Glory gone as Croatia's oldest shipyard closes

The smell of machine oil and scrap metal lingers in the musty workshops of the Kraljevica dock, the only reminder of the glory of Croatia's oldest shipyard. That, and two nearly finished boats that may never be completed.

The workers, in gray or blue overalls, shuffle around, smoking and talking. Most of the machinery is at least 50 years old and unmanned.

From time to time, someone spots the cameras and microphones of visiting reporters and shouts a curse against the faraway officials who are sending the shipyard into bankruptcy to comply with European Union competition rules.

"After spending a lifetime here, it is not easy to accept that tomorrow it will be gone, because it shouldn't be. If there was some goodwill from the owners, the state, if we were restructured properly, we could survive," said metal tube welder Emil Matetic, who, at 63, is two years away from retirement.

Matetic and many other workers are angry at the role the EU has played and believe their shipyard may have been offered up as a kind of sacrifice."It's the rule of profit that grinds," he said. "There is only profit, profit, profit. No sentiment there."

Industry analysts say the docks had it coming after failing to modernize and overhaul their business for years.

Croatia has five large shipyards. Only one of them runs a profitable business. The remaining four, including Kraljevica, generate losses of around $175.30 million a year, despite receiving hefty state aid, considered illegal in the EU.

"Croatia does not even want to admit how much money it has poured into an industry that was globally competitive in the early 1980s, but went steadily downhill since then," said Ante Babic of the Center for International Development think tank.

"In a way, the EU has done us a favor because we never tried to restructure them ourselves."

Slow, steady fall

Located in a small, picturesque bay in the northern Adriatic, the shipyard was founded by King Charles VI in 1729. It built wooden warships for the Austro-Hungarian Empire. Wood later gave way to metal, and business peaked during World War I.

Bombing in World War II almost reduced it to rubble. Communist Yugoslavia, whose leader, Tito, briefly worked there in the 1920s, rebuilt it and made sure it worked at full capacity for 50 years.

Shipbuilding was a flagship export sector in Yugoslavia, which had been among the top five global players. But the sector declined irrevocably in the 1990s, due to the wars in the Balkans, the loss of the traditional Russian market, mismanagement and failure to modernize.

Though global shipbuilding boomed in 2004-2008, Croatia's share of European shipbuilding output shrank from 13 percent in 2004 to 6 percent in 2008, according to a study by the Community of European Shipbuilding Associations.

After three centuries of venerable history, the shipyard is now quiet.

"What's left for us is to finish these boats, but even that is questionable. So the question is: Will I earn my pension here or out on the street?" asked Matetic.

Reuters