Approval granted for Meyer Werft's salvage operation
The fate of 17,000 jobs at Meyer Werft hangs in the balance, with the company requiring a substantial financial boost to ward off bankruptcy. Fortunately, approval for this injection has been granted. However, the COVID-19 pandemic and the Ukraine war aren't the sole reasons Meyer Werft finds itself in crisis.
The German Bundestag's Budget Committee has given the go-ahead for Meyer Werft's rescue. The relevant matter was passed, as confirmed by Reuters' sources.
Germany's government and the state of Lower Saxony aim to save the troubled Papenburg-based company from collapse with a government takeover. The Social Democratic Party (SPD), under Chancellor Olaf Scholz, has recently emphasized its intent to preserve numerous jobs in the economically vulnerable Emsland region. Including suppliers and service providers, about 17,000 jobs rely on the shipyard directly or indirectly.
On Wednesday, the Lower Saxony state parliament's Budget Committee in Hannover will also debate the rescue plan, which includes 400 million euros in equity and around two billion euros in guarantees. After parliamentary approval, further details must be ironed out before a final agreement is reached in the near future.
The federal government and the state of Lower Saxony now plan to purchase approximately 80.7% of Meyer Werft for 400 million euros. This includes around two billion euros in loan guarantees. On Wednesday, the Lower Saxony state parliament's Budget Committee in Hannover will discuss aid for Meyer Werft. According to the German Federal Ministry of Economics, EU approval won't be required for this state support.
Meyer Werft needs to raise almost 2.8 billion euros by the end of 2027 to fund new ship construction. Agreements on this must be finalized by September 15. The root cause of the crisis is not a lack of orders but contracts for new ships signed before the COVID-19 pandemic, which do not account for the drastically increased energy and raw material costs since then. Furthermore, 80% of the construction price is typically paid upon ship delivery; therefore, the shipyard must finance construction with loans.
The approved financial aid from Germany's government and Lower Saxony will help Meyer Werft avoid bankruptcy and secure jobs, ensuring a total of 17,000 positions remain stable. Following the German Bundestag's Budget Committee's approval, the Lower Saxony state parliament's Budget Committee will also discuss the rescue plan on Wednesday.
