Can a new Disney ship save Meyer Werft?
Meyer Werft, a tradition-rich shipyard, has been fighting for its survival for weeks. The news that it is now building the next cruise giant for a Japanese company brings relief. However, there is a catch.
Finally, some good news for Meyer: The heavily indebted shipyard has secured a new contract. On Tuesday, Senior CEO Bernard Meyer, who has been leading the company in the sixth generation, signed a contract in Tokyo with the Oriental Land Company (OLC). The Japanese company is a partner of the Disney Corporation and has ordered a new Disney cruise ship from Meyer Werft. The colossus is scheduled for delivery in 2028 and is expected to set sail in 2029.
"I am very pleased to have signed this important contract in Tokyo today and to have won another customer from Japan for Meyer Werft," Meyer announced in a statement from the yard. "This is an important building block for the long-term future of shipbuilding in Papenburg." A photo from Tuesday in Japan shows the smiling patriarch next to OLC CEO Kenji Yoshida, proudly holding up the signed contract for the camera.
A shortage of approximately 2.8 billion Euros exists until 2027
It was probably a welcome distraction for Meyer. At home in Papenburg, Niedersachsen, more than 9,000 kilometers from Tokyo, the future of shipbuilding, as Meyer speaks of it, is uncertain. The 200-year-old family business is known worldwide for its cruise ships, with additional locations in Rostock and Finland. However, the traditional shipyard has been fighting for its survival for weeks. This is the most severe crisis in the company's history. The Meyer Werft is missing approximately 2.8 billion Euros by the year 2027.
At first glance, this may seem paradoxical. In fact, Meyer's order books are full. New orders like the one for the new Disney ship will not solve the crisis. "The new order provides a perspective because it becomes clear that Disney continues to rely on Meyer Werft," says Heiko Messerschmidt, district secretary of IG Metall Coast.
However, the problems lie elsewhere: When customers order ships, they initially pay only 20% of the contract value. The remaining 80% is only paid when the ships are delivered. The yards must finance this themselves. However, Meyer Werft currently lacks the financial cushion for this.
Late consequence of the Corona Pandemic
The reason is the pandemic. When cruise ships were considered virus carousels during the Corona years and entire ships with thousands of passengers were repeatedly placed under quarantine, the cruise industry effectively came to a standstill. Consequently, shipping companies did not order new cruise ships during this period.
Meyer Werft managed to stay afloat but had to take on debt. Due to the Corona order gap, fewer ships than usual are now being delivered and paid for. In addition, shipbuilding has become significantly more expensive due to inflation, for example due to increased steel prices and labor costs. Since ship prices are apparently negotiated openly with the shipping companies, Meyer Werft cannot pass on these additional costs to its customers.
At the existence fight at the coast, it's also about Thousands of Jobs. The company employs, according to its own statements, around 7000 people. In Papenburg, the shipbuilder is the largest employer in the region. The crisis may not only affect the roughly 3600 people who directly work in the yard. Thousands more jobs depend on suppliers, such as upholstery or painting shops, linked to the yard. A bankruptcy would be devastating for the entire region.
Tax money for the rescue of the yard?
To obtain credit, the Meyer Werft needs 400 million Euro. For weeks now, it has been about whether the state of Lower Saxony and the federal government will intervene with tax money to save the yard. Private investors seem to have shown no interest so far. The state and the federal government have reportedly invested over a billion Euro in the yard since 2005, for example, for the controversial Ems deepening, so that the giant cruise ships from the yard could even enter the North Sea. Politics is now discussing possible help with conditions. The Meyer Holding had once moved its headquarters from the Ems to Luxembourg to avoid having to set up a supervisory board. Now there is an agreement that the headquarters will be returned and that there will also be a supervisory board.
The influence of the Meyer family could potentially decrease. Tim and Jan Meyer, the sons of CEO Bernard Meyer, left the management in June, as first reported by the "Osnabrücker Zeitung". According to NDR, banks and customers had put pressure on the yard's management. The NDR also quoted Bernard Meyer with the words, the family is ready to contribute. It is unclear whether this means that the family will pay the required 400 million Euro.
The Meyers belong to the richest families in the country. In the latest list of the 500 richest Germans in "Manager Magazin", they last appeared in 2021, since then they no longer appear. Their estimated total assets at that time: 400 million Euro.
The article first appeared at Capital.de**
The state aid discussion surrounding Meyer Werft's survival is crucial, as the shipyard is currently seeking an additional 400 million Euro in credit. Given their past investments, both the state of Lower Saxony and the federal government are considering providing help with conditions. (State Aid)
Despite the new Disney cruise ship order, Meyer Werft's financial troubles stem from the pandemic and its impact on the cruise industry, leading to decreased orders and increased costs. This has placed the future of the shipyard, along with the 7,000 employees and numerous related jobs, at risk. (Cruise ships, Economy, Labor market)
