German Shipbuilder Meyer Werft Furloughs Staff for Six Weeks

The German shipyard Meyer Werft, which has built its reputation over the past 30 years as a leader in cruise ship construction, is placing most of its employees on an extended summer holiday as it works to manage its business in the post-COVID-19 environment. Since March, Meyer Werft has been facing the problems in the cruise industry, which many feared was placing its strong order book in jeopardy.

A spokesperson for Meyer Werft based in Papenburg, Germany confirmed that the regular summer holiday for employees in July, which typically lasted two to three weeks, is being extended to six weeks till the end of August. However, some employees, as well as partners and suppliers, will continue to work on some projects. 

Bernard Meyer had previously said that the shipyard would slow production discussing with the cruise lines rescheduling delivery dates to better manage the yard’s workflow. Overtime work and contractors were being reduced in an effort to save money. According to reports in the German media, the shipyard is now seeking to reduce costs by 1.2 billion euros ($1.4 billon) over the next five years. Many of the yard’s more than 3,000 employees have also been told that they will have to wait to receive vacation pay until later in the year, a move that is believed to be saving the yard 14 million euros ($16 million).

Previously, Meyer Werft delivered two large cruise ships and a third smaller ship each year. This spring when the coronavirus began to impact the cruise industry Meyer had P&O Cruises new ship Iona nearing completion, work underway on both Saga Cruises’ Spirit of Adventure and Royal Caribbean International’s Odyssey of the Seas. Blocks were also being staged for the next large cruise ship due for 2021. 

Since then, the Iona has undergone sea trials, a final drydocking, and inspection in Rotterdam. She is believed to be ready for delivery but recently returned to Bremerhaven, Germany. Discussions are ongoing with Carnival Corporation on the delivery date. Meyer is believed to be anxious to complete the deliver and receive the final payment for the ship. 

Saga Cruises recently announced that it was rescheduling the planned maiden voyage of the Spirit of Adventure. The 58,250 gross tons cruise ship had originally been scheduled to enter service in August but is now planned for a November launch. It is unclear if the current employee holiday might impact her revised schedule. Royal Caribbean recently canceled the planned fall launch of its cruise ship building at Meyer Werft deferring it until the spring of 2021. Meyer also has work underway assembling blocks for another large cruise ship, the AIDAcosma, which would have been delivered in the spring of 2021.

The German state and federal governments have also been discussing financial assistance to the shipbuilding industry to maintain the jobs. At the end of June, the German government assisted in arranging a nearly $200 million emergency aid package for shipbuilder MV Werften. Launched in 2016 by Genting, MV Werften is building cruise ships for Genting’s Dream Cruises as well as an expedition cruise ship and river cruise ships for Crystal Cruises. MV Werften suspended operations when the coronavirus interrupted workflow and staffing. Efforts are currently underway on a more extensive rescue package estimated at approximately $600 million for the shipyard

The uncertainty over the resumption of cruising continues to place pressure on all the shipbuilders but so far none of them has reported any cancelations from their order book.