Germany's Scholz to visit Meyer Werft shipyard amid bailout talks. (picture alliance/dpa | Lars Penning)
An apparent solution to save the struggling Meyer Werft shipyard in northern Germany appears to be within reach, with German Chancellor Olaf Scholz and others expected to address shipyard workers there on Thursday.
A company spokesman and sources in Berlin told dpa that progress is being made toward a deal that could rescue the financially troubled shipyard, which has been facing potentially existential difficulties.
Scholz is expected to be joined by the state premier for Lower Saxony, Stephan Weil, and the state's economy minister, Olaf Lies, according to the chairman of the works council at Meyer Werft, Andreas Hensen.
Government sources in Berlin told dpa that no final decision has been made on a possible rescue plan, but that there is a willingness to intervene to save the shipyard.
The Meyer Werft shipyard is located in the state of Lower Saxony. Scholz, Weil and Lies are all members of the centre-left Social Democratic Party (SPD), which historically has maintained very close ties with organized labour.
According to a management spokesman, all parties involved have agreed in principle to rescue plan for the faltering company. "However, there are still some technical details to be clarified," the spokesman said.
Among the outstanding issues is how to value the company in light of a recent order from the Disney Group for four cruise ships, the largest single order in the shipyard's roughly 200-year history.
A solution must be found by September 15, otherwise the shipyard will run out of money, according to the company. But the spokesman expressed confidence that a deal could get done.
There have been reports that the state and federal governments might consider taking a stake in the shipyard, which would also provide for an increase in equity capital of €400 million ($445 million).
The shipyard has also said it may need guarantees in order to obtain loans for the continued construction of ships.
The company, known for building cruise ships, may need nearly €2.8 billion in guarantees by 2027.
The Handelsblatt newspaper and the regional public broadcaster NDR both reported that a plan under consideration could have the German government and Lower Saxony provide a guarantee of around €900 million each, while temporarily taking over 80% to 90% of the ownership of the shipyard.
However, such a solution would still have to be approved by the the German parliament's budget committee and the European Commission, among others.
The shipyard's financial crisis stems in part from deals cut for cruise ships before the coronavirus pandemic, which did not provide for any adjustment when energy prices and the cost of raw materials later rose dramatically.
In the shipbuilding industry, a large proportion of the purchase price of a cruise ship - typically 80% - is only paid on delivery, meaning the shipyard generally has to finance construction with loans.
However, banks became very reluctant to extend Meyer Werft further credit after the shipyard slipped into the red due to the collapse of the global tourism market during the pandemic.
A recent expert evaluation of Meyer Werft's business gave the shipyard good prospects for the future - at least under certain conditions.
The restructuring of the company is expected to be completed by 2028 and will include significant job losses a the shipyard.
At the beginning of July, Meyer Werft's management agreed on a restructuring plan with the works council and the IG Metall trade union. The plan calls for cutting 340 of the roughly 3,000 jobs there.
The arrangement also calls for the creation of a new supervisory board and group-wide works council at Meyer Werft as well as relocating the company's headquarters from Luxembourg to Germany.
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