- The Administration is intervening to safeguard Meyer Werft, hinting at its potential utilization for defense-related tasks.
The Parliamentary Budget Committee of Germany has paved the way for the billion-euro salvage of Meyer Werft. They agreed that the federal government can participate in the rescue with the planned 200 million euros. Now, Lower Saxony needs to give its approval to save the Papenburg shipyard from its financially precarious situation.
Meyer Constructs Cruise Ships and potential Military Vessels
The shipyard is recognized for its cruise ships, but the federal government also sees a potential military application and is prepared for the rescue due to this factor, among others. "Meyer Werft could potentially play a significant role in German military shipbuilding in the event of a geopolitical tension escalation," according to a classified report from the German Finance Ministry to the Parliamentary Budget Committee.
"This seems like an after-the-fact justification to me," says Max Johns, a professor of maritime management at the Hamburg Business School, to Capital. After all, there are other commercial shipyards in Germany, like Thyssenkrupp Marine Systems and the Lürssen shipyard, which are established in military shipbuilding. "It's bold to keep a shipyard on standby with the vague idea that something might happen someday." In his view, politics is now "retroactively searching for reasons" after the rescue commitment.
Meyer Werft could be useful for military shipbuilding
So far, the federal government has primarily cited the great importance of the Meyer Werft for the German shipping industry as the reason for the involvement and emphasized the securing of thousands of jobs. "By temporarily stabilizing the shipyard financially, we secure the future of the shipyard and thousands of jobs," said SPD budget spokesman Dennis Rohde. Meyer Werft is an essential engine for the maritime economy and employs around 3,500 people directly and more than 10,000 in the supply industry.
The report from the Finance Ministry shows geostrategic considerations: The shipyard could be used for the navy and military shipbuilding. It is involved in the new construction project of the marine logistics support ship class 707, being manufactured alongside Naval Vessels Lürssen, according to the "Handelsblatt." The shipyard is also to build a new pier on the south bank of the Marine Arsenal Warnowwerft, which can also be used by the Neptun Werft, the German Armed Forces, and NATO.
Crisis Background at Meyer Werft: Management Errors
The crisis background at Meyer Werft is not a lack of orders, but management errors. "A maritime company can indeed face difficulties due to poor work or inadequate products," said Johns recently to Capital. "In this case, however, one of the main reasons for the crisis is a management error: The contracts for the ships do not contain any sliding clauses, for example, for material costs." Contracts for new ships signed before the COVID-19 pandemic do not provide for any adjustments to the significantly increased energy and raw material prices since then. In the industry, it's common for 80% of construction costs to be paid only upon delivery of the ship – the shipyard must therefore interim-finance the construction with loans. By the end of 2027, Meyer Werft must raise almost 2.8 billion euros to finance the production of new ships. The agreements for this must be in place by September 15. The federal government and the state of Lower Saxony want to take over 80% of the shipyard in equal shares and provide a total of 2.6 billion euros for this. This includes guarantees of around one billion euros each to secure loans. The federal government expects that the shipyard will still incur losses in 2025 and 2026 even if the restructuring plan is implemented.
Exit Strategies: Unknown!
"If jobs are preserved and the money can be recovered, then this is a sensible bridging measure," says Johns about the state's entry. "But how the federal government is pursuing this goal and what the exit strategies look like is not clear to me at the moment." The Committee on the Budget should have positioned itself on the exit strategies, but now the easy way has been chosen and the problem has been postponed to the time after the next federal election.
Both from Berlin and Hanover, it's said that the shipyard should not remain in public hands in the long term. However, there's no fixed exit date for the state's involvement.
The federal government's interest in participating in the rescue of Meyer Werft extends beyond its role in the shipping industry, as it sees potential military applications for the shipyard in times of geopolitical tension. The federal government is not only concerned about securing jobs at Meyer Werft but also sees the shipyard as a potential asset for naval and military shipbuilding, as mentioned in the report from the Finance Ministry.
