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.