CELEX: 52011PC0258
Language: en
Date: 2011-05-06
Title: Proposal for a DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the mobilisation of the European Globalisation Adjustment Fund in accordance with point 28 of the Interinstitutional Agreement of 17 May 2006 between the European Parliament, the Council and the Commission on budgetary discipline and sound financial management (application EGF/2010/022 DK/LM Glasfiber from Denmark)

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		52011PC0258
		
			DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the mobilisation of the European Globalisation Adjustment Fund in accordance with point 28 of the Interinstitutional Agreement of 17 May 2006 between the European Parliament, the Council and the Commission on budgetary discipline and sound financial management (application EGF/2010/022 DK/LM Glasfiber from Denmark) Proposal for a DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the mobilisation of the European Globalisation Adjustment Fund in accordance with point 28 of the Interinstitutional Agreement of 17 May 2006 between the European Parliament, the Council and the Commission on budgetary discipline and sound financial management (application EGF/2010/022 DK/LM Glasfiber from Denmark) /* COM/2011/0258 final */
			
				
		
		
			
			   	EXPLANATORY MEMORANDUM
Point 28 of the Interinstitutional
Agreement of 17 May 2006 between the European Parliament, the Council and the
Commission on budgetary discipline and sound financial management[1] allows for the mobilisation of
the European Globalisation Adjustment Fund (EGF) through a flexibility
mechanism, within the annual ceiling of EUR 500 million over and
above the relevant headings of the financial framework.
The rules applicable to the contributions
from the EGF are laid down in Regulation (EC) No 1927/2006 of the European
Parliament and of the Council of 20 December 2006 on establishing the European
Globalisation Adjustment Fund[2].
On 7 July 2010, Denmark submitted application EGF/2010/022 DK/LM
Glasfiber for a financial contribution from the EGF,
following redundancies in LM Glasfiber in Denmark.
After a thorough
examination of this application, the Commission has concluded in accordance
with Article 10 of Regulation (EC) No 1927/2006 that the conditions for a
financial contribution under this Regulation are met.
SUMMARY OF THE APPLICATION AND ANALYSIS
 Key data: ||   
 EGF Reference no. || EGF/2010/022 
 Member State || Denmark 
 Article 2 || (a) 
 Primary enterprise || LM Glasfiber 
 Suppliers and downstream promoters || 0 
 Reference period || 1.1.2010 – 30.4.2010 
 Starting date for the personalised services || 1.8.2010 
 Application date || 7.7.2010 
 Redundancies during the reference period || 651 
 Redundancies before and after the reference period || 999 
 Total eligible redundancies || 1 650 
 Redundant workers targeted for support || 825 
 Expenditure for personalised services (EUR) || 9 191 946 
 Expenditure for implementing EGF[3] (EUR) || 419 463 
 Expenditure for implementing EGF (%) || 4,36 
 Total budget (EUR) || 9 611 409 
 EGF contribution (65 %) (EUR) || 6 247 415 
1.                      
The application was presented to the Commission
on 7 July 2010 and supplemented by additional information up to 3 February 2011.
2.                      
The application meets the conditions for
deploying the EGF as set out in Article 2(a) of Regulation (EC) No 1927/2006,
and was submitted within the deadline of 10 weeks referred to in Article 5 of
that Regulation.
Link between the redundancies and major structural changes in world trade patterns due to globalisation or the global financial and economic crisis
3.                      
In order to establish the link between the
redundancies and major structural changes in world trade patterns due to
globalisation, Denmark argues that the
wind turbine manufacturing industry in the EU, which is included in NACE
Revision 2 Division 28 ('Manufacture of machinery and equipment'), has been
seriously affected by changes in world trade patterns, in particular a
significant reduction of the EU market share. Denmark explains that, although
the European production of wind turbines has increased in the past few years,
the global market for wind turbines has developed even faster, especially in
Asia and North America.
4.                      
Denmark quotes the World Wind Energy Report 2009
prepared by the World Wind Energy Association, which shows that the most
dynamic progress of the wind industry took place in Asia and North America and
the focus of the global wind sector moved away from Europe. Amid a dynamic
global growth of the sector, Europe's share in total capacity was reduced from
65,5 % in 2006 to 47,9 % in 2009. Asia is expanding most rapidly,
accounting for 40,4 % of the new wind capacity in 2009 (in comparison to
18,1 % in 2004) while Europe fell back from 70,7% of new capacity in 2004
to only 27,3% in 2009. 
(Source: World Wind Energy Report 2009,
WWEA World Wind Energy Association)
5.                      
Apart from considerably lower labour costs, the
high costs of transporting the big parts of wind turbines require European
producers to move their production closer to the most dynamic end-user markets
to ensure their competiveness and market position. As a result, production has
been progressively migrating out of the EU. LM Glasfiber delocalised its
activities to China, where the prospects for the wind energy sector are better
and market growth is strong. The company increased its production capacity in
China through the construction of factories and partnerships with key players
in Asian markets. Factories were opened in 2009 in the Chinese province of
Xinjiang and in the costal city Qin Huang Dao. 
6.                      
In addition, the new economic context as a
result of the financial and economic crisis negatively affected the EU wind
industry in 2009. As a result, the Danish wind industry experienced a sharp
drop in employment in that year, as well as a drop in turnover.
Demonstration of the number of
redundancies and compliance with the criteria of Article 2(a)
7.                      
Denmark submitted this application under the
intervention criteria of Article 2(a) of Regulation (EC) No 1927/2006, which
requires at least 500 redundancies over a four-month period in an enterprise in
a Member State, including workers made redundant in its suppliers and
downstream producers.
8.                      
The application cites 651 redundancies in LM Glasfiber during the four-month reference period from 1 January 2010 to 30 April 2010 and 976 redundancies before and 23
after the reference period, but related to the same collective redundancy
procedure. All of these redundancies were calculated in accordance with the
first indent of the second paragraph of Article 2 of Regulation (EC) No
1927/2006. 
Explanation of the unforeseen nature
of those redundancies
9.                      
The Danish authorities argue that, in the light
of the fact that the wind energy sector has been constantly growing, the
collective redundancies in LM Glasfiber happened unexpectedly. They further
argue that the sudden reduction in demand on the EU market, as well as the
significant and constant growth of the Asian market, left the company with no
alternative but to reduce production facilities in Europe and move them to the growing
markets in China. Therefore, LM Glasfiber entered a strategic partnership with
the Chinese wind turbine manufacturer Goldwind Science and Technology Co and
opened two factories in China, in the province of Xinjiang and in Qin Huang Dao.

Identification of the dismissing
enterprises and workers targeted for assistance 
10.                  
The application relates to 1 650
redundancies in LM Glasfiber, of which 651 occurred during the reference
period, 976 before the reference period and 23 after the reference period but
which are eligible for inclusion according to Article 3a (b) of Regulation (EC)
No 1927/2006. Denmark estimates that 50 % of the redundant workers (825)
will opt to receive assistance from the EGF. The remaining 50 % are
expected to find employment through their own initiative without requiring
assistance from the EGF. 
11.                  
The break-down of the targeted workers is as
follows:
 Category || Number || Percent 
 Men || 606 || 73,45 
 Women || 219 || 26,55 
 EU citizens || 825 || 100,00 
 Non EU citizens || 0 || 0 
 15-24 years old || 84 || 10,18 
 25-54 years old || 655 || 79,39 
 55-64 years old || 79 || 9,58 
 > 64 years old || 7 || 0,85 
12.                  
In terms of occupational categories, the
break-down is as follows:
 Category || Number || Percent 
 Legislators, senior officials and managers || 1 || 0,12 
 Professionals || 2 || 0,24 
 Technicians and associate professionals || 93 || 11,27 
 Clerks || 24 || 2,91 
 Craft and related trades workers || 17 || 2,06 
 Elementary occupations || 688 || 83,40 
13.                  
In accordance with Article 7 of Regulation (EC)
No 1927/2006, Denmark has confirmed that a policy of equality between women and
men as well as non-discrimination has been applied, and will continue to apply,
during the various stages of the implementation of and, in particular, in
access to the EGF.
Description of the territory
concerned and its authorities and stakeholders
14.                  
The factories being closed are located in Lunderskov and Hammelev within the municipalities of Kolding and
Haderslev and on the border with Vejen. Thus, the territory affected by the
redundancies concerns these three municipalities in the Southern part of
Denmark (Syddanmark). This territory is also situated within the Triangle area
(Trekanten), the region of economic priority in Denmark. 
15.                  
Traditionally, the area in question was
specialised in agriculture, manufacturing and transportation. It has
experienced significant growth in industry; however, this growth has been based
on declining sectors such as transportation and manufacturing. Gradually,
employment in food manufacturing has declined in the area, followed by
logistics and transportation. In the early 1990s, the area started to specialise
in advanced energy production, mainly construction of wind turbines. The focus
on the wind turbine industry created a large sub-component industry as well as
an increasing workforce employed within the energy sector. 
16.                  
Haderslev, Kolding and Vejen consist of three
independent municipalities, each with a local city council within Syddanmark.
Other stakeholders are the regional authorities of the area concerned, as well
as the educational and training bodies. 
Expected impact of the redundancies
as regards local, regional or national employment
17.                  
Denmark argues that, due to globalisation, many
companies in the area have reduced production and as a result, unemployment has
increased. According to Danish statistics, unemployment in the Triangle area increased
by 25 % in 2009 in comparison to 2008. The closure of two LM Glasfiber factories
in Lunderskov and Hammelev contributed significantly to the increase in the
unemployment rate of the area. Particularly low skilled workers have been
affected. In Denmark as a whole the employment
situation has also deteriorated sharply in recent years: the unemployment rate
rose from 3,3 % in 2008 to 8,2 % in 2010.
18.                  
The collective redundancies in LM Glasfiber have
left the area unable to create sufficient re-employment. Denmark anticipates
that, even after the end of the crisis, the sector will not revive, with most of
the new orders going to the Far East, where costs are lower. Without retraining
and additional support, the workers risk slipping into long-term unemployment. 
19.                  
According to the Danish Wind Industry
Association, employment in the wind industry sector experienced a sharp decline
during 2009 of 13 % (from total average employment of 28 400 persons
to 24 700), both for manufacturers and suppliers. 
Co-ordinated package of personalised
services to be funded and a breakdown of its estimated costs, including its
complementarity with actions funded by the Structural Funds
20.                  
Denmark proposes a package of measures in support
of the redundant workers that is built around three pillars, following a basic
course and clarification; education and training; employment incentives; and
incentives for business start-up. The package is designed to take into account
the educational levels of the workers, their ability to be mobile, and current
or expected job opportunities in the region. Although all the targeted workers
will participate in the basic course and clarification, other actions may
target smaller numbers of workers, some of whom will benefit from more than one
action where appropriate. 
21.                  
An initial basic course and clarification
is carried out in order to identify the best options for each worker
individually. Each targeted worker is offered a basic group training and
individual coaching to identify their skills and to find the best fit with the
available active labour market measures. The estimated cost is
EUR 1 610,74 per worker. 
22.                  
The pillar 'education and training' comprises
six separate actions. These actions are complementary to the Growth Plan
elaborated for Kolding, Vejen and Haderslev municipalities. The new businesses
will be developed in the areas where the region already possesses a strong
foundation in terms of business, knowledge and skills: 
(1)              
Supplementary training in tourism. It is estimated that 100 workers will benefit from this action, at
an approximate cost of EUR 4 026,85 per worker. The action aims to
give the workers skills relevant to the growing tourism sector in the region,
including marketing, branding, the service concept and business administration.

(2)              
Supplementary training in energy technology. It is estimated that 100 workers will benefit from this action, at
an approximate cost of EUR 4 026,85 per worker. Due to Denmark's
focus on developing the alternative sustainable energy production, there is a
need to train workers in the energy sector. It is proposed to give workers
relevant skills and increase existing knowledge of workers with certain competences
and experience in the field, in close collaboration with existing employers in
the region.
(3)              
Supplementary training in design. It is estimated that 100 workers will benefit from this action, at
an approximate cost of EUR 4 026,85 per worker. It is proposed to
train workers in design in order to apply it in production, mainly in SMEs. The
course will give the participants the knowledge about use of design in
industry, product development, branding, and consumer trends. 
(4)              
Supplementary training in food industry. It is estimated that 100 workers will benefit from this action, at
an approximate cost of EUR 4 026,85 per worker. The action aims at
developing relevant skills and knowledge to work in the area of health food, including
food labelling, nutritional recommendations etc. Due to the number of small and larger food producers in the
area as well as catering services, the focus will be on conjoining food and
health as basis for developing new business opportunities. 
(5)              
Attracting and retaining young people in further
education. It is estimated that 100 workers will
benefit from this action, at an approximate cost of EUR 6 711,41 per
worker. This action is aimed at attracting younger redundant workers back into
education, for which additional support is needed, including guidance and
material and financial support to facilitate the transition from work to study.

(6)              
Supplementary education in reading/writing. It is estimated that 350 workers will benefit from this action, at
an approximate cost of EUR 2 684,56 per worker. Workers with low
levels of educational attainment will be offered remedial education in areas
such as reading, spelling and mathematics in order to allow them to take
advantage of other educational and employment opportunities.
23.                  
The pillar 'employment incentives' is based on
one action:
(1)              
Company-based training. It is estimated that 300 workers will benefit from this action, at
an approximate cost of EUR 4 026,85 per worker. In order to
facilitate the reintegration of the unemployed into the labour market, this
action offers on-the-job training, especially in SMEs, with a specific focus on
the skills that such firms require. 
24.                  
The pillar 'incentives for business start-ups'
comprises two separate actions:
(1)              
Entrepreneurs' course. It is estimated that 40 workers will benefit from this action, at
an approximate cost of EUR 5 637,58 per worker. The course lasting
six weeks will include the introduction to business plans, company orientation,
management and accounting and will end with the preparation of a business case
by the participants.
(2)              
On-going
advice and mentoring for entrepreneurs. It is estimated that 10 workers
will benefit from this action, at an approximate cost of EUR 1 342,30
per worker. To help new entrepreneurs to succeed, this action proposes to offer
entrepreneurs ongoing advice and mentoring. Every new start-up company will be
assigned a mentor with knowledge of the sector who regularly visits and advises
the entrepreneur. It is planned that the mentoring scheme will run for one
year, and simultaneously it is planned to set up network groups within current
and potential growth sectors, where new entrepreneurs can meet, discuss and
cooperate.
25.                  
Subsistence allowance will be paid daily to all targeted workers to help them participate
in the measures (an approximate cost of EUR 3 872,28 per worker). The
allowances will be granted for the duration of the training and will be an
integral part of the active labour measures. 
26.                  
The expenditure for implementing EGF, which is
included in the application in accordance with Article 3 of Regulation (EC) No
1927/2006, covers preparatory, management, information and publicity as well as
control activities.
27.                  
The personalised services presented by the
Danish authorities are active labour market measures within the eligible
actions defined by Article 3 of Regulation (EC) No 1927/2006. The Danish
authorities estimate the total costs of these services at EUR 9 191 946
and the expenditure for implementing EGF at EUR 419 463 (4,36 %
of the total amount). The total contribution requested from the EGF is EUR 6 247 415
(65 % of the total costs).
 Actions || Estimated number of workers targeted || Estimated cost per worker targeted (EUR) || Total costs* (EGF and national cofinancing) (EUR) 
 Personalised services (first paragraph of Article 3 of Regulation (EC) No 1927/2006) 
 Basic course and clarification || 825 || 1 610,74 || 1 328 859 
 Education and Training ||   ||   ||   
 Supplementary training in tourism || 100 || 4 026,85 || 402 685 
 Supplementary training in energy technology || 100 || 4 026,85 || 402 685 
 Supplementary training in design || 100 || 4 026,85 || 402 685 
 Supplementary training in food industry || 100 || 4 026,85 || 402 685 
 Attracting and retaining young people in further education || 100 || 6 711,41 || 671 141 
 Supplementary education in reading/writing || 350 || 2 684,56 || 939 596 
 Employment incentives ||   ||   ||   
 Company-based training || 300 || 4 026,85 || 1 208 054 
 Incentives for business start-ups ||   ||   ||   
 Entrepreneurs' course || 40 || 5 637,58 || 225 503 
 On-going advice and mentoring for entrepreneurs || 10 || 1 342,30 || 13 423 
 Subsistence allowance || 825 || 3 872,28 || 3 194 630 
 Sub total personalised services ||   || 9 191 946   
 Expenditure for implementing EGF (third paragraph of Article 3 of Regulation (EC) No 1927/2006) 
 Preparatory activities ||   || 62 919 
 Management ||   || 209 732 
 Information and publicity ||   || 62 919 
 Control activities ||   || 83 893 
 Sub total expenditure for implementing EGF ||   || 419 463 
 Total estimated costs ||   || 9 611 409 
 EGF contribution (65 % of total costs) ||   || 6 247 415 
* Totals do not
tally due to conversion from DKr and subsequent rounding of unit costs per
worker
28.                  
Denmark confirms that the measures described
above are complementary with actions funded by the Structural Funds. 
Date on which the personalised
services to the affected workers were started or are planned to start
29.                  
Denmark started the personalised services to the
affected workers included in the co-ordinated package proposed for co-financing
to the EGF on 1 August 2010. This date therefore represents the beginning of
the period of eligibility for any assistance that might be awarded from the
EGF.
Procedures for consulting the social
partners
30.                  
The South Denmark region and municipalities of
Vejen, Kolding and Haderslev prepared the application jointly, with the
involvement of various social partners, including industrial associations,
trade unions and education and training institutions. Joint meetings were held
to discuss the detailed strategy for a transition plan. 
31.                  
The Danish authorities confirmed that the
requirements laid down in national and Community legislation concerning
collective redundancies have been complied with.
Information on actions that are
mandatory by virtue of national law or pursuant to collective agreements
32.                  
As regards the criteria contained in Article 6
of Regulation (EC) No 1927/2006, the Danish authorities in their application:
·      confirmed that the financial contribution from the EGF does not
replace measures which are the responsibility of companies by virtue of
national law or collective agreements;
·      demonstrated that the actions provide support for individual workers
and are not to be used for restructuring companies or sectors;
·      confirmed that the eligible actions referred to above do not receive
assistance from other Community financial instruments.
Management and control systems 
33.                  
Denmark has notified the Commission that the
financial contribution will be managed and controlled by the same bodies as the
European Social Fund, which also has the Danish Enterprise and Construction
Authority (EBST) as Managing Authority. The Certifying Authority will be vested
in a different department of the same body. The Auditing Authority will be the
EU Controllerfunction in the Danish Enterprise and Construction Authority. 
Financing
34.                  
On the basis of the application from Denmark,
the proposed contribution from the EGF to the coordinated package of
personalised services is EUR 6 247 415, representing 65 %
of the total cost. The Commission's proposed allocation under the Fund is based
on the information made available by Denmark.
35.                  
Considering the maximum possible amount of a
financial contribution from the EGF under Article 10(1) of Regulation (EC) No
1927/2006, as well as the scope for reallocating appropriations, the Commission
proposes to mobilise the EGF for the total amount referred above, to be allocated
under heading 1a of the financial framework.
36.                  
The proposed amount of financial contribution
will leave more than 25 % of the maximum annual amount earmarked for the
EGF available for allocations during the last four months of the year, as
required by Article 12(6) of Regulation (EC) No 1927/2006.
37.                  
By presenting this proposal to mobilise the EGF,
the Commission initiates the simplified trialogue procedure, as required by
Point 28 of the Interinstitutional Agreement of 17 May 2006, with a view to
securing the agreement of the two arms of the budgetary authority on the need
to use the EGF and the amount required. The Commission invites the first of the
two arms of the budgetary authority that reaches agreement on the draft
mobilisation proposal, at appropriate political level, to inform the other arm
and the Commission of its intentions. In case of disagreement by either of the
two arms of the budgetary authority, a formal trialogue meeting will be
convened.
38.                  
The Commission presents separately a transfer request
in order to enter in the 2011 budget specific commitment appropriations, as
required in Point 28 of the Interinstitutional Agreement of 17 May 2006.
Source of payment appropriations 
39.                  
The 2011 budget showing payment appropriations
of EUR 47 608 950 on budget line 04.0501 "European
Globalisation Adjustment Fund (EGF)", this budget line will be used to
cover the amount of 6 247 415 EUR needed for the present
application.
Proposal for a
DECISION OF THE EUROPEAN PARLIAMENT
AND OF THE COUNCIL
on the mobilisation of the European
Globalisation Adjustment Fund in accordance with point 28 of the
Interinstitutional Agreement of 17 May 2006 between the European Parliament,
the Council and the Commission on budgetary discipline and sound financial
management (application EGF/2010/022 DK/LM Glasfiber from Denmark)
THE EUROPEAN PARLIAMENT AND THE
COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the
Functioning of the European Union,
Having regard to the Interinstitutional
Agreement of 17 May 2006 between the European Parliament, the Council and the
Commission on budgetary discipline and sound financial management[4], and in particular point 28
thereof,
Having regard to Regulation (EC) No
1927/2006 of the European Parliament and of the Council of 20 December 2006
establishing the European Globalisation Adjustment Fund[5], and in particular Article
12(3) thereof,
Having regard to the proposal from the
Commission[6],
Whereas:
(1)       The European Globalisation
Adjustment Fund (EGF) was established to provide additional support for workers
made redundant as a result of major structural changes in world trade patterns
due to globalisation and to assist them with their reintegration into the
labour market.
(2)       The scope of the EGF was
broadened for applications submitted from 1 May 2009 to include support for
workers made redundant as a direct result of the global financial and economic
crisis.
(3)       The Interinstitutional
Agreement of 17 May 2006 allows the mobilisation of the EGF within the annual
ceiling of EUR 500 million.
(4)       Denmark submitted an
application to mobilise the EGF, in respect of redundancies in the enterprise
LM Glasfiber on 7 July 2010 and supplemented it by
additional information up to 3 February 2011. This
application complies with the requirements for determining the financial
contributions as laid down in Article 10 of
Regulation (EC) No 1927/2006. The Commission, therefore,
proposes to mobilise an amount of EUR 6 247 415.
(5)       The EGF should, therefore,
be mobilised in order to provide a financial contribution for the application
submitted by Denmark.
HAVE ADOPTED THIS DECISION:
Article 1
For the general budget of the European
Union for the financial year 2011, the European Globalisation Adjustment Fund
(EGF) shall be mobilised to provide the sum of EUR 6 247 415 in
commitment and payment appropriations.
Article 2
This Decision shall be published in the Official
Journal of the European Union.
Done at [Brussels/Strasbourg],
For the European Parliament                       For
the Council
The President                                                 The
President
[1]               OJ C 139, 14.6.2006, p. 1.
[2]               OJ L 406, 30.12.2006, p. 1.
[3]               In accordance with the third paragraph of Article 3
of Regulation (EC) No 1927/2006.
[4]               OJ C 139, 14.6.2006, p. 1.
[5]               OJ L 406, 30.12.2006, p. 1.
[6]               OJ C […], […], p. […].