations. It had already taken

(4) OJ C 229, 14.9.2004, p. 5.
(5) OJ C 74, 10.3.1998, p. 74.

(72) Measures 7 and 8 in the table in paragraph 22 concern the
construction of an additional quay and the purchase of a
new crane. The Commission considers that,
two
reasons, these investments rank as measures to upgrade
or modernise Rolandwerft. First, before the investments,
Rolandwerft used to fit out and repair two ships at the same
time by berthing one ship in parallel to the ship berthed
directly at the quay. This process was inefficient and costly.
The investments will enable Rolandwerft to berth two ships
directly at the quay and will improve the fitting-out of the
two ships. Second, the investments are the last in a series of

for

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Official Journal of the European Union

L 112/39

investments started in 1999 with a view to enabling the
yard to build larger ships. The yard had adapted its
production because demand had shifted from much smaller
feeder
ships currently built by
Rolandwerft. The Commission considers that an adaptation
of production to market demand can be considered as
modernisation.

to the feeder

ships

i m p r o v i n g
A i m o f
e x i s t i n g i n s t a l l a t i o n s

t h e

p r o d u c t i v i t y

o f

(73) The

are

investments

also aimed at

improving the
productivity of existing installations. The fitting-out at the
original quay will become more efficient because the ships
are no longer berthed alongside one another and there is no
longer any need to cross over the ship berthed at the
quayside. And so, although it can be assumed that the new
quay is not merely a relocated existing installation, the
Commission considers that the construction of the new
fitting-out quay will lead to a productivity increase at the
original quay.

(74)

In addition, the second crane to be installed at the extended
quay will also lead to a productivity increase at the original
quay. The combined lifting capacity of both cranes now
amounts to 85 tonnes, compared with the previous figure
of 50 tonnes, and permits the lifting of heavy loads for
which a rented swimming crane was needed previously.
After the investment, a swimming crane will be needed
only for lifting the ship's engine. All other lifting activities
can be carried out with the two cranes on the extended
quay. Second, the original crane will often be used for
activities on a smaller outdoor work area located behind the
quay. After the investment, the second crane can be used
when the first crane is needed for activities on the outdoor
work area. Fitting-out will not,
therefore, have to be
disrupted at such times.

(75) The Commission therefore finds that

the
investment is to improve the productivity of the existing
installations at the yard.

the aim of

E f f e c t o n c a p a c i t y

(76) Further, the Commission finds that the investment will not

lead to an undue increase in capacity.

(77) The Commission would first emphasise that Rolandwerft
has been fitting out two ships at a time for more than
fifteen years. Fitting-out in a second row was intended as a
transitional solution until the necessary investment in the
quay was undertaken. According to the information
submitted by Germany, the transitional period was so long
because of the specific situation on the market and the
special conditions at the yard. The Hegemann group, as the
owner of the yard, had decided to invest the available funds
as a matter of priority in Peene-Werft. After the completion

of the Peene-Werft restructuring project in 2005 and as a
consequence of the market upturn, the Hegemann group
was able to finalise its modernisation project for Roland-
werft. Given that the yard has regularly fitted out two ships
at a time over the past 15 years (with interruptions at times
the Commission sees no reason to
of
conclude that, before the investment, Rolandwerft had the
capacity to fit out only one ship.

low demand),

(78) From a technical point of view, Rolandwerft will not be able
to increase its new building and repair work because of the
bottlenecks at preceding stages, namely in the halls and the
outside work area. Both operations are already working to
their limits, thereby preventing an increase in potential
output. With regards to the yard's repair work, Germany
explained that about 50 % of each repair job must be
carried out on land, i.e. on the outside work area, but that
the capacity there was already absorbed by new building
activities. Additional repair work is therefore possible only
in place of — and not in addition to — new building. The
same
the
investment does not affect the bottlenecks, the capacity
for new building and ship repair/conversion cannot
increase. Furthermore, the specific bottlenecks cannot be
easily removed because this could be achieved only by
duplicating the entire production process.

ship conversion. As

arguments hold for

(79) The Commission also examined whether the new quay
would increase the yard's capacity for fitting out pre-
fabricated hulls. But here too, the halls are the bottleneck.
While the new ships built by Rolandwerft are pre-fitted out
in the yard's halls, this is not the case with prefabricated
hulls, which are usually empty and require a significant
technical equipment
amount of
normally used in the halls for the new building would be
needed at the quayside. When the halls and their equipment
are being fully utilised, the equipment cannot be used at the
same time for fitting out the hulls. As a consequence,
Rolandwerft cannot expand its fitting-out of hulls built
elsewhere while at the same time maintaining its high level
of new building and repair work.

fitting-out. For

this,

(80) Germany also explained that, at present, the fitting-out of
hulls is neither being carried out nor planned. At times of
peak demand, such activities are highly unlikely because the
order books of potential hull suppliers are full for years
ahead and Rolandwerft would not, therefore, be able to
obtain prefabricated hulls of the required high quality on
the market. This is borne out by the actual activities of
Rolandwerft in recent years, when Rolandwerft did not, in
addition, fit out prefabricated hulls although, in theory, it
could have done at the parallel berth. Germany made the
point that, after a market downturn when hulls would
potentially be available on the market as yards would have

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Official Journal of the European Union

30.4.2007

too would be slimmer.

free capacity, it could be assumed that the order books of
Rolandwerft
In such a case,
Rolandwerft would, for reasons of profitability, rather use
its own capacities to build the hulls than to fit out
prefabricated hulls. Even if it did fit out prefabricated hulls,
this would be in the place of — and not in addition to —
new building.

(81) The Commission notes that, hypothetically, even if a slight
increase in capacity for fitting out prefabricated hulls did
result from the investment, such an increase could be at
most minimal for the technical reasons given above. Since
the productivity increase achieved, mainly in the form of
lower crane-rental costs, would be significant, a marginal
capacity increase resulting from the occasional fitting-out
of hulls could not be regarded as disproportionate.

(82) The Commission further notes that,

in support of

its
that no capacity increase was being sought,
statement
Rolandwerft has offered to undertake not to step up use of
the new quay for a period of five years. This commitment,
submitted by Germany, provides that the yard limit its
activities at the new quay in the field of new building,
fitting-out of prefabricated hulls, and ship repair and
conversion to […] a year for a period of five years after the
completion of the investment in the new quay. The use of
the new quay for only […] is in line with the yard's
planning for the next
few years as submitted to the
Commission. Rolandwerft has also undertaken not to build
in the second row during that period. The Commission
notes that these commitments cannot be regarded as proof
that the investments will not lead to any capacity increase,
but it welcomes them as further evidence that the technical,
practical and economic reasons submitted by the bene-
ficiary are well founded and that the aim of the investment
is not to increase capacity but to improve productivity.

(83) The Commission therefore takes

the
investments in the new quay and the purchase of the new

the view that

crane constitute upgrading or modernisation of an existing
yard with the aim of increasing the productivity of the
existing installations. They will not lead to a dispropor-
tionate
capacity increase. The Commission therefore
considers that the construction of the new quay and the
purchase of the new crane fulfil the conditions for the
granting of regional
investment aid laid down in the
shipbuilding framework. The investments amounting to
EUR 4 640 000 are thus eligible for regional aid.

VII.

CONCLUSION

(84) The Commission comes to the conclusion that the planned
regional aid for Rolandwerft, amounting to 12 % of EUR
13 000 000, i.e. EUR 1 560 000, fulfils the conditions for
regional aid laid down in the shipbuilding framework. The
planned aid therefore fulfils the necessary conditions to be
considered compatible with the common market,

HAS ADOPTED THIS DECISION:

Article 1

The state aid which Germany is planning to implement for
Rolandwerft, amounting to 12 % of EUR 13 000 000, i.e. EUR
1 560 000, is compatible with the common market pursuant to
Article 87(3)(c) of the EC Treaty.

Article 2

This Decision is addressed to the Federal Republic of Germany.

Done at Brussels, 20 December 2006.

For the Commission

Neelie KROES

Member of the Commission