The Euskalduna Shipbuilding and Ship Repair Company

Public Limited Company

Popularly known as Euskalduna, its birth marked a turning point in the history of shipbuilding in the Basque Country as it marked the beginning of a new industrial era in the sector: that of modern civil shipbuilding.

Its foundation was part of the economic boom that the Señorío had been experiencing since 1898, which fundamentally affected the iron and steel, mining and shipping sectors. Under their protection, half of the tonnage of the Spanish shipping companies was concentrated in the estuary, while the Basque shipping companies filled the gap left by the British by acquiring the vessels previously employed by them. This situation had a very positive multiplier effect on the Biscayan economy, as it led to the development of other activities closely related to the shipping business, such as ship agencies, insurance and, of course, shipbuilding and ship repair.

Founded on 27 March 1900 by the main shipowners of Bizkaia, it was a company that from its origins was linked to civil and private demand. Its founders were Eduardo Aznar y de la Sota, his sons Eduardo and Luis María Aznar y Tudor, and Ramón de la Sota y Llano. They set a share capital of 8 million pesetas for the company, although initially they only paid in 5 million pesetas, which was tightly controlled through the registered shares of its partners and the Board of Directors.

Originally, its promoters conceived a business aimed primarily at the aviation of the ships of the shipping companies in order to remedy the considerable increase in the cost of repairs that had been experienced in Great Britain since 1898, basically due to the devaluation of the peseta against the pound. Although this was the initial purpose of its promoters, from very early on, shipbuilding gradually gained importance until it became its main activity.

The land abandoned in Olabeaga by the Bilbao Dry Docks was the embryo of this modern shipyard, which came to occupy an area of 90,000 m2. Work was immediately undertaken to refurbish and remodel the old facilities acquired. They built a quay on the left bank of the estuary, widened the old docks, refurbished the workshops and built dock number 3 to house large tonnage vessels. At the same time, they bought the land adjacent to the shipyard.

On the eve of the First World War, the factory had 3 dry docks for careening and repairs; workshops for boilermaking, forging, fitting and lathes, carpentry, joinery, shipbuilding, boiler repair, machine and boiler construction, and foundry; pump house for bilge pumping; compressed air plant; electrical equipment department; sheet metal bending furnace department and rivet shop; bolt, rivet and nut factory; and 2 slipways for shipbuilding.

In spite of everything, Euskalduna's premises and production capacity were rather limited. It was for this reason that, from 1914 onwards, its managers embarked on an ambitious strategy of expansion and vertical integration. They did so in order to take advantage of the increase in demand for large tonnage iron ships due to the impossibility of obtaining them on the foreign market, but also to avoid problems in the supply of materials and naval equipment. They proceeded to erect two slipways, a new office building designed by Gregorio Ibarreche, and the construction of a model workshop and an oxygen factory, among other things.

The company's upward trajectory was cut short in 1921 due to a sharp contraction in the demand for new ships as well as the restriction experienced in repairs. In order to survive in these times of crisis, Euskalduna, which had become a true metallurgical factory capable of carrying out all kinds of work, opted for the strategy of diversifying its production towards new articles that had little to do with what they were manufacturing at the time. Thus, without leaving aside armaments and naval repairs, they began to manufacture railway material, automobiles, machinery and metal constructions. In addition, in the 1930s, Bilbao City Council commissioned the company to build the Buenos Aires bridge.

Thus, by the end of the 1920s, the shipyard had specialised in the construction of medium tonnage vessels of various types and fitted with diesel engines, but at very high prices compared to those of countries such as England and Germany. In short, it had the technical capacity to attract the demand of Spanish shipowners but was unable to compete in the international market.

The international crisis of the 1930s further worsened the company's situation. The contraction of maritime transport led to a halt in orders for new ships and the repair of old ones, and government orders were insufficient to save the situation. The management's tactic was to drastically reduce production costs, especially wages. This resulted in the dismissal 1931 and 1933 of more than half of the workers, part of the technicians and administrative staff, and a reduction in the salaries of the remaining staff.

During the Civil War, Euskalduna was militarised. However, from a material point of view, the war had hardly any direct consequences on the shipyard, as the Basque Country was the only industrialised region in which its productive apparatus remained practically intact. However, the civil war had very serious effects on the company's human resources because exile, deaths, imprisonment and mutilations led to the loss of management and a large part of the skilled workforce.

Once the civil conflict was over, business prospects for the company were generally good. On the one hand, because it was necessary to replace the tonnage lost during the war and to renew the fleet of the shipping companies, which was very old - it was on average about 25 years old. On the other hand, because the legislation of the new political regime sought to promote shipbuilding, considering it a basic sector for achieving self-sufficiency. Specifically, shipbuilding was encouraged through a policy of reserving the domestic market and very cheap credit to finance investments in shipyards and ship acquisitions.

These favourable future prospects encouraged the Euskalduna Board of Directors to undertake a new expansion of the factory. 1940 and 1941 they bought some land adjoining the Olabeaga shipyard from Alejandro Arana y Compañía and the Marquis of Olaso; and in 1943 they took control of the Gracia y Cía, S.A. foundry.

With this new extension, the Company's facilities and premises were unified on the left bank of the Nervión along 750 metres. The result was the disappearance of the old foundry workshop, the enlargement of other workshops and the construction of new assembly, boilermaking, machinery and iron and steel foundry buildings designed to avoid the agglomeration of machines, tools and parts being manufactured. Along with all this, the company was equipped with a chemical laboratory, offices, archives, etc. and proceeded to increase the dimensions of dock number 3.

The new infrastructure enabled Euskalduna to develop its production capacity and, as a result, to increase its profits. Thus, by the 1950s, it had become one of the leading companies in ship and diesel engine construction, but also one of the fifty largest in Spain in terms of net assets.

The progressive opening up of the Spanish economy to the foreign market from the early 1950s and the enactment of the 1956 Merchant Fleet Protection and Renewal Act made the spectacular deployment of Euskalduna feasible. Specifically, this provision established a policy of cheap credits, construction and navigation bonuses, and certain tax advantages with the aim of achieving an annual national production of 1000,000 gross registered tons.

However, during these years, Euskalduna had to face the problem of the lack of available space at Olabeaga and, moreover, due to its location, the possibilities of further expansion were already nil. This circumstance forced it to carry out a new planning of the work in its workshops, a new business management and to specialise in the manufacture of medium-sized, high quality vessels, in order to be competitive on the foreign market and to increase productivity.

Euskalduna achieved the objectives it had set itself, but in the mid-1960s it had to overcome a new setback: that of financing the volume of work contracted. It solved this problem by merging in 1969 with La Naval and Astilleros de Cádiz to create the company Astilleros Españoles S.A.

This shipbuilding giant came into being under the Concerted Action Shipbuilding Scheme. In order to achieve the production objectives it set itself, both general and specific, each of its factories specialised in a particular type of construction. As far as the Olabeaga facilities were concerned, in the manufacture of steel-hulled vessels of 4,000 and 16,000 gross tonnage; and in naval repairs to be carried out in its two dry docks and in its floating dock of 12,000 tons of lifting capacity.

The new market reality generated by the 1973 oil crisis had dramatic consequences for the shipbuilding sector, as the transport of crude oil was the first to be affected. From that date onwards, the shipbuilding industry began the process of reconversion in order to adapt its excess production capacity to the situation generated by the crisis.

However, the reconversion required by the crisis was too late in Astilleros Españoles S.A. Moreover, emphasis was placed on the reduction of the workforce, while hardly any emphasis was placed on technological and business renewal, which was necessary precisely to be able to compete in the international market.

The tough restructuring programme implemented by Astilleros Españoles resulted in the closure of Euskalduna in 1988. Specifically, it was the result of the agreement to join the EEC, which determined a reduction in the group's production capacity.

In the medium term, the dismantling of Euskalduna has facilitated the expansion of green and leisure areas in the centre of Bilbao, and today its former facilities are the headquarters of the Naval Museum of the Biscayan capital.

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