Oasis decision on Tuesday – can Finland save its shipbuilding industry?

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Written by Teijo Niemelä Teijo Niemelä

Category: Top Headlines Top Headlines

Published: 17 December 2012 17 December 2012

Finland’s Prime Minister Jyrki Katainen was tight-lipped about possible government financial help for STX shipyard in Turku to help to win the order for a new ship from Royal Caribbean’s Oasis-class. The cruise line has requested from the Finnish government a loan of 50 million euros (to cover the cost of construction during the building process), which would help it secure an order for a cruise ship.

Royal Caribbean Cruises Ltd has said that it would like to order a new Oasis-class vessel from Turku STX Shipyard. In return, STX has asked the Finnish government to lend it the 50 million euros it needs to be able to complete the cruise ship. Ultimately, each ship in the class bears a price tag of 970 million euros, according to Yle. In shipbuilding, the customer, which in this case is Royal Caribbean, typically doesn’t ante up for construction costs until the ship is actually delivered.

Katainen, as reported by Yle, has been coming under considerable pressure to respond to the request and in fact Finland’s shipbuilding industry recently lost a major order from RCCL to the German Meyer Werft as a result.  The Finnish Maritime Industry earlier sent the Prime Minister a confidential letter saying the whole sector was at risk, if the order cannot be secured. Later on Sunday, the powerfull Finnish Metalworks’ Union urged a favorable decision on the matter.

Being quizzed on the matter on Yle’s Prime Minister’s radio interview programme, Katainen criticized the competition in shipbuilding, saying that normal market economy rules had long been distorted here, Yle reports.

“South Korea and European countries, among others, support big projects in different ways. It’s not so much the different players in the field that are competing; rather, it’s states competing with each other. What’s at issue is what kinds of risks each state is willing to take with tax payers’ money,” Katainen said.

According to the Prime Minister, Finland needs to formulate a consistent, long-term stance on government financial support, which should take into account the interests of both tax payers and business.

"We cannot think that the weaknesses of some company be compensated with tax payers’ money. Also, any support should not distort competition or put others into difficult situations," the Prime Minister explained in Yle.    

Katainen would not directly comment on possible financial support to help STX get the Royal Caribbean order, as this involved trade secrets.

The Government is working to secure the contract to Finland with similar measures as have been used with earlier ventures, Katainen revealed, adding that there has been dialogue with sector representatives. According to the Prime Minister, the government has not experienced intimidation or threats relating to the matter.

"We’ve told the shipyard what’s possible and what’s not," Katainen said.

The government is expected to make its decision on Tuesday.