Late wages, mass strikes, scrapped contracts — Croatia’s once-thriving shipbuilding sector is sinking, a last gasp of the region’s communist-era industrial giants.
The towering cranes looming over the port city of Pula have been immobile for weeks as an eerie silence hangs over the shipyard, where hundreds of workers from Croatia’s biggest shipbuilding group, Uljanik, have been on strike for most of the past two months.
They took to the streets in October for a third time this year after not receiving September’s wages, but trickled back on Monday after announcing a temporary “pause” in their latest walkout to help out unhappy clients.
Photo: AFP
“The situation is bad, wages are late, people are leaving,” Orce Stojkovski, a 48-year-old shipfitter, said from the port on Croatia’s northern Adriatic coast.
“We are nearing a moment when there will be no one left to protest, let alone build a ship,” he said, showing photographs of an August demonstration and pointing out the colleagues who have since quit.
About a quarter of Uljanik’s 4,500 workers, divided across two dock areas, have packed their bags since January, mainly to seek work in other countries.
Photo: AFP
Meanwhile, clients from Canada and the Cayman Islands have canceled contracts for nine ships this year, deepening the woes of a debt-laden firm on the brink of bankruptcy.
The cancelations were over Uljanik’s “inability to deliver ... in line with contract terms,” according to statements published on its Web site.
It has been a painful unraveling for a company at the heart of an industry that used to be a source of pride for the whole of former Yugoslavia.
During their heyday in the 1980s, Croatia’s shipbuilders were a venerated group whose business was ranked third on the global market.
However, the 1990s independence war that helped spur the collapse of Yugoslavia, followed by a tough transition from a state-controlled to a market economy, took its toll.
Overstaffing, outdated technology, poor management and the lack of an overall industry policy have added to the dysfunction.
It is a familiar story across the Balkans, where state-run industrial giants in former Yugoslavia, from metals factories to automakers, have struggled to privatize and sunk into debt. Croatia now ranks 13th in the world order book with 0.6 percent of the market — a tiny sliver compared with the 80 percent market share controlled by China, South Korea and Japan.
An industry workforce of more than 21,000 during its peak has now shrunk down to 6,000 spread across the four main construction docks: Uljanik, 3. Maj (also owned by Uljanik), Brodosplit and Brodotrogir.
Restructuring Croatia’s shipping industry was a key plank in the country’s entry into the EU in 2013.
However, analysts have said that its four main shipyards have failed to adapt to market trends as business shifts from Europe to Asia.
The European docks still open have survived by pivoting to more sophisticated ships such as cruisers, after they stopped being able to compete with Asian giants on ships such as tankers or bulk carriers.
Some also diversified their production to include steel construction, wind farms or oil platforms.
“Ships once dominated by steel and work were replaced by ships dominated by technology,” economic analyst Damir Novotny said, but added that Croatia has been slow to upgrade its technology or invest in education.
Hefty state funding has barely kept the industry afloat. The government, which still owns a 25 percent stake in Uljanik, has pumped about 4 billion euros (US$4.56 billion) into the sector in the past few decades, the Institute of Public Finance said.
The state also offered more than 500 million euros in guaranteed loans to Uljanik.
Uljanik in March chose a local firm as a strategic partner to restructure the company, but the rescue plan was rejected by Brussels, because of excessive state participation in the process. A new plan is now under review in Zagreb.
“If it will not be accepted, we are facing a bad scenario — bankruptcy or liquidation,” union leader Djino Sverko said.
Bankruptcy could herald “the end of Croatia’s shipbuilding industry as a whole,” he said, adding that it would leave him and thousands of others without a job, and add to Croatia’s 8.4 percent unemployment rate.
“Uljanik is 162 years old. This work is sacred to us,” he said. “It would be like a mother abandoning her child over protruding ears.”
The sector, accounting for about 2 percent of the GDP, also supports thousands of subcontractors as well as trade schools, universities and insurance firms. Its collapse would affect them all.
Now, it is tourism that is bringing the biggest boon. Many shipbuilders are renting their apartments to cover gaps in their pay.
However, there are fears that Croatia cannot live on tourism alone, which makes up 20 percent of its GDP.
“We cannot think of Pula without Uljanik,” Pula Mayor Boris Miletic said. “It is part of Pula and the Istria [Peninsula’s] identity.”
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