Privatisation plan to save Gdansk shipyard submitted to EU

Poland's Gdansk shipyard, the birthplace of the anti-communist Solidarity movement, has submitted a last-ditch rescue plan to the EU to prevent its closure.

The European Commission set a Tuesday deadline for the yard to submit proposals on cutting capacity, and thus avoid having to repay state subsidies that could trigger its bankruptcy.

The yard is set to be privatised and either a Ukrainian or Italian company will buy a majority stake under the plan.

"We have outlined a very detailed proposal on how to make the shipyard profitable and make it work in line with EU rules," chief executive Andrzej Jaworski said. "I am convinced that the crisis can be prevented," he added.

In 1980 what were known as the "Lenin Shipyards" in Gdansk became the birthplace of the Solidarity union which helped bring about the fall of communism in Poland and the Soviet Union. The 1980 Gdansk shipyard strike ended with the birth of Solidarity.

Closing the yard would be political dynamite and the ruling conservatives are likely to do anything to avoid this ahead of a parliamentary election due in under three months.

Under EU rules, governments can give financial help to ailing companies only if cash is accompanied by plans that would make the firms viable in the long term.

"What the commission wants to see is not a closed Gdansk shipyard, but a genuine, far reaching restructuring of a company that would ensure its long-term viability," commission spokeswoman Amelia Torres told a news briefing in Brussels. "We are perfectly aware of the historic importance of the Gdansk shipyard."

The EU executive has demanded Gdansk close two of its three slipways.

Polish daily Rzeczpospolitareported Warsaw had agreed to the demand.

Two other shipyards, in Gdynia and Szczecin, faced similar problems and the commission has accepted capacity cuts in return for clearing past state aid.

The total state aid given to the three shipyards since Poland entered the European Union in 2004 amounts to €1.3 billion. Mr Jaworski said the plan sent to Brussels proposes a cut in capacity until 2014 and a privatisation of the yard.

Ukrainian metals holding company Donbass Industrial Union (DIU) and an Italian shipping company have been selected as the final bidders to acquire a 75 per cent in the yard for some €100 million, Mr Jaworski said.

"The company will be selected within three months," he said. "We will chose an offer which will guarantee a smooth operation of our yards." The plan needs to be approved by the EU.

Polish shipyards blossomed under communism by building merchant ships for the Soviet Union, but its workers were badly paid and mismanagement led to strikes in the 1970s and 1980s.

After communism collapsed in 1989, trade unions blocked the sale of the yard to foreign investors. Subsequent governments avoided radical changes and the yard has hovered on the verge of bankruptcy for years.

Today, Polish yards face tough competition from better equipped western European shipyards and also from Asia.Employees at the Gdansk yard, some of whom worked there during the rise of Solidarity, fear for the future of the 3,000-strong workforce.

"We don't know what will happen today, tomorrow or in a week," said Tadeusz Zbik, who has worked at the yard for 20 years. "We are very nervous all the time because we have no idea . . . if we will keep our jobs."