Watery grave?

Before the eastern German shipyards in Rostock-Warnemuende and Wismar had to file for insolvency in June 2009, they were among the strongest yards in the country. But then, the global financial crisis took its toll.

"Financial institutions have behaved a bit differently since the crisis," said shipbuilder Gunnar Flemming. "The banks do have money; after all they received it from the government. But they won't spend it properly, they won't give us the necessary credits."

Flemming was one of several thousand workers who demonstrated earlier this week in front of the regional parliament in Schwerin in an effort to protect their jobs.

Since their founding in 1946, the shipyards in Rostock and Wismar were always among the biggest employers in what is now the state of Mecklenburg-Western Pomerania.

After Germany's reunification, the shipyards saw a number of new owners coming and going, among them investors from western Germany, Norway and more recently Russia. All of them had promised a bright future for the shipbuilding sector on the Baltic coast, but failed to live up to expectations.

Russia to the rescue?

When the global recession set in, the shipyards stopped receiving any fresh orders which led to their bankruptcy last year. In August 2009, Russian investor Vitaly Yusufov bought the Rostock and Wismar facilities for some 40 million euros ($55 million) and renamed them Nordic Yards.

Yusufov promised to secure contracts predominantly from Russian companies which he said were in need of modernizing their fleets. And he promised to save about 1,200 jobs in the long run, with the bulk of the former shipbuilders already transferred to a state-financed interim company offering qualification schemes.

Now the waiting game may soon be over for many workers after the Russian owner secured an order for a large icebreaker-cum-cargo vessel from the Russian company Norilsk Nickel to be built at the Wismar shipyard.

Construction work is set to start in July, but the pre-financing of the order couldn't be agreed upon during a meeting on Tuesday between Vitaly Yusufov, government representatives from Mecklenburg-Western Pomerania and bankers.

"When you see what was done to save incapable banks and what was done to save the automobile industry in Germany, and when you see what is not being done to save the shipbuilding industry, you'll realize that we've got a big problem here," said Steffen Bockhahn, a parliamentarian for the Left Party in Rostock.

Distant ships, distant hopes

Professor Gerald Braun from the Rostock Institute for Entrepreneurship and Regional Development says he feels for the angry shipbuilders in eastern Germany, but believes they are pursuing a lost cause. He points to the hundreds of thousands of jobs that have been axed in the shipbuilding sector across Europe since the late 1970s.

To ensure survival, Wismar and Rostock would have to find a niche to cater for the high-end and renewable energy off-shore markets, according to Professor Braun. However, he feels that it might already be too late to enact the necessary changes and that Germany is falling behind competitors in Taiwan, South Korea, China and India.

But Nordic Yards owner Vitaly Yusufov remains confident that better times are ahead. He is optimistic that the one order he has secured so far is only the beginning.

Whether or not his optimism is well-founded will be revealed on March 24, when a final decision is due to be reached on the pre-financing of the ordered tanker. If the banks are unable or unwilling to lend sufficient credit, the shipbuilding industry in eastern Germany is likely to sink for the last time.

Author: Hardy Graupner
Editor: Rob Turner