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Croatia’s shipyard workers face an unweatherable storm

19 November 2014 ( - Blue cranes haunt the sky over Nauta Lamjana, a shipyard in the middle of Croatia’s Adriatic coast.

Thousands of jobs at shipyards like Nauta Lamjana, 3. Maj (pictured), Brodotrogir, Brodosplit and Uljanik have disappeared since Croatia joined the European Union in July 2013.

Shop steward and former worker Mario Košta recalls the heyday of the seaside industrial site, when the otherwise-sleepy island of Ugljan hummed with up to 600 workers hammering, clanking and welding out a living, mostly by servicing oil rigs.

“These crazy Americans used to do handstands at the top of oil platforms,” he said with a wistful laugh. Those days are gone.

Nauta Lamjana was swept up in a privatisation spree that consumed large swaths of the Croatian economy right after the war that broke up Yugoslavia in the early 1990s.

The once-proud shipyard has endured a mix of ineptitude, alleged corruption and a poor economic environment over the course of 20 years.

Now Košta and other shipyard workers fear that history may repeat itself.

A similar privatisation spree occurred during Croatia’s European Union accession hearings.

The European Commission (EC) demanded the nation cut subsidies to its four largest shipyards to meet fair competition standards.

Croatia had reportedly pumped US$4.76 billion in subsidies over two decades into unprofitable shipyards.

The privatisations — a rush job that saw the restructuring of three shipyards approved within the year before their deadline — was rife with errors and misjudgments, according to Ozren Matijašević, President of the Croatian Association of Trade Unions.

The mistakes dampened any hopes of a real, immediate turnaround.

“Croatia entered the EU with its pants around its ankles,” he said, curtly.

A tepid response to tenders for the shipyards forced Croatia to entice potential buyers with “restructuring aid.” By the time the dust settled, Croatia had committed to over €1 billion in taxpayer-funded restructuring aid to help the privatisation transition.

Croatia kept in line with EC competition rules by limiting production capacity. As a result, the nation’s oldest shipyard, Kraljevica, was left to flounder into bankruptcy.

Thousands of jobs at the shipyards 3. Maj, Brodotrogir, Brodosplit and Uljanik have since disappeared, according to figures published by the Croatian Union of Autonomous Trades.

On a knife’s edge

Croatia’s remaining shipbuilding employees grasp precariously to a knife’s edge of state aid that could be cut at any moment by the fickle axe of deficit hawks.

The production caps — in some cases prolonged outright bans on new business — may have already sealed the fate of some shipyards, according to Matijašević.

“Croatia agreed to unreasonable terms,” he said. “The order book is not as full as it could be.”
Yet the pressures exerted on the country’s shipyards aren’t entirely unique.

Competing in a slowing global marketplace puts Croatia at a strategic disadvantage.

Competitors such as China and South Korea dominate in terms of cost, capacity and technology, according to Dr Joan Mileski, Professor and Head of Texas A&M’s Department of Maritime Administration.

“The [shipbuilding] industry is being squeezed,” she said in a telephone interview with Equal Times.
“The price of a ship is very expensive. The fuel costs are very expensive. There’s a glut of ships currently in the market. There’s a global market problem.”

Mileski said the state subsidies could only inoculate shipbuilders so much before a dreary market takes hold.

“Even if they were subsidised, [Croatia would] have the same problems,” she added.

“The maritime industry goes in cycles. We follow the big trends of the economics of the globe.”
Košta, Matijašević and other members of the shipbuilding workforce admit macroeconomics are working against them.

Yet they claim they’ve been sold out by a self-serving political class making short-term deals for personal gain.

Croatia’s Ministry of Economy has been in the crosshairs of disgruntled former and current workers interviewed by Equal Times.

They claim the states’ restructuring funds were cut to keep Croatia as a whole in compliance with the EU’s Excessive Deficit Procedure.

The Ministry did not respond to several requests for comment.

Košta and others believe the rest of Croatia’s shipyards may one day resemble Nauta Lamjana.
The shipyard looks abandoned. Just 25 workers mill about imperceptibly inside Nauta Lamjana’s gated premises.

Its output has dwindled since an administrator hired by the local commercial court last year began wrenching bankruptcy proceedings that could shut the shipyard for good.

Košta called Nauta Lamjana his “only real job.”

“It’s not that I’m in shock. I’m used to taking hits,” he said, while taking a skeptical look around the site.

“The worst of what we’ve been through? That’s what’s waiting for all of them.”

Joe Orovic