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South Korean Company Takes Control of Romanian Shipyard

Budapest, May 28 (RFE/RL) -- Romania has agreed that a South Korean industrial group should take control of one of its most important shipyards to make it more competitive in the international market.

A statement issued by the Bucharest government says that Daewoo of South Korea will take a 51 percent stake in the "May 2" shipyard at a cost of 53-million dollars. It will modernize the shipyard's outdated technology and improve production. The agreement was signed in Bucharest at the weekend.

The "May 2" shipyard is at Mangalia, a Black Sea port about 50 kms south of Constanta. It is the second-largest of Romania's 12 shipyards, and has the capacity to build and repair ships of up to 200,000 tons. It also produces oil rigs for Romania's offshore oil industry. It has two docks, one of which is claimed to be the largest repair dock in the Black Sea region. According to Romanian officials, about 80 percent of the shipyard's business comes from other countries.

The "May 2" shipyard currently has orders which will keep it busy until 1997. But shipping officials say its outdated technology limits production to about one ship a year. Daewoo's stated goal is to lift production to about six ships a year, and to increase the number of vessels repaired at the yard to about 100 a year. Currently, about 40 ships are repaired there.

Loss of jobs through the introduction of new technology is a sensitive issue in Romania where unemployment is high. Daewoo has agreed to maintain a workforce of 3,400 for at least two years, although it is expected to fall once the modernisation has been completed.

Romanian officials said the deal has been delayed for more than two years, partly because of domestic opposition to selling a foreign company a controlling share in some an important industry. Daewoo is already the biggest foreign investor in Romania. It is investing 900-million dollars in a joint venture to produce cars in the country. It is also involved in the development of the railway system in Romania.

Romanian law allows large investors several benefits, including exemption from profit tax for seven years. To qualify, a company must invest a minimum 50-million dollars, and meet certain other standards. Romanian officials said Daewoo's 53-million investment in the shipyard should enable it to qualify.