“Management error”
Is the state sinking millions by rescuing Meyer Werft?
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Meyer Werft is threatened with bankruptcy. Tens of thousands of jobs are at risk. The federal government and the state of Lower Saxony therefore want to take over a large majority in the shipbuilding group for a sum of millions. Shipping expert Max Johns explains what should happen nextProfessor of Maritime Management at the Hamburg School of Business Administration.
The Meyer Werft has been fighting for survival for months. Now the federal government and the state of Lower Saxony are saving them with 400 million euros in equity and guarantees. The state takes over 80 percent of the company's shares. Does that make sense?
Max Johns: If it's about saving jobs and the tax money is not lost, the state's involvement makes sense. It takes three years to find another investor. So it should only be a bridging measure. If we manage to find such an investor, the investment would have been worth it. It would not make sense for the state to become an entrepreneur in the long term or lose money. After all, it is neither a systemically important company nor a “crown jewel,” as the Chancellor said. To do this, the shipyard would not only have to be well positioned technologically, but also economically, socially, ecologically and have exemplary governance. That is hardly the case.
The Meyer family should be able to buy back the company shares later. What do you think is a likely exit scenario?
The family has not yet convincingly managed to make a transition from the older generation to the younger one. I can't say exactly whether this will be successful in a second attempt. But doubts seem appropriate. An external investor is probably more likely. Private equity companies are unlikely to be an option for this. There is a higher probability that other technology or shipyard companies will be interested in Meyer Werft, such as Chantier de l'Atlantique from France or Fincantieri from Italy. Both also have a cruise portfolio and might be interested in the portfolio and location.
After Galeria Karstadt Kaufhof, is the state now threatened with the next million-dollar grave? Or does Meyer Werft have a realistic prospect of a good economic future?
You have to keep this in mind: a maritime company like this can get into trouble because it works poorly or doesn't produce good products. In this case, one of the most important reasons for the crisis is a management error: the contracts for the ships do not contain any escalation clauses, for example for material costs. This meant that they were set up without sufficient protection against inflation. The financial problem is now being repaired. With the existing order book, there can be a promising future. However, the maritime economy is extremely volatile and external influences such as recessions, wars or pandemics can have a major impact on the cruise business.
Meyer Werft cannot renegotiate the prices and now has to sell the ships at prices that are actually too low. There was also a Corona gap.
The shipping companies have practically not been able to organize any cruises for two years and have therefore asked for ships to be delivered later. The shipyard sat there for so long with half-built ships, some of which it had pre-financed and for which it initially received no money. She was unable to cope with this long phase of interim financing. Shipbuilding is very expensive; for a single ship we are talking about 1 billion euros to finance all stages. As the shipyard's order book looks at the moment, it is doing well and its products are in high demand. In this respect, there is a possibility that a million-dollar grave will not be created there, because there is at least currently demand on the customer side. This is what distinguishes it from Galeria Karstadt Kaufhof. The business model there was fundamentally questioned because people were going to department stores less. Of course, if one of the crises mentioned occurs, problems could arise again. That’s why it’s important that government funding is scaled back quickly.
Katja Michel spoke to Max Johns
The interview first appeared on capital.de
