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November 29, 2000

Commission opposes extension of subsidies
to EC yards
The European Commission today stated that it opposes a prolongation of operating aid for shipbuilding, which will expire on December 31, 2000. However, it appeared to suggest that it could be necessary to reintroduce some form of subsidization next year as a "temporary defensive mechanism" against South Korean practices.

The Commission issued a report on the situation in world shipbuilding earlier this month. (Essentially it said that the Koreans are still cheating on prices and European yards are still suffering as a result).

Shipbuilding will be on the agenda at the meeting of EC industry ministers on December 5. A number of European shipbuilders would be overjoyed if the industry ministers decided that direct subsidies of ship prices could, indeed, be continued.

In a statement today, the Commission said that it is currently finalising its examination of the European shipbuilding industry's request to open an investigation into unfair practices in South Korea under the Trade Barriers Regulation (TBR).

If no satisfactory negotiated solution can be reached with Korea, the Commission will report to the Council by May 1, 2001. It will then propose taking action against South Korea in the WTO and establishing a "defensive temporary support mechanism specifically designed to counter unfair South Korean practices for a period necessary for the conclusion of the WTO procedure."

This "mechanism" would be limited to those market segments where it has been demonstrated that EU industry has been directly injured by unfair Korean trade practices.

The Commission also declared its willingness to allow greater use of State aid for R&D in the shipbuilding sector.


Litton to collaborate on superconductors for ship propulsion
Litton Ship Systems and American Superconductor Corporation today announced an agreement to collaborate in the utilization of High Temperature Superconductor (HTS) technology for commercial and naval ships.

The initial focus of the collaboration will be on the application of HTS motors for electric ship propulsion.

American Superconductor engineers have designed and patented ultra-compact HTS motors that, says the company, will propel ships more efficiently and quietly, and that will create more usable space on board ships. The result will be higher fuel efficiency and more passenger and cargo space on commercial ships, which translates into increased profits. For naval vessels, the result will be more space for weapons, sensors, combat system elements, fuel and crews' quarters, in addition to greater stealth and higher fuel efficiency.

"We believe that HTS motors provide great potential for ship propulsion," said Dr. Lawrence J. Cavaiola, president of the Litton Ship Systems Full Service Center, which will administer LSS' collaboration with American Superconductor, and vice president of Litton Ship Systems. "We are very excited to be working with American Superconductor - a world leader in HTS technology - to transition this technology to the fleet."

American Superconductor announced earlier this week that it had completed the first phase of a U.S. Navy program for an initial design of a 33,500-horsepower HTS ship propulsion motor, and that it had received a follow-on contract from the Navy to complete the motor design and to start component fabrication and testing. The company stated it expected to obtain additional Navy contracts over the next several years leading to the manufacture and testing of HTS motors for installation on Navy ships.

"We are delighted to be collaborating with Litton Ship Systems, one of the nation's leading shipbuilders," said Greg Yurek, chief executive officer of American Superconductor. "We are looking forward to ultimately providing LSS with an array of systems and components that will provide the basis for creation of entirely new concepts in ship design. The application of HTS technology will create a paradigm shift in ship design that hasn't been seen since the transition from sails to steam-driven systems."

In July 2000, the company and Rockwell Automation announced the successful operation of the world's first 1,000-horsepower HTS motor. American Superconductor also announced that it is currently fabricating a 5,000-horsepower, HTS industrial motor of its own proprietary design, which it expects to have ready for test in the spring of 2001.

American Superconductor's HTS wire, which today can carry more than 100 times the power of copper wires with the same dimensions, creates the possibility for radically new ship designs and extremely compact, quiet and powerful propulsion systems.

Superconductors are materials that carry large quantities of electricity with zero electrical resistance when cooled to very low or cryogenic temperatures. While superconductors have been known for decades, the only commercial application until recently was in medical magnetic resonance imaging (MRI) devices. These devices utilize low temperature superconductor (LTS) wires. In 1986, two IBM scientists discovered a new family of superconductor materials that still require cooling to cryogenic temperatures, but that operate at 5 to 20 times higher temperatures than the old LTS materials. The new materials, which are ceramic compounds, have become known as high temperature superconductors (HTS). The lower cost of cooling these new materials significantly enhanced the commercial economics of superconductor applications, and created the possibility of using high power density superconducting wires in electric power applications, such as power cables, motors and generators. American Superconductor has over 250 U.S. patents, patent applications and licenses related to the manufacture of HTS wires and the applications of superconductors to electric power applications.

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