German government preparing rescue package for ailing shipyard

A rescue of the ailing North German shipyard Meyer Werft has now become a matter of concern for German chancellor Olaf Scholz.

According to the news agency Reuters, Scholz is determined to have the German state step in with capital to ensure the survival of the 229-year-old shipbuilder.

The family-owned Meyer Werft has long been in financial crisis, but the cash shortage is now so acute that the shipyard needs a fresh injection of capital in September and the Berlin government is working on a solution that would see the state step in as majority shareholder for a transitional period.

“We all want to secure the continued existence of the shipyard – and with it everything that depends on it,” said Scholz, according to Reuters, when the chancellor visited the shipyard in Papenburg, west of Bremen and not far from Hamburg, where Scholz is the former mayor.

According to Reuters sources, the yard is short of EUR 2.8bn in capital to finance, among other things, newbuilds, for which the yard only receives payment once completed.

Meyer Werft has a total order book of EUR 11bn for luxury ships, but is suffering from the effects of a pause in demand that occurred during the coronavirus pandemic.

The German government is reportedly negotiating with the owner family and the shipbuilder’s banks on a solution that would temporarily make the state majority shareholder with a stake of up to 90% in Meyer Werft until a permanent solution can be found.

(English edit by Kristoffer Grønbæk)