The EU's Industrial Maritime Strategy
It's similar to America's Maritime Action Plan in many ways, but different in an important one.
The opinions and views expressed at Sixty Degrees North belong solely to the author and do not necessarily reflect those of his employer.
On March 4th, the European Commission launched an Industrial Maritime Strategy for a competitive, sustainable, and resilient European Union maritime sector. The strategy has six parts—three key pillars and three horizontal initiatives1. In the diagram below, the key pillars are in blue and the initiatives are in green
Overview
The Three Pillars
Pillar I: Build, Equip, and Repair
The strategy states:
Europe is still a global leader in some of the most technologically sophisticated ship types (e.g. cruise, naval, icebreakers, research vessels, submarine cable vessels, offshore wind support vessels, floating and converter platforms, yachts and recreational craft), clean propulsion systems, and advanced equipment….While European shipyards have specialised in high-value, low-volume markets, foreign competitors are entering these segments as well.”
“To preserve Europe’s manufacturing base and unleash its innovative potential, the EU and its Member States need to concentrate industrial policy efforts where the best results can be realistically achieved, i.e. high-value segments with a strong industrial potential for manufacturing in the EU. (bold in original)
In support of this pillar, the strategy proposes the following flagship actions:
Launch an EU Industrial Maritime Value Chains Alliance to foster leadership in lead markets
Support European shipyards’ digital, clean and circular transformation (“Shipyards of the Future”)
Leverage public procurement and EU funding as proposed in the Multinational Financial Framework (MFF), in support of EU industrial leadership, including through public orders’ pipelines and targeted non-price and economic security criteria
Actions to ensure fair competition internationally for EU shipyards and equipment manufacturers, including export credits for ships and where necessary and feasible sector-specific trade measures
Comments
Like the American Maritime Action Plan, the Strategy seeks to support European shipbuilders by adding incentives to upgrade shipyards, develop steady public demand, and provide incentives to build new government ships in Europe.
The EU Industrial Maritime Value Chains Alliance will help prioritize investment in key sectors and businesses, to maintain Europe’s edge in specialized shipbuilding. Funding will be made available to modernize the maritime industrial base.
The strategy also calls for EU/EEA nations to work together to create a “multi-year, aggregated pipeline of public orders…to create a long term aggregated public demand signal in relevant segments (e.g. ferries, research vessels, icebreakers, tugs, drones).” Additionally, the EC is proposing targeted non-price requirements in public procurements to capture the benefits of buying within the EU.
However, nations have other incentives. A country with an active shipyard, or with high unemployment, may require that future ships be built domestically even if it means higher costs, longer timelines, and less business for other shipbuilders. For nations without a strong maritime industry, tight budgets make cost a driving force.
Sweden’s icebreaker acquisition program is a good example of this. The program began jointly with Finland, but then Finland and Sweden decided to go their own ways. The Swedish Maritime Administration then awarded the contract to build its icebreaker to Hyundai Heavy Industries of Korea strictly on cost basis. That award is under appeal for several reasons, and the outcome has not yet been determined. The cost difference was about EUR 11.8 million in a contract worth over EUR 300 million, or about 3.8%. For more information, see the links at the end of this article.
Pillar II: Transport and Connect
Transport and Connect includes measures to strengthen the competitiveness, sustainability and connectivity of maritime transport.
It covers measures to simplify reporting and administrative procedures for shipping, support green and digital transition, promote quality shipping, and enhance agility and proactive stance in international relations. The Commission will, together with Member States, reinforce EU engagement at IMO on global maritime standards, to help achieve a level playing field. The strategy also announces the continued use of current state aid guidelines for maritime transport to retain today’s market shares and encourage vessels to choose EU flags in the face of intense global competition.”2 (bold in original)
Flagship actions
Pursue work within the IMO towards global solutions and revise relevant EU legislation taking into consideration global measures at IMO in order to avoid double payment
Consider how to simplify the monitoring, reporting and verification framework for EU ETS and Fuel EU Maritime and streamline administrative formalities for shipping operations
Pursue global ambition, including through reinforced engagement at IMO work, foster strategic partnerships with third countries and ensure smooth functioning of global maritime markets
Comments
By encouraging and enforcing new environmental and safety rules at the EU and International level, the EU can increase demand for new clean vessels and the retrofit of older vessels to meet the new standards, providing more work for European shipbuilders. Additionally, the European Commission encourages EU member states to streamline their customs and reporting laws, moving towards a waterborne single market. Many European nations have cabotage and other restrictions, adding cost to internal shipping. The Strategy notes that:
While the above measures facilitate compliance, it remains equally key to reduce the data that ships must report when they call at EU ports. Currently ships can be required to submit up to 1,200 data elements, two thirds of which stem from national laws. With the aim of harnessing the full potential of Europe's waterborne single market, the Commission calls on Member States to work jointly towards simplifying and streamlining national and EU reporting requirements.
We’ll come back to this at the end.
Pillar III: Secure and Protect
The maritime domain faces increasing threats, both at the surface level and on the seabed. The threats underscore the need for robust naval, icebreaking, underwater and dual-use capabilities to support EU defence, Arctic security, critical infrastructure protection and military mobility needs. Tackling these challenges can create opportunities for growth in the EU maritime industry, including by leveraging and fostering production of dual use vessels, platforms and technologies.3 (bold in original)
Flagship actions
Support the ramp-up of naval industrial production capacities, including through the new European Defence Industry Programme and ReArm Europe Plan4
Propose to pursue a Dual Use Ferry Construction support programme
This section also has some specifics on cable security and maritime domain awareness:
The EU Action Plan on Cable Security, which outlines the development of an Integrated Surveillance Mechanism for Submarine cables per sea basin hubs, and the Action Plan on drone and counter-drone security, with industrial measures for drones such as a joint purchasing initiative, will help ensure timely threat detection and response capabilities.
To strengthen EU-level maritime domain awareness from space to seabed and address missing capability gaps, it will be important to leverage Europe’s maritime industrial base, building on the Ocean Pact and other existing EU initiatives58 in this area, to further support:
Increasing R&D of technologies and military/dual use systems for command, control, communication, intelligence, surveillance and reconnaissance
Common procurement of unmanned sea drones and communications systems for naval vessels, coast guard, and port authorities, ensuring coordination
Investment in and development of cybersecurity solutions and integrated systems combining surveillance capabilities to enable a comprehensive and coordinated approach to maritime security and port protection.
In this regard, the Commission encourages Member States to make use of the opportunities offered by EDIP, in particular the possibility of establishing European Defence Projects of Common Interest, including in the area of maritime domain awareness.
Comments
Despite references to EDIP (which provides funding for common procurements involving three or more nations) and to joint procurement of drones and communications systems, the strategy falls short of calling for the common procurement of Navy or Coast Guard vessels. The reference to dual-use ferries is to facilitate the movement of troops and military equipment within Europe. A necessary capability, but it does not seem to rise to the call of action at the beginning of the section for more “robust naval, icebreaking, underwater and dual-use capabilities.”
The Horizontal Initiatives
The second three pillars, which are in green in the chart, are referred to as “horizontal initiatives.” These describe actions that the European Commission intends to take in support of the three “key” pillars:
These pillars are supported by horizontal initiatives, including research and innovation, finance and skills development. The Commission will advance EU technological leadership and innovation through policy, regulatory and funding frameworks, and ensure that EU-funded research projects are effectively deployed on the market.” 5(bold in original)
Initiative I: Access to Innovation
Flagship actions
Update the regulatory framework to foster EU leadership in innovative technologies including wind propulsion, nuclear propulsion and autonomous ships
Strengthen and expand the scope of R&I support for waterborne sector, building on the achievements of the current co-programmed Zero-Emission Waterborne Transport Partnership
Launch the Ocean Observation Initiative (OceanEye)
Comments
Like America’s Maritime Action Plan, the strategy calls for regulatory updates and investment in nuclear propulsion and autonomous ships. Unlike the MAP, it also calls for investment in wind technology and zero-emission transport.
Initiative II: Access to Finance and Investment
According to the strategy’s estimates, these actions will not be cheap. It estimates that EU fleet decarbonisation will require €2.4 billion to €8.5 billion per year, and the digital transformation of shipyards needs between €3 and €7.5 billion. Then there are additional financing requirements (such as for inland navigation vessels, offshore wind vessels, etc). This high cost will require the coordinated use of current and future EU funding as well as national funding and private capital. As such, the strategy calls on Member States, financial institutions, and national promotional banks to support these measures.
Flagship actions
Support the renewal and decarbonisation of the shipping fleet under the current Connecting Europe Facility while fostering domestic industrial capacity
Consider under the forthcoming ETS review an EU mechanism to support the uptake of sustainable fuels and clean propulsion technologies
Encourage Member States to allocate part of ETS revenues to maritime decarbonisation investments in Europe
Revise the EU taxonomy criteria to improve access to sustainable finance and incentivise sustainable investments
Comments
Like the MAP, the strategy does not spell out how the desired policies will be funded. It does suggest prioritizing existing EU funding in support of the initiatives, but this is far from the total cost of the programs. The strategy suggests revising criteria to allow projects to find additional sources of finance, but again this will not be nearly enough funding. Member nations will have to fund these actions themselves.
Initiative III: Access to Skills and Quality Jobs
Flagship actions
Create a network of maritime higher education institutions and vocational training centers across the EU providing education and training for maritime cluster jobs including re- and up-skilling programmes.
Encourage and support Member States in increasing participation of maritime higher education in Erasmus+ and associated initiatives by facilitating procedures and removing barriers to learning mobility.
Comments
Like the USA, the EU has a need for more workers in the coming years. From the strategy:
The Mobility Transition Pathway highlights major up- and re-skilling needs with up to 40% of the shipbuilding workforce expected to retire by 2030. In the Pact of Skills on Shipbuilding, industry partners committed to up- and re-skill 7% of employees annually and to attract 234,000 new workers by 2030. In the shipping sector up to 250,000 seafarers will require re-skilling and up-skilling to address emerging technological and fuel-related needs.
Many European nations have a much stronger position than the USA when it comes to the labor force, as their secondary schools have a track for developing skilled labor, not just college preparation. Still, there is a significant requirement for new workers that will be challenging to meet.
Enforceability
One of the challenges with the EU strategy is that the strategy essentially requires the 27 EU member states to operate in accordance with it. However, there is no legal requirement to do so. Nations are free to pursue their own interests in shipbuilding.
Aleksi Kolehmainen recently reached out the European Commission for comment for a recent article about the Industrial Maritime Strategy, and how it relates to Sweden’s ongoing icebreaker procurement. From his article in Tekniikka&Talous (machine translated):
Sweden’s decision to purchase a new icebreaker from the lowest-bidding South Korean shipyard appears to be at odds with the Commission’s recent strategy.
However, the Commission says the strategy has no legal implications for ongoing or future ship procurement procedures.
Thoughts and Comments
The MAP and the EU’s Industrial Maritime Strategy have many similarities. Both seek to encourage investment in shipyards while creating steady demand for shipbuilding. Both seek regulatory change to improve research and development of nuclear propulsion and drones.
However, the EU’s strategy is specific to high value segments, defined as cruise, naval, icebreakers, research vessels, submarine cable vessels, offshore wind support vessels, floating and converter platforms, yachts and recreational craft. It does not include general cargo and container ships.
But the largest difference is enforceability. The MAP’s implementation relies on both executive action and legislation. There are already two related bills pending in Congress, and the Trump Administration plans to submit its own bill to codify the MAP into law. For the European Union, implementation of the strategy rests in the hands of the 27 European Union member states, each of which have their own national interest.
EU and EDF funding requirements are designed to encourage joint procurement. But these initiatives have a spotty history, with the European Corvette Project being one recent example. The project began in 2019 with the support of France, which was looking to replace its Floréal-class frigates. France recently withdrew from the project, which may never deliver a ship.
And as the EC said, “the strategy has no legal implications for ongoing or future ship procurement procedures.”
I wish the EU luck, as the West collectively needs many more capable ships.
Until next time—
All the Best,
PGR
Referenced articles:
Confusingly, the full report refers to six pillars, while the accompanying infographic refers to three (key) pillars, with different naming conventions
From the EC press release
Opening paragraph of the Secure and Protect section of the strategy.
Under EDIP, the EU will fund common procurement actions carried out by at least three countries (two of which must be EU members). For more information: European Defence Industry Programme: Council gives final approval - Consilium
From the EC press release
With the french, italians and germans in the EU you can be sure that the funding will be directed and integrated to their own job programs - not on the basis/leveraging of the existing skills and capabilities.
I still don't see a way that EU will work as a unified entity. But I also don't know if that would be a good thing. It's complicated…