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will there soon be a consolodation and conglomeration of German shipbuilders?

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  • will there soon be a consolodation and conglomeration of German shipbuilders?

    Berlin is reportedly brokering a deal to consolidate German naval shipbuilders

    by Sebastian Sprenger
    17 April 2020
    Defense News

    COLOGNE, Germany — The German government is facilitating talks between major naval shipbuilders in an effort to set up a national conglomerate rivaling industry champions like Naval Group in France and Fincantieri in Italy, according to a local media report.

    Negotiations to that effect have been ongoing behind closed doors since the beginning of 2020 between ThyssenKrupp Marine Systems, German Naval Yards Kiel, and Lürssen, broadcaster NDR reported Thursday.

    Top executives from the companies confirmed the developments on Twitter, though without elaborating on the status of the negotiations.

    News of the consolidation plan comes in the wake of German Naval Yards Kiel and TKMS losing a multibillion-dollar contract for new Germany Navy frigate-type ship, dubbed MKS 180. Dutch bidder Damen won the competition in January. The Dutch company has teamed with Lürssen for the program, vowing to do most of the construction work in Germany.

    Still, the MKS 180 award angered industry lobbying groups in Germany, who argue that the country’s good-faith effort to carry out a European Union mandate for bloc-wide competition in major public programs backfired. Other European countries tend to keep such defense-related work within their own industrial ecosystems, the argument goes.

    “The need for a German consolidation in naval shipbuilding has been repeatedly emphasized by us and our owner, Privinvest, during the past few years,” German Naval Yards Kiel CEO Jörg Herwig was quoted as saying in a statement. “Only a strong German player will be able to remain globally competitive and strengthen the German technology sector.”

    Privinvest is owned by French-Lebanese businessman Iskandar Safa.

    A request for a statement from the German Ministry for Economic Affairs and Energy was not immediately returned on Thursday.

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  • #2
    Originally posted by JRT View Post
    News of the consolidation plan comes in the wake of German Naval Yards Kiel and TKMS losing a multibillion-dollar contract for new Germany Navy frigate-type ship, dubbed MKS 180. Dutch bidder Damen won the competition in January. The Dutch company has teamed with Lürssen for the program, vowing to do most of the construction work in Germany.
    GNYK is still contesting that in court.

    Originally posted by JRT View Post
    Top executives from the companies confirmed the developments on Twitter, though without elaborating on the status of the negotiations.
    More like the CEO of GNYK (that Herwig guy) stated on Twitter, after being asked (rough translation):
    "Only a strong German player will in the future be competitive and secure and expand the German high technology sector; at the same time it is a good way to save thousands of workplaces and shipyard locations in Germany"

    Lürssen declined to comment, and apparently no one asked TKMS. Which makes this kinda sound that while there may be something ongoing, it might be mostly the idea of GNYK who is cranky about losing that contract while at the same time being the by far smallest of these three players and currently the only one of them sending their employees on furloughs due to Corona...
    Last edited by kato; 20 Apr 20,, 16:41.

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    • #3
      Originally posted by kato View Post
      More like the CEO of GNYK (that Herwig guy) stated on Twitter, after being asked (rough translation):
      "Only a strong German player will in the future be competitive and secure and expand the German high technology sector; at the same time it is a good way to save thousands of workplaces and shipyard locations in Germany"

      Lürssen declined to comment, and apparently no one asked TKMS. Which makes this kinda sound that while there may be something ongoing, it might be mostly the idea of GNYK who is cranky about losing that contract while at the same time being the by far smallest of these three players and currently the only one of them sending their employees on furloughs due to Corona...
      GNYK might be trying to stay in the game while TKMS seems to be exploring some other larger merger deals.

      -----

      Fincanteri's CEO Giuseppi Bono was interviewed for an article by Defense News published on May 04 2020, shortly after Fincantieri's FREMM won the down select for FFGX. At the tail end of the article, he was asked and answered the following question.

      Q: "Turning to Europe, there is ongoing consolidation in the German shipbuilding sector. How does that affect your plans to launch a type of European naval Airbus with French yard Naval Group?", asked Tom Kington for Defense News.

      A: "With Germany we have a consolidated and long-standing partnership related to the submarine sector. Consolidation must happen in Europe if it wants to count for something in the world, for this reason our goal must be a common defence. There are four of five major yards in the U.S. We cannot think of having more than that in Europe. We must consolidate.", answered Giuseppi Bono.


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      In the story quoted below, the plot thickens...

      Exclusive: Thyssenkrupp, Fincantieri in talks to form warship champion

      Christoph Steitz, Tom Käckenhoff, Sabine Siebold
      MAY 13, 2020
      Reuters - Deals


      FRANKFURT/DUESSELDORF/BERLIN (Reuters) - Thyssenkrupp (TKAG.DE) is exploring several strategic options for its warship unit, ranging from combining it with Italy’s Fincantieri (FCT.MI) to creating a national champion with German peers, a person familiar with the matter said.

      The talks are aimed at creating economies of scale for the division, Thyssenkrupp Marine Systems (TKMS), which builds submarines and surface ships and operates in a highly fragmented sector driven by political decisions, the source said.

      As part of the deliberations, the steel-to-car parts conglomerate is in talks with shipbuilder Fincantieri about a 50-50 joint venture to create a European champion with combined sales of 3.4 billion euros ($3.7 billion), the person said.

      Under that scenario Fincantieri, which also builds cruise ships and is majority-owned by the Italian government, would bring in its defense activities, which the source said accounted for 1.6 billion euros of sales last year.

      Thyssenkrupp declined to comment.

      Fincantieri declined to comment on concrete talks. A spokesman added: “The consolidation of the European defense industry remains desirable and the long-standing cooperation with Germany’s naval industry to build submarines represents a concrete opportunity to talk about future scenarios of consolidation”.

      Thyssenkrupp is also in early discussions to merge TKMS with smaller German rivals Luerssen and German Naval Yards (GNYK) to create a national powerhouse in a bid to keep critical defense technology in the country and safeguard jobs, the source said.

      GERMAN CHAMPION

      One option under discussion includes Luerssen buying a stake of just over 50% in GNYK in a first step, with Thyssenkrupp possibly becoming involved at a later stage, two people familiar with the matter said.

      Luerssen and GNYK late on Wednesday confirmed that they would merge their defense vessel units into a joint company to be led by family-run Luerssen to increase efficiency and improve their competitiveness.

      “We also want to actively contribute to master the challenges in the shipping sector that have been caused by the corona pandemic and to protect jobs and technology in the country over the long term,” Friedrich Luerssen of the Luerssen family said.

      Daniel Friedrich, who heads IG Metall Kueste, the powerful German union’s arm responsible for workers in coastal areas, said national consolidation was the right step to kick off consolidation.

      “The subsequent step would be a European idea. We would then have to talk about how we can make it work with global players such as Fincantieri, such as Naval (Group) in France, that not only have European sites but are present globally.”

      Thyssenkrupp might also decide to keep the division, which generated 1.8 billion euros of sales and 1 million of adjusted operating profit in the last fiscal year, and develop it further on its own, the source said.

      Thyssenkrupp late last year said it planned to invest 250 million euros at TKMS by 2023, encouraged by good order intake and adding it would hire 500 new employees by the end of this year.

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      Last edited by JRT; 14 May 20,, 23:53.
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      • #4
        Originally posted by JRT View Post
        GNYK might be trying to stay in the game while TKMS seems to be exploring some other larger merger deals.
        Germany recently declared naval surface shipbuilding a "key industry". Among other things this enacts a protectionism that limits new foreign (=non-EU) investment in industries in that field to 25% of shares. Privinvest, the owner of GNYK, is a Lebanese company. In other words, GNYK/Privinvest would soon have faced a situation where they have no possibility to expand, and where their standing itself is threatened. And that's why they sought to bring that particular field of industry into a joint-venture with a German-held company.

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