- Chancellor's Arrival Anticipated at Meyer Werft.
The Importance of Meyer Werft and Over 3,000 Jobs in Northwest Lower Saxony's Vulnerable Region
As per the company's leaders, a preliminary agreement has been reached among the federal government, Lower Saxony state, and banks to save Meyer Werft, a shipyard located in a potentially fragile region of Northwest Lower Saxony. A meeting is scheduled today, which is expected to be attended by Chancellor Olaf Scholz (SPD).
Potential Rescue Measures
It seems that a deal has been struck for a temporary involvement of the federal government and Lower Saxony in the business. The public sector is also planning to boost the shipyard's equity capital by 400 million euros. This move is vital for the banks to enable the company to finance the construction of cruise ships in the future.
Given that the construction of cruise ships requires the shipyard to prepay 80%, it requires guarantees, for which the public sector is expected to provide. By 2027, the company is projected to need close to 2.8 billion euros.
Unanswered Questions Remain
Meyer Werft, the banks, the state, and the owner family agree, in principle, on the rescue plan. However, several critical aspects still require clarification. These include transferring the holding company from Luxembourg to Papenburg or setting up a group works council.
In addition, the budget committees of the Bundestag and Lower Saxony state parliament and the EU Commission need to approve the plan. However, time is crucial: An agreement must be reached by September 15, or else the shipyard will run out of funds.
Filled Order Books
The shipyard has a full order book. A significant order worth hundreds of millions was recently secured from the American Disney corporation for four cruise ships. Construction has also begun on platforms necessary to transmit wind power generated at sea to the mainland. However, due to financial struggles during the pandemic, the company's creditworthiness has been questioned by the banks.
Expert Report Foresees a Positive Future, Under Conditions
A recent expert report suggests a positive future for the shipyard, provided certain conditions are met. The company must, once again, turn a profit. As Chief Restructuring Officer Ralf Schmitz mentioned a few weeks ago, the shipyard "has not been a profit center in recent years." The planned company restructuring is set to be completed by 2028, which will result in around 340 of the 3,000 jobs being cut.
Crucial for the Region
The demise of the shipyard would be a major setback for the Lower Saxony state government, according to economic association calculations. Up to 18,000 people could be indirectly impacted by its insolvency. The state has made significant investments to keep the shipyard at the controversial toll bridge location in Papenburg. The shipyard is also considered a pioneer in the maritime economy by its supporters, and its loss would negatively impact the German maritime industry beyond just the company.
The public sector's plan to increase Meyer Werft's equity capital by 400 million euros is essential for the banks to continue financing the construction of cruise ships, given the requirement for 80% prepayment. If an agreement isn't reached by September 15 due to budget approval processes, the shipyard may run out of funds.
With a full order book, including a significant order from Disney, Meyer Werft's financial situation would be stronger if not for the impact of the pandemic on its creditworthiness.
