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Future of Norwegian shipyard sector in question

THE fate of Norway’s shipyards is uncertain after one yard filed for bankruptcy, and STX Europe posted an operating loss of NKr560m ($82m) for last year. Additonally, the Norwegian government is still waiting for clarification from the European Commission after complaining about potential discrepancies in aid to Spain’s shipbuilding industry. The privately run Karmsund shipyard in western Norway filed for bankruptcy last week, stating it had been unable to get financing following cost overruns. The announcement came only weeks after a recent finance package from the Norwegian government aimed at stimulating the banks to begin lending again. Two shipowners with orders at the yard have subsequently cancelled their orders. Meanwhile, STX Europe, which owns a number of yards in Norway and elsewhere in Europe, said that despite delivering a record 37 vessels during 2008, and seeing revenues increase by 17% to NKr31.5bn ($4.6bn), cost overruns on major projects led to greater losses. The group reported an operating loss of NKr560m in 2008, compared with a loss of NKr177m in 2007. The loss was “part attributable to negative developments in major projects for which significant loss provisions were made in 2008”, STX Europe said in a report. STX Europe specialises in building cruiseships, ferries and offshore vessels. It said a slump in new orders reduced its orderbook to NKr47.8bn, which included delivery of 77 ships over the next three years. Meanwhile, the Norwegian Ministry of Trade and Industry has yet to hear from Neelie Kroes, the competition commissioner at the European Commission on the issue of possible Spanish state aid to its yards. The ministry wrote to Ms Kroes a month ago to express its concern over a tax lease scheme in Spain that it suspects could be the equivalent of state aid and therefore would create distortion of competition
in Europe. Norwegian Minister for Trade and iIdustry Sylvia Brustad said in the letter that it was important that fair competition remained for European yards, especially in times of turmoil.

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