- Approval granted for financial assistance to assist struggling Meyer Werft
The huge EU-funded bailout of financially stranded Meyer Werft has been given the go-ahead. Both the Budget Committee of the German Bundestag and the Budget Committee of the Lower Saxony Landtag have given the green light for the aid.
The decisions outline the federal government and the state of Lower Saxony purchasing an 80% stake in the presently loss-making shipyard for 400 million euros. Aside from this, both the federal government and the state will provide guarantees of approximately one billion euros each to secure bank loans. The state's involvement is planned to be time-limited, but there's no set expiry date.
SDP budget politician Dennis Rohde stated that Meyer Werft is a major driver for the maritime economy, employing around 3,500 people directly and more than 10,000 in the supply industry. The federal government and the state now share the responsibility of pulling the company out of its financial predicament.
Meyer Werft from Papenburg boasts a history over 200 years long and is renowned for cruise ships today. However, it's currently grappling with a crisis that could threaten its survival: by 2027, it needs to generate almost 2.8 billion euros to fund new ship construction. The state is now stepping in to help the company.
As per dpa sources from parliamentary circles, the federal government also has a strategic interest: in case of geopolitical tensions, the shipyard facilities could be utilized by the navy and play a significant role in military shipbuilding. Economically, however, the federal government anticipates the shipyard will continue to incur losses in the years 2025 and 2026 even if the restructuring plan is implemented.
The crisis at Meyer Werft isn't due to a lack of orders: in August, the company even secured the largest order in its history with four cruise ships for Disney Cruise Line. However, some cruise ship contracts were signed prior to the coronavirus pandemic and do not incorporate price adjustments for increased energy and raw material costs. Additionally, in shipbuilding, 80% of the construction cost is only paid upon delivery of the ship, forcing the shipyard to secure interim financing through loans.
Federal Chancellor Olaf Scholz deemed Meyer Werft an "industrial crown jewel"
Federal Chancellor Olaf Scholz had already promised the company the federal government's support at the end of August, referring to the shipyard in Papenburg. A powerful maritime economy is essential to maintain Germany's position as the third-largest economic power in the world, and Meyer Werft is a "industrial crown jewel", as the SPD politician put it.
In principle, state aid must be reported to the EU Commission for a country to provide financial assistance to its companies. There's no stipulated deadline by which the Commission must decide whether state aid is permissible. For the rescue of Meyer Werft, the Commission stated that it's currently engaged in constructive discussions with the German authorities. According to information from Lower Saxony, the state aid in this case is structured in such a way that it's not legally dependent on EU approval. However, the EU has been voluntarily informed about the project.
The federal government and state officials are actively working towards rescuing Meyer Werft, recognizing its significance as an "industrial crown jewel" and a crucial driver for the maritime economy. If approved by the EU Commission, the aid package includes the purchase of an 80% stake and guarantees totaling nearly 2 billion euros to help the shipyard navigate its financial crisis and secure necessary loans for future ship construction.
