By Panagiotis T. Xenokostas, Chairman of the Board of Hellenic Shipyards Union (EEN), founder and owner of ONEX group
With the publication of the Draghi Report, a set of existential challenges and objectives are emphatically raised for the EU as a collective building, as well as for its member states.
At the starting point of the new global economic megacycle, with the Industrial Revolution 4.0 in full swing and Industry 5.0 just around the corner, Industrial Strategy is placed at the center of analysis, but also of anxiety about the content of the rearrangement of the international distribution of power.
Recovering the competitiveness of European industry and focusing on its needs, strengthening innovation and accelerating the pace of “metabolism” of productive transformations, limiting dependence on raw material inputs and “circularity”, creating and exploiting economies of scale, are included in the “centre piece” of a very broad and comprehensive Plan for economic and productive restructuring.
If the “mutualisation” of debt (issuance of common debt) and the “toolbox” of the proposed annual investment increase of 750-800 billion euros activate and intensify a “traditional” internal confrontation of the EU, the attempt to specialise the Plan through member state and sector makes each country “confront” with itself, its weaknesses, pathologies and timeless distortions.
The dimension of “urgency” and the proposal for immediate decisions that permeate the Draghi Report constitute the final warning for the largest economies in Europe and the danger signal for the smaller ones.
Consensus and integration of megatrends cannot be achieved through procrastination, fragmented approaches and micromanagement terms.
Draghi’s assumptions and proposals “find” the Greek industrial sector in an idiosyncratic phase with major internal differences. The closure of large factories in traditional industrial sectors reinforces concerns about a possible new cycle of deindustrialization, also reflecting a broader “problematic” condition that characterizes the operating environment of European industries.
On the other hand, the rebirth of its branch is recorded Shipbuilding and Naval Industry as well as the entire related ecosystem, while opportunities arise, inter alia, on a smaller or larger scale in industries such as munitions and floating offshore wind turbines.
In particular, for the Shipbuilding and Naval Industry sector, our country faces a major dilemma regarding its full recovery.
The dilemma in question is clear, straightforward and boils down to whether or not we want heavy industry. And if so, to what extent do we realize that in a globalized environment, with a non-linear evolutionary time, speeds, demands and choices are defined in the field of international competition, and not through internal processes or experimentation?
Undeniably, at this critical moment we are going through, the dignified life and well-being of those who live and work in our country requires a set of coordinated actions by the Government, the State and the industrial world with a time horizon of 18 months.
The signing of this “Industrial Contract” is projected as a structural condition of the new production model, so that Greece does not miss the “last train” of real and long-term sustainable development with extroversion and export orientation, exploitation of comparative advantages, reconnection with the vital needs of the Greek economy and industrial production, of which an alarming “alienation” has been recorded in recent decades.
In the Shipbuilding Sector, therefore, from the Industry’s point of view, as conditions and not advertisements or illusions, the following can be defined, as indicative and not restrictive:
• Private investments in upgrades and equipment exceeding €100 million in the last five years and portfolio value exceeding €150 million.
• Annual export growth rate exceeding 25% over the last five years.
• CSR programs of at least 1% of turnover.
• ESG Plan.
• Diffusion of more than 25% of turnover through industrial partnerships in SMEs in the Greek territory.
• Employment of more than 300 workers in each shipyard.
• ISO, Safety Plan, Waste and waste management systems, use of means of communication, such as trailers, in accordance with Greek and European legislation.
On the contrary, the Government and the State are obliged to launch a coherent network of targeted institutional interventions. As the Hellenic Shipyards Union (HSE), we have submitted relevant proposals to the relevant ministries and are in the consultation phase.
More specifically:
• Avoid and prevent unfair competition in the equipment programs of the Ministry of National Defense, directly or indirectly (e.g. MEKO, FMS programs, interstate agreements, etc.). The selection of the Shipyard Units for the execution of shipbuilding and processing with the Navy end user must be carried out with absolute transparency also by the Navy, regardless of whether the Shipyard is inside or outside the Greek territory.
• In the context of the defense programs, new shipbuilding, modernization and maintenance, totaling several billion euros, must be implemented fully and vertically in our country’s “shipyards”, since any other option would result in a total weakening of the sector, workers, the productive fabric and the national economy. The possibilities of building all types of ships, even frigates, are now equivalent in Greece to those in other European countries and, in fact, at a reduced cost of 10-15%. It is worth noting that Greek shipyards that in the past took on large equipment contracts without exporting and investing, ended up bankrupt.
• Synergies between the defence sector of the Shipyards and major national defence industries, such as those of weapons systems and ammunition. Horizontal synergies have a multiplier effect on the measurable increase of the industrial footprint in the national economy and in the sectoral labour market. Taking into account, therefore, that the impact, through transparent selection procedures and premium procedures, of the possibility of vertically integrated production must become a priority, while avoiding cases of state aid (illegal state aid and lack of integrity) that bring new burdens to the contributing Greek economy.
• A unified framework for the institutional treatment of the country’s shipyards to avoid distortions and unfair competition practices. Overcoming bureaucratic obstacles and delays that generate costs or losses of millions of euros.
• Institutional recognition of the Shipbuilding sector as part of the “shipbuilding chain” and homogenization of the status of Shipyards with Navigation. Shipyards are and should be seen as an independent area of imperfections with a series of ramifications in critical issues of procedures, VAT, labor legislation, licenses and projects with a positive signal for employees, safety and environmental protection policies, added value in improving productivity and competitiveness of the industry.
• Formulation of a special plan for the inclusion of national shipyards in the Major Industrial Investment Program (above €150M), due to the possibility of effectively absorbing “stagnant” funds in order to accelerate the productive transformation and modernization of the sector.
• Establishment and preparation of a “Shipyard Registry” with the aim of creating an evaluation system for allocating resources and implementing equipment programs with simultaneous provision for integration and construction of infrastructure projects, in order to achieve maximum utilization through synergies with co-competent Ministries and TEE.
• Approval of pending energy transition pilot programs through the development of floating offshore wind turbines, in order to structure the national supply chain through the verticalization of energy production and storage.
• National construction of tugboats and coastal vessels, for the necessary renewal of the fleet and the measurable contribution to the green transition, maximizing the benefit for workers and domestic employment, significant “returns” for the Greek public and for the national economy with the involvement of private investments.
• Investment in technical and professional education and training with the strategic partnership ONEX – DYPA. Attract and motivate students to study in already established schools and specialties. Investigate their development or create an “Academy of Maritime and Shipbuilding Technical Professions”.
• Conversion of the country’s large shipyards into “gateways” for labor for training and employment, based on the diagnosis of relevant needs.
• Recognition of EEN as an equal social partner and institutional interlocutor of the Greek Government on issues in the Shipbuilding sector. In an industry with intense international competition, the establishment of structures and tools for social dialogue is a necessary condition to launch bold and innovative reforms, seize opportunities and drastically limit the loss of valuable time.
Given the complexity of the issues and the competence of the various services and departments, it is considered necessary to create a General or Special Secretariat for Shipyards and Investments in the Shipbuilding Ecosystem, which will include all responsibilities.
All of the above are part of the “roadmap” of reforms and structural changes in the Shipbuilding Industry sector. Timely and full implementation of the proposed interventions and initiatives will transform the shipbuilding industry into a long-term sustainable growth engine, with a strong share of GDP (between 2-4%), creation of thousands of sustainable and well-paid jobs, enhancement of Greece’s power through supply self-sufficiency and production of surplus economic diplomacy.
The imperative need for institutional protection of reindustrialization and productive reconstruction must be robust, coherent and dynamic, since, in any other case, the efforts of the Prime Minister and the then Minister of State for Foreign Affairs, Mr. “entangled” in responsibilities, ideologies, micropolitical conveniences or personal beliefs.