Delegation of Estonian Shipbuilders in Germany

As a result of cooperation between Estonian Employers' Confederation and its German partners, the visit of a delegation of Estonian shipbuilders to the shipbuilding companies in North Germany was carried out during May 9-14 (included). The leading specialists of BLRT GRUPP AS and LOKSA SHIPYARD belonged to the delegation. The delegation paid a visit to the Ministry of Finance of the Federal State of Mecklenburg-Vorpommern. In addition, Wismar Shipyard AKER OSTSEE, basing on Norwegian capital, the headquarters of NORDMETAL -an organization of shipbuilding and other industrial companies in North Germany- in Hamburg, the Analysis Centre of the German Association of Shipbuilding and Repairs etc. were visited.

15 years ago more than 50,000 people were working in the shipyards of Rostock, Wismar, Varnemünde, Stralsund and other East German cities. As a result of privatization, reorganisation, modernization and increase in labour productivity, only 5000 full-time employees have been left in the aforementioned shipyards. About as much are partially involved as subcontractors for performing the orders of the shipyards. For example, painting works are in general ordered from subcontractors. For the purpose of solving the social problems arising from redundancy and for organizing retraining, a special company was founded at the MINISTRY OF FINANCE of the Federal State for managing those processes.

In the shipyards of Western Germany, around 20,000 people are employed. Germany is one of the leading countries in Europe as far as shipbuilding is concerned, giving 4-5 per cent of the respective produce in the world market as a whole, corresponding to the value of 5 billion EUR. At the same time, the annual volume of European shipbuilding industry is 3-4 times smaller than the respective produce of South Korean companies.

In course of the first wave of privatization during the years 1992-1994, 83 per cent of East German shipyards remained under the control of national capital. Today, the proportion is precisely the contrary in favour of foreign capital.

The Wismar Shipyard that was visited has been privatized to Bremen Vulkan concern. Germany used the funds obtained from privatization for investing 600 million DEM in reconstruction of this shipyard and in construction of one of the most modern shipyards of container-cargo ships in Europe. In 1998, the shipyards of Wismari and Varnemünde were bought by AKER KVAERNER YARDS, basing on Norwegian capital, which has control over more than 20 shipyards in the world. In the docks of the shipyards of Wismar and Varnemünde, one ship with the cargo capacity of 2500 - 2700 sea containers is built each month. Those factories have concluded preliminary contracts for building 31 new container-cargo ships during the upcoming years. They stay competitive in the market with the shipyards of South-East Asia. Under the control of the Norwegians, the competitive ability and labour productivity of the companies have increased. While in 1990 less than half of the personnel of the shipyards were production workers, in 2004 this figure is 77.5 per cent. While earlier it took 25.1 hours to build one gross register ton of a ship, now it takes 13.8 hours. Labour productivity has increased about twice.

The German government regards shipbuilding as a branch of industry with outstanding importance. The price of building each ship is subsidized in 6 per cent, of which 2/3 comes from the national and 1/3 of the federal budget. Germany continues supporting shipbuilding also as a member of the European Union. Otherwise it would be difficult to stand up against Korean and Japanese shipbuilding giants. The Chinese shipyards are about to be launched. Primarily this will be noted by the coming of a new world level manufacturer and rise in price of shipbuilding steel in the world market. While in 2002 a ton of shipbuilding steel cost an average of 290 euros, by spring 2004 the price has increased to 350 euros, which is one fifth more. Given the high demand for steel in the world market, no decrease in price could be predicted.

The German shipbuilding policy has well been summarized in the document INITIATIVE LEADERSHIP 2015, which has been approved on the national level. By this document, the course was taken to increase the quality of shipbuilding, lengthening the exploitation period of ships, 60 per cent of the ships built should continue to go for export, new technologies are being worked out, new carriers of energy are sought etc. German shipbuilders have brought up the issue that World Trade Organisation (WTO) and European Union (EU) should step together against the shipbuilding industry of South-East Asia with national dumping. Or at least they should try to agree on a common national level of subsidizing shipbuilding industry. However, more realistic would be a development scenario where Germany will specialise in producing quality ships with longer exploitation period. Analogically, the German car industry is highly competitive in the world market.

As a result of an agreement on wages, the average gross wage of the employees of the companies of NORDMETALL is 1800 EUR, while the wage of employees pertaining to the highest wage category is 33 per cent higher and the employees pertaining to the lowest category -graduates of  vocational education institutions- is 14 per cent lower. During practice, the students receive a wage of 600 EUR a month. A 13 per cent health insurance is calculated from the wage of an employee, and in addition to that, the employer also pays a 13 per cent health insurance. There are about three hundred companies in Germany which have the right to be involved in health insurance, which we understand as the activity of the Health Insurance Fund. This ensures strong competition and high quality of medicine services.

It was repeatedly confirmed by both parties that German and Baltic shipbuilding and repairs companies cannot be regarded precisely as competitors, and by acting together, are rather strengthening the respective market of the Baltic Sea region.

The atmosphere of the meetings was especially positive because they took place a few weeks after the expansion of the European Union.

The overview has been composed by Heinart Puhkim, Personnel Manager of BLRT Grupp AS

In Tallinn, on May 18, 2004