A decision by the Finnish government not to grant STX Finland a subordinated loan of €50 million but a smaller innovation grant instead that was not enough to secure an order for a third Oasis class cruise liner for the Finnish builder, has raised controversy in the country.
Martin Saarikangas, a former conservative MP and formerly head of Kvaerner Masa-Yards, a predecessor company of STX Finland, has led criticism and stated that the decision puts between 10,000 and 20,000 jobs at risk and cold lead to the wipe out of the Finnish maritime technology cluster in almost its entirety.
Meanwhile, Erkki Tuomioja, social democrat foreign minister in conservative prime minister Jyrki Katainen’s wide coalition, has defended the government’s decision. He said in his blog after the New Year that one should ask at what level of cost and for the benefit of whom jobs could be retained by subsidizing shipbuilding. He also asks how many jobs could have been created by funding growth sectors that have received no backing from the state.
“Another important question is how sustainable and sensible is it that the beneficiaries of these grants have been American shipping companies that operate cruise ships in the Caribbean and Asian companies that own European shipyards,” he asked in his blog, referring to STX Finland that is part of the Seoul based STX Business Group through its fully owned subsidiary STX Europe, which also owns 64% of the shares in STX France that won the Oasis order.
Tuomioja also said that it would not have been certain that Royal Carbbean Cruises Ltd (RCCL) would have awarded the order to STX Finland even if a €50 million loan had been awarded to the yard. “In the worst case, it would only have been extraordinary aid to the owner of the yard to cover the costs of running the yard down,” Tuomioja said.
After Christmas, STX Finland said it would commence talks with representatives of its staff to seek a 30% cut in fixed costs. A shop steward at its Rauma yard said in the Finnish media this would mean hundreds of job cuts in the currently 2,200 strong workforce of STX Finland.
This week, economic affairs minister Jan Vapaavuori, a key person behind the government’s decision in the aid package negotiations, was cited by the Finnish media to say that this did not result from the government’s decision regarding the Oasis class ship order.
STX Finland has two 97,000 gross ton cruise liners on order from TUI Cruises, a German company in which RCCL has 50% of the shares. However, construction time financing of the two was linked to the assumption that STX Finland will also win the Oasis order. As this did not happen, the financing of the two ships is not in place. Should talks to arrange that fail, STX Finland’s Turku yard is likely to face closure, it has been reported, already in March according to some observers.
The Green Party, which is also a member of the current government coalition, has a history of strong backing to new emission control rules that will take effect in a region that covers the English Channel, the North Sea and the Baltic from 2015. The shipping industry has warned that this will lead to significant increases in operating costs as fuel with lower sulphur content will have to be used, which is more expensive than the fuel currently in use, or scrubbers have to be fitted in exhausts of vessels, which is a capital expenditure item.
