A Case Study: Crisis and Possibilities of Greek Enterprises

Authors: G.P. Vlachos and A.K. Lazopoulos

Abstract:

During the last two decades, the shiprepairing and shipbuilding industry has undergone serious and extensive restructuring all over the world. The energy crisis of the 1970's, the appearance of new forces in the international shipbuilding and shiprepairing market (e.g. Korea, China, Poland, Ukraine, Romania etc.) as well as the crisis in the shipping industry caused by overtonnage, resulted in a radical restructuring of this industrial sector: New forces emerged in the shipbuilding industry (Japan, Singapore, Poland, China etc.) while other traditional forces are facing an unprecedented crisis (member-countries of the E.U.). The E.U., having realised that its members are gradually but steadily losing their competitiveness, issued the 5th, 6th and 7th Directive. The results of these Directives were immediate and impressive: Many units closed down, while the number of those employed in the sector was halved. Nevertheless, the E.U. Directives did not fulfill their objectives completely. They simply managed to stabilize the competitiveness of the E.U. units compared with their main rivals (Japan, S. Korea). The situation does not seem to be improving, since new competitors with strong comparative advantages are brought to the fore of shipbuilding and shiprepairing market (China, Poland, Russia etc.). At the same time, international organisations (OECD) enforce increasingly strict control measures and the curtailment of public financing towards shipyards, in order to safeguard fair terms of competition and liberate the activities of these units from state protectionism. Due to this intensely competitive environment, the shipbuilding and shiprepairing activity of the E.U. is expected to be tested severely. Greece could not be left untouched by this crisis. The majority of the Greek shipbuilding / shiprepairing industry is situated in the region known as 'Perama Zone'. This area extends from the northern limits of the Port of Piraeus as far as Elefsina Bay. Inside this area are entrepreneurially activated the two largest units of the sector ('Greek Skaramanga Shipyards' and 'Elefsina Shipyards') and almost the entirety of the small-medium shiprepairing companies. The Greek shipbuilding activity is facing a long term crisis and in particular the Small-medium companies of the sector are showing an unprecedented, even for the European standards, unemployment rate. This situation compels large parts of the local population to marginalize, since the whole area is financially dependent on the "multiplying phenomena" of the companies located at the Zone. In addition, a very serious effort is being made for the past two years by the Greek government, in order to offer solutions to these vast problems. During the governmental attempts to develop a long term policy, the State had to confront the reactions and rejections of many trade unions and employees. According to the above, this paper is aspiring to outline the Greek and European shipbuilding and shiprepairing industry, to compare it with that of its rival countries, to codify the specific sectorial problems, to seek perspectives and finally to propose specific solutions in order to regain competitiveness as well as to tackle unemployment in the Greek and European Shipbuilding / Shiprepairing Industry.