Wednesday, March 18, 2009
German Shipbuilders Face Cancellations of $1.2 Billion in 2009
Wednesday, 18 March 2009
German shipbuilders face order cancellations worth as much as 936 million euros ($1.2 billion) this year as the industry reels from overcapacity, the Economy Ministry said. Wharves in ports from Emden on Germany’s western border with the Netherlands to Rostock in the east may report as many as 29 cancellations in 2009, equal to last year’s tally, Deputy Economy Minister Dagmar Woehrl told reporters in Berlin today. Dropped orders in Germany, the world’s third-largest shipbuilder after South Korea and China, cost shipbuilders 730 million euros in 2008, Woehrl said.
The cancellations come on top of “acute liquidity problems” for shipbuilders, said Woehrl. The industry at the end of 2008 still had orders for 172 ships on its books while loans, especially finance for final-phase container-ship building, was drying up, she said.
Plummeting orders for ships as well as curbed lending by ship financiers HSH Nordbank AG and Commerzbank AG have already prompted closures in the luxury yacht segment and risk spreading to other parts of the industry in spite of government aid. As a measure of the industry’s woes, some companies are having to seek 100 percent guarantees for loans, Woehrl said.
Economic stimulus programs launched by Chancellor Angela Merkel’s government since November have enabled companies from carmakers to shipbuilders to tap guarantees for up to 90 percent of finance. Even so, “lack of cover for the last 10 percent of finance seems to be a hurdle to gaining loans,” Woehrl said.
Merkel’s government has put up 40 billion euros in KfW development bank loans since the end of last year to help industries. Merkel has also boosted Hermes credit guarantees for export orders, Woehrl said.
Source: Bloomberg
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