Spanish shipbuilding sector struggling after loss of state subsidies

Spanish shipbuilders are struggling since the European Union in 2011 ordered the end of state subsidies for the sector.

The threat that Brussels may demand that the bulk of the three billion euros which the sector received in aid between 2005 and 2011 be paid back is adding to the industry’s woes and frightening off business.

The sector has lost contracts for 50 ships due to concerns over the commission’s inquiries into the state aid, according to the PYMAR association which represents Spain’s shipbuilders.

Six Spanish shipyards have already closed in recent years, leaving just 19 standing which employ 87,000 people directly or indirectly.

Brussels will rule by July 17 if the state aid needs to be repaid

The decision is anxiously awaited in Vigo, where the shipyard is a major employer along with a Citroen plant and Pescanova, a major Spanish fish company which in April filed for insolvency.

The city of around 300,000 people on Spain’s north-western coast of Galicia already has an unemployment rate of 27 per cent.

Unions have called for a day of protest and strikes on July 11 when European Union’s commissioner for competition, Joaquin Almunia, will meet with representatives of Spanish shipbuilders in Brussels.

Being forced to pay back the state aid “would be a serious attack to legal security in Spain and it will cause Spanish shipyards to lose their clients,” the president of the Spanish Shipping Association, Adolfo Utor, told reporters in Madrid.