Germany Explores Rescue for Genting’s Shipyards
Urgent talks are getting underway between MV Werften and its owners Genting Hong Kong with the German federal and state government for the release of additional rescue funds to maintain work at the financially troubled shipyard group. The negotiations for a rescue package valued at possibly more than $600 million are centered on maintaining the current cruise ship construction projects at the three eastern shipyards, but also include discussions of reducing the workforce by possibly a third. In separated discussions, there is talk of closing the Lloyd Werft shipyard in Bremerhaven, which is also owned by MV Werften.
Last October, the State of Mecklenburg-Vorpommern, where the shipyards are located, and the federal authorities provided an initial bridge loan from Germany’s Federal Economic Stabilization Fund (WSF) valued at $228 million intended to cover ongoing operating costs including wages and salaries of employees at the shipyard sites. The bridge loan was put in place to secure the operations for a few months while a broader economic assessment could be completed. At the beginning of 2021, the shipyard group received another $65 million to save the operation from insolvency according to the Ministry of Economics in Mecklenburg-Vorpommern.
Speaking after a meeting last Friday, the Minister said that their focus was on providing the finances necessary to maintain near-term work and employment through the construction of the two 200,000 gross ton cruise ships currently being built for Genting’s Dream Cruises. Work of the first of the Global Dream cruise ships began in September 2018, followed by her sister ship a year later.
MV Werften suspended work in the spring of 2020 later saying it would not resume work until global supply lines had been restored. According to reports in the German media, limited work resumed on the two giant cruise ships late in 2020. Work on a smaller, expedition cruise ship the Crystal Endeavour however is nearly done. The minister said they believed that this ship was 95 percent completed and would be delivered shortly, while Crystal Cruises announced they were delaying the introduction through August 2021 for the Crystal Endeavor.
"The prerequisite for the granting of federal loan is the adjustment of the number of staff to the order situation," said Peter Fetten managing director of MV Werften. The company had begun talks with the labor unions and government authorities to begin a transition program that could see as many as 1,200 of the group’s 3,000 losing their jobs. Workers have been protested the planned job cuts and fear that work at one of the group’s three locations will be eliminated.
Reacting to the expected long-term downturn in the cruise ship industry, MV Werften has also told the government officials that they expect to refocus the yard’s work to include tankers and platform vessels. Genting had acquired the three shipyards in 2016 forming the group to focus on the construction of ships for its cruise lines Crystal Cruises and Dream Cruises. The minister, however, said the plan to expand into additional ship types was a mid-term initiative while the cruise ships remained the best hope for near-term work. The Federal Ministry is expected to announce its decision shortly after reviewing the financial details and it is hoped an agreement could be reached by the end of March.
Separately, in Bremen talks have been ongoing with the Federal Ministry of Economics, the unions, and employee representatives about the fate of the Lloyd Werft shipyard. One of Germany’s oldest shipyards, the company was also acquired by Genting in 2016, but it continued to focus on cruise ship repairs and the construction of large, luxury yachts. Citing a lack of work as the cruise lines have deferred the large upgrade projects for cruise ships, talks began about the possible sale or financial rescue of this shipyard in addition to the deal for MV Werften. On Friday, Lloyd Werft informed employees that it expects to cease operations by year’s end.