The powers that be in the Federal Government and Lower Saxony are eyeing a majority stake in struggling shipyard giant, Meyer Werft. According to Lower Saxony's Minister of Economics, Olaf Lies, the plan involves forking over 400 million euros for an 80% share of the company, voiced during a session at the Hannover state parliament. Furthermore, both parties will offer guarantees to prevent a potential collapse, with each guarantee amounting to around a billion euros. Last week, the federal government and state authorities hinted at intervening temporarily in the shipyard's affairs. Now, Lies provides the nitty-gritty.
Over 20,000 jobs in Germany hang in the balance.
Lies justified the rescue operations, declaring that Meyer Werft's troubles pose a direct and indirect threat to over 20,000 jobs across Germany, with around half of them located in Lower Saxony. "We can't afford to be onlookers," the SPD politician remarked. He also mentioned the importance of safeguarding Germany's maritime sector.
Lies emphasized that the state's aim is not to become the shipyard's sole, long-term proprietor. "We envision a bright future for Meyer Werft under private ownership," he stated, leaving room for the Meyer family to reclaim their shares.
Meyer Werft needs to accrue approximately 2.8 billion euros by 2027 to finance new ship construction projects. These deals must be sealed by September 15th.
It was revealed that Meyer Werft's difficulties do not stem from a lack of orders. However, some contracts were agreed upon before the Corona pandemic, failing to incorporate price adjustments that account for the soaring energy and raw material costs. Moreover, commercial vessels receive 80% of their construction costs upon delivery, forcing the shipyard to rely on loans to cover the construction expenses during interim phases.
The proposed rescue measures, announced by Lower Saxony's Minister of Economics Olaf Lies, aim to defend over 20,000 jobs in Germany, with half of them residing in Lower Saxony. Lies reiterated that the state does not intend to maintain a long-term stake in Meyer Werft, envisioning a bright future for the shipyard under private ownership.
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Meyer Werft, a renowned cruise ship builder, is currently grappling with significant financial issues. Major concerns include:
- Financial Gap: Meyer Werft must surmount an almost 2.8 billion euro ($3.1 billion) financing void due to the delayed effects of the COVID-19 pandemic on demand for cruise ships[2].
- Debt Burden: The company's substantial debt may adversely impact its financial well-being and operating agility[3].
- Order Delays: Although Meyer Werft has a full order book, the delayed delivery of ships is contributing to its financial predicament[2].
To tackle these challenges and salvage jobs, the German government and Lower Saxony are deploying comprehensive support:
- Equity and Stake: The German federal and state governments will invest 400 million euros ($445.84 million) to purchase an 80% share in Meyer Werft to secure the company's future[2].
- Loan Guarantees: The support package includes guarantees for 2.6 billion euros in loans to help the family-owned business[2].
- Government Backing: German Chancellor Olaf Scholz has pledged to ensure the continued existence of the shipyard and its workforce[2].
- Strategic Partners: Lower Saxony and the federal government are jointly safeguarding Meyer Werft's long-term perspective[4].
These steps aim to fortify Meyer Werft's financial position, allowing it to carry on operations while maintaining employment for its workforce.
