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German trade union blames gov’t for “looming disaster” in shipbuilding industry

Berlin -The trade union’s comments were made in response to reports that industrial conglomerate ThyssenKrupp was considering divesting its Kiel-based shipbuilding business ThyssenKrupp Marine Systems (TKMS) after being passed over in a public tender to build a series of new MKS 180 frigates for the German navy.

Berlin - The trade union IG Metall Kueste attacked the federal government on Friday for being at least partially responsible for a “looming disaster” in the Germany shipbuilding industry. The trade union’s comments were made in response to reports that industrial conglomerate ThyssenKrupp was considering divesting its Kiel-based shipbuilding business ThyssenKrupp Marine Systems (TKMS) after being passed over in a public tender to build a series of new MKS 180 frigates for the German navy. IG Metall Kueste accused the ministry of defense of “risking the end of German marine shipbuilding” by deciding against TKMS. According to the newspaper Handelsblatt, TKMS’ failure to secure the government order worth 3.5 billion euros (4.12 billion U.S. dollars) has thrown the future of its 6,000 employees into doubt. Aside from a general dearth of orders currently experienced by the unit, TKMS is also likely to struggle to attract new defense sector business from other countries without the credentials of already delivering equipment to its own national navy.

The mother corporation ThyssenKrupp has consequently entered talks with competitors over the future of its wharfs responsible for building oversea vessels and may also consider selling its larger submarine division. TKMS is the world’s leading supplier of conventional submarines. In order to prevent a resulting wider decline of shipbuilding in Germany, IG Metall Kueste called on the government in Berlin to deliver on a promise made in its coalition agreement by formally declaring German naval construction as a “key technology.” This way, policymakers would be able to offer domestic wharfs special subsidies in order to keep critical know-how surrounding the construction of frigates and submarines in the country. The wharf German Naval Yards (GNY) and the Dutch Damen Group are the last two remaining competitors in the ongoing MKS 180 tender. While the Damen Group plans to build the vessels in Germany in cooperation with domestic firm Luerssen, significant naval know-how would still be transferred to the Netherlands as a consequence. By contrast, GNY intends to form a joint venture with a U.S. company. This circumstance has also been described as problematic by some German policymakers in light of deteriorating transatlantic relations. Even local rivals of TKMS have reacted to the news of its potential demise with unease. An unnamed industry executive cited by Handelsblatt warned that it would be a “fatal signal” if TKMS would have to be wound down entirely as a ThyssenKrupp division. The individual emphasized that TKMS played a key role in the shipbuilding industry as the local market leader. “No wharf would be able to fill this gap at the moment.”

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