- The crucial matter revolving around Meyer Werft's salvage operation.
For several months, the federal government and Lower Saxony have been exploring a potential bailout for Meyer Werft, known for its luxury cruise ships. Today, Federal Chancellor Olaf Scholz and Lower Saxony's Minister-President Stephan Weil (both SPD) are expected at a crisis meeting with the struggling company in Papenburg, Emsland. A resolution is on the horizon, but not yet finalized. A summary.
Why is Meyer Werft in trouble?
The company is desperately in need of cash - deals need to be reached by September 15th. In total, the shipyard needs to amass nearly 2.8 billion euros by 2027 to fund new ship constructions. Fortunately, there's no lack of orders; Meyer Werft recently secured a record-breaking agreement with Disney Cruise Line for four ships. However, some cruise ship contracts were signed before the COVID-19 pandemic and do not account for the skyrocketing energy and raw material costs. Furthermore, 80% of the construction cost is paid upon ship delivery, so the shipyard relies on loans to cover construction costs temporarily.
What's on the table as a possible solution?
A temporary investment by the federal government and Lower Saxony to boost the company's equity by approximately 400 million euros is under consideration. Additionally, the shipyard requires loan guarantees to bridge the billion-dollar financing gap for building new ships.
German government sources claim that no definitive decision has been made yet, but there's an intention to save the shipyard. Under this scenario, the federal government and Lower Saxony could extend around 900 million euros in guarantees and temporarily assume 80-90% ownership of the shipyard. However, such a plan needs approval from various committees, including the Budget Committee of the Bundestag and the EU Commission.
At the beginning of July, Meyer Werft's management and the works council, along with the IG Metall trade union, agreed on a restructuring plan. The shipyard plans to shed 340 of its 3,000+ jobs in Papenburg. Furthermore, a supervisory board and group works council are expected to be formed, and the company headquarters is scheduled to return from Luxembourg to Germany, as requested by politics.
Why is politics pushing for Meyer Werft's survival?
Minister-President Weil emphasized in the summer that if the company shows promising prospects, Lower Saxony will do everything in its power to ensure a better future for it. "We're doing this to save jobs," Weil stated. Besides the local workforce and Lower Saxony, "several thousand jobs" depend on the shipyard. Around 7,000 people work for the Meyer Group, with shipyards in Rostock and Turku, Finland, in addition to Papenburg.
Meyer Werft is one of the leading producers of luxury cruise ships globally and is a significant economic factor for Lower Saxony. Besides the jobs, saving the shipyard also preserves the expertise of civilian shipbuilding in Germany, the state government argued.
Stephan Weil, the Minister-President of Lower Saxony, will be attending the crisis meeting with Meyer Werft today. Stephan Weil has expressed his support for the company, stating that Lower Saxony will do everything in its power to ensure a better future for Meyer Werft if it shows promising prospects.
