The owner of the Turku shipyard is in big financial difficulties – “Nothing to report”, acknowledges the shipyard itself

Go down The German owner family of the shipyard, i.e. Meyer Turku, is in great financial difficulties. According to the North German broadcasting company Ndr, the shipyard company Meyer Werft would need 2.7 billion euros in funding by 2027 to secure its operations.

The aid package is now being negotiated with both the state of Lower Saxony and the federal government.

Meyers, who have been building ships for over 200 years, have a large cruise ship yard in Papenburg, Germany, in addition to Turku. It is the largest shipyard in Germany. Thursday in Germany was reportedthat Meyer Werft had reached an agreement with the trade unions on the reduction of 340 jobs from the company’s German operations, which corresponds to about ten percent of its workforce.

The political sources interviewed by Ndr believe that receiving state support is likely because the shipyard company’s business is in itself on a sustainable basis.

The industry suffered first from the collapse of the cruise industry caused by the corona epidemic and then from the drastic cost inflation in shipbuilding, which has caused the crisis.

Go down the shipyard and its subcontractors employ approximately 10,000 people in Finland and are a large source of export income. The shipyard is also associated with a large risk directly to the state coffers. Therefore, the situation at the shipyard has been closely monitored all the way up to the leadership of the Finnish government.

The Meyer family was found to be the buyer of the shipyard with the help of the government in 2013. The previous owner, the Korean company STX, ran into difficulties and the shipyard was threatened with closure.

Turku is one of Europe’s four centers of cruise ship construction. The others are located in Italy, France and Germany. About 600 million euros remain in Finland for every cruise ship worth a billion euros.

According to the Maritime Industry Association, there are approximately 1,100 companies operating in the sector, with a total of approximately 25,000 employees. Turku shipyard is definitely the most important customer of subcontractors in Finland.

Cruise ships for at least 15 years, the market has been dominated by a financing model in which the majority of the purchase price is paid only when the ship is delivered. Even after that, the assumption is that the shipyard company’s home state guarantees the client’s bank loans.

At the end of March, the balance sheet of Finnvera, which manages export credit in Finland, had more than 12 billion euros of guarantee risk related to ship orders. Most of the guarantees concern Finnvera’s CEO Juuso Heinilän including ships already delivered. Part of the risk is financing during construction of the shipyard, and part is guarantee promises for ordered but not yet built ships.

With regard to ships that have already been delivered, the guarantee risk is therefore no longer related to the shipyard, but to its customers, i.e. the world’s largest cruise lines. The Turku shipyard’s biggest customers are the US-based Carnival Cruises, Royal Caribbean, and Tui Cruises, half-owned by the latter.

Koronapandemian during the period it already seemed that these guarantees could result in big losses for Finnvera and Finnish taxpayers. In 2020, Finnvera made a loss provision of 1.1 billion euros for cruise line guarantees.

If the shipping companies had not paid the bank loans related to their ship purchases, the banks would have asked for the money from the guarantor, i.e. Finnvera.

Cruise lines teetered on the brink of bankruptcy when cruise operations stopped completely for two years. However, reserve crimes were avoided.

Since then, Finnvera’s loss provisions have largely been liquidated, and as soon as the pandemic eased, cruise operations became perhaps surprisingly popular. Shipping companies have managed to repay their loans.

Meyer Turku has not announced anything about the situation of the German sister company so far. Regarding the communication of the Turku shipyard, HS was told on Thursday that the company has nothing new to report on the matter.

Meyer Werft from Germany, on the other hand, was told that the discussions in Germany have “no effect on Turku’s operations, because the shipyards operate as separate companies”. Formally, this is the case. Meyer Group is not the parent company of Meyer Turku, but the ownership of the shipyards was arranged in 2016 to family foundations.

One foundation owns the Turku shipyard, the other owns Meyer’s operations in Germany.

The difficulties of the German company will still inevitably have an impact on Turku as well, because the shipyard operates under the same group management. Joint management affects, for example, how orders are channeled and resources are distributed. The shipyards also have the same financiers.

Meyer Group has until now been strictly a family-run company, whose most important operations have been managed by them in recent years by Bernard Meyer the eldest sons Jan and Tim Meyer. They represent the seventh generation of the shipyard family.

Father Bernard has apparently tested his sons’ abilities as a shipyard manager. Jan Meyer first pulled the Turku shipyard. Now it’s driven by Tim.

In the end, father Meyer did not choose his sons to be the CEO of the entire Meyer Group. At the end of last year, the CEO was appointed Berndt Eikenswho at least does not lack knowledge of Finland.

Eikens has worked in various positions at forest giant UPM for 25 years and in the management team since 2013. According to HS’s information, he was also strong in the selection of UPM’s new CEO, but in the end the Italian Max Reynaudo took the win.

in Finland Meyer’s arrangements and the fate of the Turku shipyard are closely monitored both at Finnvera and the Ministry of Labor and Economy. The entire shipyard industry has been tough in recent years.

On Monday HS toldthat the Finnish government had to promise the Rauma shipyard RMC EUR 50 million in support in the spring, because the shipyard’s finances could not withstand the losses resulting from the cost increase of the car ferries ordered to Australia.

In the same context, the customer paid 50 million more of the purchase price. According to the chairman of the board of RMC, the subsidy to the shipyard has not been paid in the end. The state is the largest owner of RMC through the capital investor Tes.

The result of the Turku shipyard, or Meyer Turku oy, has also been at a loss in recent years, because the costs of the shipbuilding industry have risen sharply after Russia attacked Ukraine. Ships are usually ordered at a fixed price.

“We will follow very carefully about the shipyard’s situation, because with regard to the shipyard, we have a risk in the financing of the advance payments for the ships under construction and in the financing during the construction of the shipyard,” says Finnveran’s Heinilä.

According to Heinilä, we are also in close contact with the Ministry of Labor and Economy, because the maritime industry is such an important industry and the Turku shipyard is an irreplaceable engine in it.

In the current orders, the shipyard still has work for about two years to come. Heinilä says he is confident that the work will not end there. What is trust based on?

“Yes, I believe that the shipyard will receive new orders. Icon handed over to the customer in November [of the Seas] ykkönen is, on a world scale, the finest and most valuable ship that has been built, and it has been an excellent investment from the shipping company’s point of view,” he says.

If the customer is satisfied, it can be assumed that more purchases will be made. The ship of the next Icon series will be completed at the shipyard in a year.

Germany’s According to NDR, in mid-July, the Federal Ministry of Finance expects Meyer to provide a detailed report on the company’s financial situation.

According to NRD’s information, the ministry has already considered different ways to help the shipyard company in its beginnings. The help could be loan guarantees or a direct loan from the state’s special financing company KFW, which has become known for, among other things, rescuing and practically taking over the airline Lufthansa and Fortum’s subsidiary Uniper.