Varazdin County prefect and former Economy Minister from 2011 to 2012, Radimir Cacic, appeared on N1 television's morning programme Novi Dan to comment on the state of affairs at the Pula-based Uljanik shipyard, whose workers have been on strike since Wednesday due to unpaid wages.

Who is responsible for the poor state of affairs at Uljanik and 3. Maj shipyards?

“Of course, it’s the management, and the owners. It is them who make management and business decisions, and apart from them, the government has to shoulder some of the blame…It is entirely clear that a decisive intervention by company owners is very late, and with decisions about appointing a different management board and strategic partnership.”

Why did Uljanik’s privatisation and attempts to turn it into a successful business fail? 

“Uljanik is the only shipyard which, upon its own request, ceased to be designated as a troubled company in 2010. Back then they insisted on it, because their business was doing significantly better than at other Croatian shipyards. They asked that employees and former employees are given a key stake in the company and continue doing business. The government accepted their proposal and wrote off a billion kuna in collaterals and subsidies.”

Was that a wrong decision to make?

“At that moment there was not a single reason to refuse what the management, the workers, and the unions insisted on. We told them that we had a clear and unconditional requirement set by the EU that we should privatise state-owned shipyards. We told the shipyards that it’s something we must do, and that if they insist on this solution, we can certainly do that. We also did some legal changes which allowed workers to buy company shares at only a tenth of their market value.

The way the managements worked prior to 2012 and after that were completely different. Former CEO (Karlo) Radolovic left the company that year, and the management was taken over by another group of people who have shown themselves to be incapable of managing the company in a way that would be acceptable in the market. That was also the time when Uljanik acquired the 3. Maj shipyard, which received 850 million kuna in state aid for restructuring, and Uljanik itself received billions of kuna. For anyone to claim today that Uljanik had no support from the government is completely off the mark. Saying so amounts to deceiving the public. Some of it is absolutely the fault of politicians, but let’s not ignore the huge responsibility of the workers – and owners are for the most part, the company’s employees – and also, the management of Uljanik.”

What can we expect to happen now?

“Well, if this was about €12 million, we’d solve the problem quickly, and we wouldn’t be having any more discussions. But we are talking here about some €670 million in state guarantees for 17 ships, and that’s a serious problem. I remember well the problem we had with Kraljevica shipyard (which closed in 2012). We had only two ships that had been ordered there, and there was a real threat of guarantees being activated, and this led to some very complicated negotiations.

It’s a very serious and responsible task that the government cannot run away from, even though none of it is its fault. The government can say “this is a parivate company, so the problem is private” – but the threat of the cost this might incur is too great for the government not to get involved.

In January there were offers from one of the largest Italian shipbuilder, and they expressed a clear interest in taking over the shipyards. But that did not happen, the strategic partner chosen was Danko Koncar (owner of Brodotrogir shipyard). Whether that choice guarantees the growth of the shipbuilding business, remains to be seen. But even after Koncar takes over, we still don’t have EU’s approval for the restructuring plan. Our experience with Europe hasn’t been bad so far. For the most part they were understanding of the problems with the Croatian shipbuilding sector.

What we have here is a case of a non-functioning management that isn’t controlled by owners. This concept of caretaker workers’ self-management where the executives can do whatever they please, supported by local politicians, with them getting huge amounts of funding in the form of state guarantees – without the government having any say in the whole thing – is completely wrong, and cannot work. It must be very clear who the owner is, and who is responsible.”

Compared to the recent crisis at the food and retail group Agrokor, how large is the danger here?

“The potential damage here is much, much, larger. The direct consequences in the form of jobs lost (at shipyards) may seem relatively small at first glance, but the danger of large loss of jobs at Agrokor practically does not exist. Agrokor’s daughter companies can contine doing business and today Agrokor is no threat to the country. That story had a successful ending, more or less. In financial terms, Uljanik is much more dangerous.”

What can be done, realistically? What should the government do?

“Brodotrogir was once a huge shipyard, and today it’s much smaller (after the restructuring) – and the situation here is very similar. The potential for (tourist) development of the islet of Uljanik in the Pula harbour (where the shipyard is located) is undeniable. However, if a strategic decision is to be made to keep the shipbuilding business in Pula, both local and country-level authorities must agree on that. As for 3. Maj, it might be made to function well, and for Uljanik I’d go looking for a serious shipbuilder to partner up, if it was up to me.”

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