EU sparks crisis at German shipbuilder

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The Independent Online
Germany's largest shipbuilder, Bremer Vulkan, sought protection from creditors yesterday as it grappled to save the jobs of its 23,000 workers. Sinking fast in a sea of debt, Vulkan posted an operating loss of up to DM1bn for 1995, and declared several of its divisions insolvent.

Though Bremen's regional parliament went into an emergency session to discuss how to rescue the city-state's biggest employer, any such attempt is complicated by Vulkan's cavalier attitude to public subsidies. Yesterday's crisis was sparked by a European Union demand that Vulkan should release DM600m in structural funds earmarked for the company's shipyards in eastern Germany. The EU alleges that Vulkan illegally diverted the EU money to keep the Bremen headquarters afloat, starving the eastern shipyards of cash. Yesterday the European Competition Commissioner, Karel Van Miert, was adamant that "the enterprise must pay back the money".

In Bonn, the Economics Minister, Gunter Rexrodt pledged that the government do its utmost to prevent massive layoffs. But any rescue attempt would also have to involve the EU and the local governments of Bremen and Mecklenburg- Western Pomerania in the east. The banks, which are now having to renegotiate their debts, have indicated that they are not prepared to keep throwing good money after bad. Private companies have been steering clear of Vulkan for years. The consensus in the German business world is that without subsidies Bremer Vulkan would have gone under long ago.