EUR 500m defence contract could save Izar

11 October 2004

MADRID – The troubled state-run shipbuilding company Izar won a government contract worth EUR 500 million, the Defence Secretary said Monday.

Jose Bono announced the move as he unveiled the defence department’s budget for 2005.

Defence spending is to rise to 8.1 billion, which represents a 4.2 percent rise compared with 2004.

The biggest part of this increased budget will be a 17 percent rise in spending on the Spanish intelligence service, CNI, to help combat Islamic and ETA terrorists.

Izar has been faced with going out of business amid increased competition from Asia and a row over EU aid cash which was declared illegal.

The shipbuilding firm, which has two branches, one civil and the other military, has been hit by a long-running and violent industrial action.

Strikers have clashed with police in repeated street protests at what unions believe will mean the loss of thousands of jobs if a government plan to privatise the civil side is carried out.

Bono said Monday under the contract Izar will construct four S80 class submarines, two naval ships and 12 speed launches.

They will  also carry out modernisation work on the current Spanish navy.

Last week, unions representing Izar workers and bosses of the state-run company met EU competition commissioner Mario Monti in an effort to resolve the long-running dispute

The main talking point will be how to resolve the repayment of EUR 1.2 billion of EU aid which was later declared illegal.

Monti later said the company had two months to resolve how it would work out the future of the company.
 
Currently Izar employs 10,700 workers.

Industrial unrest at Izar is seen as the first real test of new Socialist prime minister Jose Luis Rodriguez Zapatero.

Izar has been in crisis since the EU demanded in May that it repay EUR 300 million of EU aid that Brussels says breached competition rules.

[Copyright EFE with Expatica]

Subject: Spanish news