Saturday, 16 May 2020

German shipyard shuffle clears path for MKS-180 warship program to proceed


German shipyard shuffle clears path for MKS-180 warship program to proceed

By: Sebastian Sprenger    

COLOGNE, Germany – An agreement by two German shipyards to merge has dislodged a major legal roadblock in the multibillion-dollar program to build the navy's MKS-180 large frigate-type warships.

The defense ministry's confirmation on Friday that German Naval Yards Kiel had dropped its protest against Dutch shipbuilder Damen, announced as the winner of the contract in January, was the final building block in a turbulent week for the naval industry here.

Days prior, the German shipbuilder said it would merge with Bremen-based Lürssen, giving the latter company the lead in building surface combatants together. Lürssen, for its part, is already part of the MKS-180 team as a subcontractor to Damen, and the Dutch have said they would lean heavily on their German partner in building four initial vessels under the program.

Earlier this year, GNY had lamented an unfair evaluation of its MKS-180 bid by the defense ministry, announcing it was prepared for a potentially lengthy legal battle. But just as litigious as the company sounded in its public proclamations, industry insiders said there appeared to be a willingness early on by all companies to come to an agreement outside of duking it out in court.

Damen, meanwhile, is expected to re-think the distribution of its MKS-180 workshare plan now that the former competitor is also onboard, albeit only by extension. Considerations to that effect would be a “logical next step,” one company official said.

“We are pleased with the consolidation of the German shipping industry under the leadership of the Bremer Lürssen Group,” reads a Damen statement. “We look forward to intensive cooperation in the future. As Damen, we see this consolidation as a positive development.”

The company also believes the merger would “increase the chance of equal cooperation between Northern European countries in the field of naval construction – a development that we can only applaud in an otherwise unevenly distributed European playing field.”

That leaves the question of what will happen with ThyssenKrupp Marine Systems, another losing bidder in the MKS-180 race. The company was previously reported to be part of the German consolidation talks, leading to reports that a single national shipbuilding “champion” was in the works.

For now, however, TKMS is still weighing its options, as Reuters reported this week. In one scenario, the shipbuilder could merge with Italy's Fincantieri, with talks already going on that effect, according to the news service. It is also possible that the company could eventually join the the other two German yards at a later time.

Whatever happens next, it appears that a broader move toward naval-industry consolidation here may be gaining steam in the wake of the Lürssen-GNY deal, according to experts.

“The cards are reshuffled,” said Sebastian Bruns, a naval analyst with the University of Kiel in northern Germany. “The consolidation is a significant step forward – and potentially not the final evolution in the Central European warship sector yet.”

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