Germany's federal government is considering extending support to a local shipbuilder that has been beset by financial difficulty, a spokesperson of the country's economic ministry confirmed earlier this week. The proposed step will benefit Meyer Werft, a yard in Papenburg in Lower Saxony that specialises in the construction of cruise ships for both domestic and overseas customers.
As part of its restructuring, Meyer Werft must raise €2.7 billion (US$2.9 billion) over the next few years to compensate for losses it had incurred. The government will decide whether to extend a financial lifeline to the cash-strapped shipyard following an assessment.
Meyer Werft's financial troubles began following the onset of the Covid-19 pandemic, when supply chain disruptions led to some ship deliveries being delayed, as well as a drop in orders for new vessels. This forced the company to temporarily reduce its production activities, resulting in only one large and one small cruise ship being completed each year.
The situation was further impacted by inflation and rising costs in the wake of the 2022 Russian invasion of Ukraine. According to local media, the contracts for those cruise ships under construction at the Papenburg facilities had already been finalised before the pandemic occurred and therefore do not provide for adjustments to account for any price increases affecting energy and raw materials.
Minister-President of Lower Saxony Stephan Weil told local news agency DPA that he is in confidential discussions with both the yard and the federal government. The talks are being held with the objective of determining future viability assessments and formalising loan agreements with banks.
Both Weil and Olaf Lies, Lower Saxony Economic Minister, said that Meyer Werft must reduce its workforce, relocate its headquarters from Luxembourg back to Germany, and establish a supervisory board before it could benefit from any state aid. The company had moved to Luxembourg in 2015 to avoid having to establish a supervisory board, which is a requirement in Germany for an organisation of its nature.
Meyer Werft and trade union IG Metall have already come to an agreement regarding workforce reductions as part of the requisites. Among other things, the yard has agreed to cut only 340 positions instead of the initially proposed number of 440. The original plan of 440 reductions had been earlier opposed by IG Metall and the Lower Saxony government.