The billion-euro rescue of the traditional Meyer Werft by the federal government and the state of Lower Saxony has been decided. The budget committee of the Bundestag gave the green light, as did that of the state parliament in Hanover. This means that the state will take over the majority of the financially troubled shipyard and shoulder high guarantees. The employees at the shipbuilding sites in Papenburg and Rostock can breathe a sigh of relief.

The aim of the state aid is to secure thousands of jobs at the shipyard and its suppliers and to support the maritime economy. In addition, the federal government is pursuing strategic interests with the rescue: if the geopolitical situation worsens, the shipyard, which is currently known primarily for cruise ships, could also be used for military purposes for the navy, according to parliamentary circles.

The rescue plan envisages the federal and state governments taking over around 80 percent of the shares for 400 million euros. They are also granting the company guarantees of around one billion euros each to secure loans from banks. The relevant contracts are to be signed on Friday. The state’s involvement is to be time-limited, but there is no fixed exit date.

The shipyard will probably not make a profit again until 2028

Economically, the situation for Meyer Werft will probably remain difficult for years to come. “We will have the shipyard at full capacity again in 2026, but according to the restructuring report, we will not have a positive economic result again until 2028,” said Lower Saxony’s Economics Minister Olaf Lies (SPD).

This is why there is also criticism of the state’s entry. At the end of August, economist Marcel Fratzscher told NDR: “There is actually no good reason why this company is essential for Germany. It is not.” The president of the German Institute for Economic Research (DIW) said it was worrying that there was no private investor who wanted to get involved: “That should actually be an alarm signal to everyone that this company is not actually positioned for sustainability.”

Lower Saxony’s Economics Minister Lies, however, explained that they had the choice between bankruptcy with the loss of thousands of jobs or stabilizing the shipyard. A difficult year is expected for 2025, but after that there is a “really good perspective,” said the SPD politician. “The goal is of course for an external company to join this shipyard at some point.”

Scholz sees the shipyard as an “industrial crown jewel”

Federal Minister of Economics Robert Habeck is also convinced that the shipyard has a future. “There are numerous orders, especially for the construction of ships, there is a high demand for the shipyard, which speaks for the shipyard’s future prospects,” said the Green politician.

One of the arguments in favor of the rescue is that the shipbuilding know-how should be kept in the country. Chancellor Olaf Scholz (SPD) said in Papenburg just over three weeks ago that Germany’s position as the world’s third-largest economy requires a strong maritime economy – and that Meyer Werft is an “industrial crown jewel.”

In fact, the shipyard, with its more than 200-year history, has a good reputation worldwide and its order books are well filled. Just in August, the company even recorded what it claims to be the largest order in its history: four cruise ships for the Disney Cruise Line.

Meyer Werft must close financing gap of 2.8 billion euros

Rather, the background to the crisis is that some contracts for cruise ships that were signed before the corona pandemic do not provide for adjustments to the sharp rise in energy and raw material prices since then. In addition, in shipbuilding, 80 percent of the construction price is usually only paid when the ship is delivered – so the shipyard has to finance the construction with loans. Meyer Werft, for example, has to raise almost 2.8 billion euros to finance new ship construction by the end of 2027.

Due to the high financial requirements, Left Party member of the Bundestag Victor Perli now expects that the shipyard will remain in state hands for a long time. “The federal and state governments must prepare for this scenario of creating a large state shipyard on a permanent basis,” he said.

Headquarters to be relocated from Luxembourg back to Germany

The IG Metall Küste union expressed relief at the decisions of the federal and state governments. The restructuring plan does indeed provide for the elimination of 340 jobs. However, for the time being, there will be no redundancies, said IG Metall district manager Daniel Friedrich. In the coming days, a voluntary program will be presented to the workforce, which is to take effect until March 2025.

In total, around 7,000 people work for the Meyer Group. In addition to the Papenburg location, it has shipyards in Rostock and Turku, Finland.

In future, the company will be structurally managed as a group with a supervisory board and a group works council. During the negotiations on aid, the state of Lower Saxony also insisted that the company headquarters be moved back from Luxembourg to Germany.

Lower Saxony: State aid does not require EU approval

In principle, state aid must be registered with the EU Commission before a country can provide financial support to its companies. There is no deadline by which the Commission must decide whether aid is permissible. To save Meyer Werft, the Commission announced that it was holding constructive discussions with the German authorities. According to information from Lower Saxony, the state aid in this case is designed in such a way that it is not legally dependent on the approval of the EU. The EU was nevertheless informed voluntarily about the project.