- Federal and state entities considering affiliation with Meyer Werft
The parliamentary budget committees of Germany's Bundestag and Lower Saxony will deliberate on Wednesday about saving Meyer Werft, a company renowned for its cruise ships, which is currently grappling with a severe financial predicament. This company based in Papenburg employs thousands and plays a crucial role in maintaining the marine industry. Consequently, the state is now intervening to ensure its survival.
The proposal entails the federal government and Lower Saxony jointly purchasing an 80% stake in the currently financially unstable shipbuilding facility for 400 million euros. Besides, both parties are also prepared to provide guarantees worth approximately one billion euros each for securing loans.
Financing needs to be finalized by September 15th.
There isn't a specified withdrawal date for the state's intervention, but both Berlin and Hannover have made it clear that the shipbuilding facility should not continue to be under public ownership in the long term. Currently, however, due to the lack of any potential private investors and the company's significant strategic importance to both the federal government and the state, state intervention is necessary, according to Lower Saxony's government.
Meyer Werft must secure around 2.8 billion euros for new ship constructions by the end of 2027. Agreements regarding this need to be reached by September 15th.
The financial crisis is not a result of diminished orders but rather contracts for new ships signed before the COVID-19 pandemic, which do not provide for adjustments to the substantial rise in energy and raw material prices since then. Moreover, in the shipping industry, 80% of the construction cost is typically only paid upon delivery of the ship, so the shipbuilding facility has to finance the construction with short-term loans.
Chancellor Scholz regards Meyer Werft as an "industrial gem"
In theory, state assistance must be reported to the EU Commission to permit a nation to financially support its companies. The EU Commission does not have a set deadline to determine whether such aid is permissible. Regarding the rescue of Meyer Werft, the commission has mentioned that it's holding productive discussions with the German authorities. According to Lower Saxony, the state aid in this case is designed such that it does not depend on EU approval, although the EU has been informed voluntarily about the project.
Federal Chancellor Olaf Scholz had assured the company of the federal government's support by the end of August at the Papenburg shipyard. "Meyer Werft is a trump card we cannot afford to lose and will not lose," stated the SPD politician. Germany's position as the world's third-largest economic power relies on a robust maritime economy, and Meyer Werft is an "industrial gem."
Lower Saxony, being the state where Meyer Werft is located, is actively involved in the negotiations to save the struggling shipbuilding company. The financial predicament of Meyer Werft, known for its cruise ships based in Papenburg, has prompted a joint purchase proposal from the federal government and Lower Saxony.
