Keeping, transmitting and enhancing know-how is of utmost importance for the competitiveness of the shipbuilding industry. While the decentralisation of competence in the areas of education and training limits the scope for top-down initiatives at EU level, there should be room for support to activities carried out jointly by organisations interested in promoting know-how.

　

 Currently, financial support to trans-national initiatives is provided by the Leonardo da Vinci programme. This programme can support and has already supported the development of training modules for the maritime transport sector and for shipyards. Through the co-financing of pilot projects and mobility fellowships this programme contributes to the upgrading of the skills of older workers in the industry, the transfer of knowledge and the reintegration in the sector of people with experience in shipping. It also explores future skill requirements.

　

 The EU also promotes the exchange and development of knowledge among research workers and between the research sector and industry. The principal instrument for that purpose is the Marie Curie programme, which supports training abroad and the transfer of knowledge through fellowships at post graduate to post doctoral level. The maritime industry can benefit from this support to train researchers within the industry, enable the development of commercial research knowledge, transfer research knowledge to the industry and to facilitate exchange of knowledge between industry and academia.

　

 Initiatives that could be developed at EU level may also relate to the creation of centres for post-graduates, with research and teaching activities, or to the creation of regional centres of excellence in which both companies and educational institutions would participate. This set-up could facilitate exchanges of students, transfer of knowledge, diffusion of good practices and the recognition of qualifications throughout the EU. It would also help to develop exchanges of experiences between technical staff in the maritime sector.

　

 The evolution of the industry towards a structure with a few major companies and many subcontractors increasingly requires new managerial attitudes to foster adaptability and innovation. Management needs to strengthen its ability to run firms based on project-related roles rather than on statically organized functions. This approach would be a vehicle for the social and technical innovations required to enable the industry to keep offering high quality employment in the longer term.

　

 The sector is now formally establishing a committee for the sectoral social dialogue, recognised by the Commission in line with its Communication on social dialogue and in accordance with Art. 138 of the Treaty. This welcome development might lead to joint undertakings and to agreements as regards skills and social innovation in the broadest sense, in particular concerning the adaptability of workers and firms to change, and the implementation of lifelong learning strategies.

　

 Thus, independent of the approach chosen, four concrete key aspects need addressing: Training of managers; promoting exchanges of shipbuilding specialists; supporting the development of skills; and, an appropriate communication policy to attract skilled blue and white collar staff.

　

 Management training should be offered both in a regional and inter-national context. Interaction needs to be organised between senior and junior managers. The exchange of knowledge, including to a certain extent standardisation thereof, is important. Finally, management training should include knowledge of EU policies and regulations.

　

 Technical, management and research staff in the shipbuilding industry, including equipment manufacturers and services, should have the opportunity to work and learn elsewhere in the EU. The same applies to students and teachers on various levels.

　

 A specific EU platform where employers and employees meet, e.g. within the framework of the sectoral social dialogue, could promote the development of skills and social innovation adjusted to regional needs.

　

 A publicity campaign at EU level could help to stress the importance of preserving and further developing the shipbuilding and ship-repair industry. Regional publicity campaigns could be added to strengthen the effect of the EU-wide campaign.

　

　

 Considerations on the future structure of the European shipbuilding industry need to cover all areas of activities, from the construction of all types of merchant and naval vessels, to repair and conversion projects, to the manufacturing of key components and systems, because all these activities are closely linked. Security considerations establish clear needs for certain shipbuilding capabilities, with regard to both commercial shipping and defence related tasks. Maintenance and repair capabilities are certainly to be regarded as indispensable due to safety requirements and the topographic nature of Europe.

　

 European yards operating today in the world market differ considerably in size and the applied technology level. Generally, both small and large yards can be operated profitably. Although shipbuilding will remain a comparatively labour intensive industry, manpower can be substituted to some extent by technology, making lower technological standards in low-labour-cost environments as well as high-tech undertakings in high-labour-cost environments economically feasible. The opportunities are less in repair and conversion, as tasks are less likely to be repeatable.

　

 The cornerstones for a healthy and sustainable development of the industry world-wide are reasonable investments meeting the actual market demands. Economically less efficient facilities should exit from the market and investments should concentrate on segments where sufficient returns can be achieved. Such fundamentals for a balance of supply and demand would normally prevail if market mechanisms were allowed to work. However, in the absence of an international accord and in view of continued state intervention in some competing countries, Europe needs to develop an approach that addresses its particular needs and concerns.

　

 Shipbuilding has specific characteristics regarding its products and its production methods. Combined with a great market volatility and the cyclical nature of the industry, shipyards have to meet contradicting objectives: In order to optimise productivity, yards have to specialise; in order to be able to weather market volatility and business cycles, yards should diversify. For historical reasons, shipyards in Europe are on average considerably smaller than Far Eastern yards. In principle, this is a competitive advantage when specialising on certain products. At the same time, market volatility constitutes a serious threat to highly specialised yards. Declining demand in specific market segments may force a specialised yard to engage in alternative products for which it is less well suited, and to team up with other yards.

　

 On company level, structural changes are on-going. They relate particularly to the relationship between yard and suppliers. Today, suppliers account for ca. 70-80% of a yard's production. European yards have actively embraced this development and have thereby provided the groundwork for a vibrant European marine equipment industry. In the future, the relationship between yards and suppliers will evolve towards project partnerships, moving away from the traditional customer-supplier relation.

　

 Great diversity of yards and products exists in Europe, particularly when the situation in the future EU member states is taken into account as well. The total employment in merchant shipbuilding in the accession countries is about 20% higher than in the combined EU 15, while production output is only slightly above a quarter of the EU 15 reference figure. With still much lower labour costs, shipyards in accession countries focus on a different product porifolio. The different sets of competitive advantages already foster extensive co-operation between yards in current and future EU member states. However, this cannot conceal the fact that the EU enlargement process will increase the necessity for an overall industrial consolidation in Europe. Past experience of fundamental restructuring processes, such as in East Germany, indicates that policies are not yet optimised in this respect. Industrial restructuring needs to put stronger emphasis on commercial investors who provide additional know how and better market access.

　

 Where yard closures have become unavoidable, these should be undertaken and supported with the view to create new investments. The modification of the current EU rules on closure aid in shipbuilding (covering partial and total closure), based on the idea of an "aid to consolidation" and possibly a trans-national approach, is a first proposal with the aim to engage in proactive measures and correct past shortcomings.

　

 The future policy for the sector should be reviewed without bias and with a clear understanding of consequences. Two extreme paths, both undesirable, illustrate the possible pitfalls. The absence of specific measures for shipbuilding could even result in the disappearance of merchant shipbuilding in Europe within less than a decade. On the other hand, extreme protectionism, as for example exercised in the USA, will inevitably result in an irreversible loss of competitiveness.