Meyer Group – Readjustment to New Challenges

Consequences of COVID-19 experienced during the last 24 months have led to a reassessment and readjustment of the operation to cope with new market realities. Altogether Meyer Group employs today 7000 people at the three yards and at quite a few subsidiary companies that supply various systems and services to the Group’s yards.

Tim Meyer, Managing Director of Meyer Turku Oy.

Meyer Group operates three yards: the Papenburg facility (Meyer Werft) with two covered graving docks, the Turku yard (Meyer Turku) with the 80 meter wide dock and the 1200 ton gantry crane, both locations having been used in recent years specifically for the construction of large and medium size cruise vessels, and the Neptun Werft in Rostock for the construction of river cruise vessels and parts (typically floating engine room units, FERUs) for the Group’s bigger yards.

The yard in Turku has been part of Meyer Group since the fall of 2014, i.e. almost eight years. Since 2020, Tim Meyer is the Managing Director of Meyer Turku after his brother Jan moved from Turku to take over the Managing Director role of the yard in Papenburg. This article is based primarily on an interview with Tim Meyer in April 2022 (comments below by Tim Meyer in italics).

Impact of COVID-19

The influence of COVID-19 covers two areas: the day-to-day operation of the yards and the future market.

From the winter of 2020, there have been disturbances in the operation of all three yards of the Group and subsidiary companies, however, without any work stoppage periods. This has consisted of restrictions of visits to yard sites, reduced working hours at the yards, readjustment of shifts, working from homes etc., all influencing the productivity negatively and increasing the operation costs. “Bubbles” were used effectively to minimize infection risks at all sites. At the time of the interview there are no more significant restrictions but unfortunately further disturbances cannot be ruled out in the future. As a result of COVID-19, the total number of employees has been reduced in all locations which has been an unfortunate and painful process to everyone involved.

In the Group’s primary product segment, cruise vessels, the disturbances in the market will likely continue for at least a couple of years. Before COVID-19, about 20 to 25 cruise vessels of varying sizes were contracted every year by the cruise industry. For the last two years, only three relatively small vessels have been contracted, luckily one of them to Meyer Werft with the Japanese company NYK placing an order of an appr. 50.000 GT luxury cruise vessel destined for their Asuka brand.

– It has been clear to us even from the Spring of 2020 that contracting of cruise vessels will be at lower than pre COVID-19 level for at least three more years from now. The hugely increased debt load of cruise companies certainly has a negative effect in contracting volumes, says Tim Meyer.

– The pandemic and the re-negotiation of our orderbook with stretched delivery times led to lower production volume than the plan was before the COVID-19 breakout. Since new orders of series of large cruise ships will not materialize very soon, we have to fill our production capacities with different ship types and with smaller units. Therefore more engineering hours are necessary to keep our production capacity filled. We are presently hiring engineers and architects at all of our locations.

– We have started the Meyer Transformation development program to strengthen our organization at all departments and projects, to ensure future profitability of the yards. This is a must-do since there will be overcapacities in passenger ship building in the future. Additionally, Chinese shipyards are about to enter this European centered market segment with high pressure.

COVID-19 has very seriously affected the cruise industry as a result of the restrictions established and enforced by national administrations in practically all countries. The influence of the regulatory measures by CDC (Centers of Decease Control and Prevention) in the USA has had dramatic effects to cruise business not only directly but also indirectly as other countries have followed the suit. Cruise companies have not enjoyed similar support measures as other leisure and restaurant industries in many countries, simply because cruise companies are normally tax payers in the countries of their registration. The result is a huge increase in the debt load of all cruise companies.

Cruise shipbuilding businesses have indirectly benefitted from some relaxation in cruise ship newbuilding financing of our customers guaranteed by governmental export credit/guarantee organizations. Without this piece of action there would probably have been cancellation of newbuilding contracts. Tim Meyer describes:
– In Germany we have received 14 million Euro of COVID-19 support from the State of Lower Saxony – the state (“Land”) where Papenburg is located – but only to cover the extra-cost that occurred during the very long delivery period of the MS IONA for P&O Cruises in 2020.

As result of COVID-19, the delivery times of almost all cruise vessel newbuilding have been postponed, typically by six to twelve months. This has, of course, had as such a negative effect to the bottom line of Meyer Group as also of other cruise vessel yards but its overall long term influence is positive as it facilitated Meyer Group and others to adjust their operation to the expected lower demand in coming years.

Particularly in Turku a major facility investment program of over 260 MEUR has been realized when Meyer stepped in and before COVID-19 breakout to modernize the shipyard facilities and aiming to doubling the production capacity. The investments realized will be a main cost burden to the future economics of the Group.

Worth mentioning is also the recently announced RDI program NEcOLEAP (key words in the abbreviation NEO-ECO-LEAP) which covers research needed for the development of climate-neutral cruise ships. The program will last until 2025 and its total budget is 100 MEUR of which Meyer covers 20 MEUR. A large number of Finnish companies, universities and research institutes will participate. As is normal in large publicly funded RDI programs, the industry covers 50% of the total cost with the public entities covering the remaining 50%.


The cruise specialist yards were lucky that the orderbook at the time of the breakout of COVID-19 was very large, actually larger and longer than ever in the history of the construction of modern cruise vessels. Stretching of deliveries, of course, has led to a situation where the orderbook became even longer, up to six years in many yards. This de facto gave time for yards to readjust their operation to new realities in an organized manner.

Meyer Turku shipyard.

Before COVID-19, the Meyer Group was in the process of implementing a plan to expand the capacity of the yards to cover annual deliveries as follows:

Papenburg two large and one medium size cruise vessels
Turku two large cruise vessels
Rostock floating machinery units (FERU) to all above cruise vessels and the construction of smaller vessels

After adjustment following the breakout of COVID-19, the plan covers:

Papenburg one large and one medium size cruise vessel
Turku one large cruise vessel
Rostock floating machinery units (FERU) to all above and other smaller vessels

Neptun Werft in Rostock.

The orderbook as of late March 2022 with the delivery years is as follows:

2022: Disney Wish, Arvia (P&O Cruises)
2023: Silver Nova, Carnival Jubilee,
2024: Disney II, Silversea II
2025: Disney III, NYK Asuka III

2022: Carnival Celebration
2023: Icon of the Seas
2024: Mein Schiff 7
2025: Icon II
2026: Icon III

2023: 120m Yacht hull for Abeking & Rasmussen (yard in Germany)
2024: Parts for German navy tanker for Lürssen (yard in Germany)
2025: Parts for German navy tanker for Lürssen (yard in Germany)
floating engine room units to other Group yards

Research Vessel Sonne built in Papenburg.
Neptun Werft in Rostock.

Additionally: a research vessel together with the German yard Fassmer to be delivered in 2026 by Meyer Group

As the minimum time from signing a contract to delivery of a large cruise vessel is approximately 3,5 years, new contracts need to be secured early 2023 at the latest.

Meyer Werft, Papenburg yard.

Cruise vessel market

For the future of the Meyer Group, the development of cruise vessel newbuilding market is, of course, critically important. A strong recovery of cruise business is taking place in most areas of the World during 2022. The estimates are that by July 2022, almost all cruise vessels of the world will be in revenue service, however, still perhaps with somewhat reduced occupancy.

Cruise Vessel Disney Wish, being built in Papenburg.

There remain a few problematic geographical areas because of recent geopolitical etc. developments like:

Baltic Sea cancellation of cruises and revised itineraries in the summer of 2022 because of the recent Russian invasion to Ukraine. No calls to St Petersburg, which is traditionally THE key destination in the Baltic
Black Sea no cruises in 2022 because of the same reason
China zero-tolerance COVID-19 policy delaying the restart of cruising activities considerably, no forecast yet available on the return

These three disturbances will not have a dramatic effect to global cruise volumes as ships can be easily repositioned to another area at a short notice.

Thus assuming no further negative surprises in the COVID-19 front, the recovery is well underway. What will probably delay newbuilding contracting to some extent is the huge debt load all cruise companies have accumulated as the result of an 18 + months period practically without income, for the large three cruise the increase from 30 Billion USD to 65 Billion USD. A very positive issue, however, is that all major cruise conglomerates have survived the very difficult two year period.

The economic fundamentals of the cruise business compared to onshore leisure business segments seem to remain untouched in the future: tax free status, predominantly union free status and very cost-effective labor force. These will secure the superiority of the overall attractiveness of cruising versus almost any other vacationing products.

Expanded strategy

It goes without saying that cruise vessels will be the primary product of Meyer Group also in the future. One consequence of COVID-19 is that the group has expanded its product portfolio to minimize the need of reducing the production volume. The portfolio is as follows after the revision:

Cruise vessels – size of vessels:
– We have won the world’s first cruise ship order since the pandemic started, when NYK ordered their new vessel at Meyer in 2021. This is a smaller vessel with about 50,000 GT and will be a unique ship. For the next years, we expect less series ordering and more one-off built ships, continues Tim Meyer.

– Meyer Yachts is one of many elements to diversify our product portfolio. With the brand name ONE 50, we have presented our first and completely inhouse designed yacht concept at the Monaco Yacht Show in 2021. We are aiming at yachts larger than 120-150 meters and with the ultimate green technology available. Therefore e.g. the 150 meter ONE 50 is designed to fully run on fuel cells.

Government vessels – what types of ships? To Germany and Finland only?
– We have had some government vessels ordered recently by German and Finnish authorities. These are navy tankers and a research vessel for Germany, that we are building in collaboration with other German family owned ship yards Lurssen and Fassmer. The Finnish Coast Guard and Meyer Turku also signed a letter of intent for the construction of two 120 m Offshore Patrol Vessels to be delivered to the Finnish Coast Guard.

Another new product is potentially what is called “floating solutions”, applicable to a variety of functions. Meyer released a few days ago information on the joint venture with the Turku based company Admares Oy to explore that segment. Admares has a few high profile references in that product segment.

Subsidiary companies

A long term development in the operation strategy of Meyer Group has been an increased involvement in the supplier segment by establishing and acquiring companies for specific functions to complement the operation of the yards. The coverage of these companies is today quite extensive:

Piikkiö Works Oy modular cabins
EMS PreCab modular cabins
ENG’dD Oy design and engineering services
MAC Hamburg AC systems
ND Coatings painting
Shipbuilding Completion Oy interior turnkey
RE Interior ship interior
Neptun Logistics logistics
Meyer Yachts yacht technology

Typically, these companies offer products and services exclusively to Meyer Group yards. As the RDI function of cruise ships and other sophisticated shipbuilding products has to some extent moved from yards to the supplier network over the last couple of decades, this development is a critical element to secure the position of Meyer Group in the technological superiority of the primary products of Meyer Group in the future.


In the construction of large and medium size cruise vessels, the field of competition has been quite stable for the last couple of decades. Three groups/companies have secured a great majority of all new building contracts: Chantiers de l’Atlantique in France, Fincantieri with yards in Italy and Norway (the latter for smaller ships only) and Meyer Group with yards in Germany and Finland.

Japanese yards seem to be out of that field after a few major failures and South Korean yards are obviously concentrating on other types of sophisticated products like gas carriers and units for the offshore oil and gas segment after having tried to enter the cruise ship segment about 10 years ago with no success.

Certain yards in China are looking at the cruise segment with high interest. This is clearly a consequence of the expansion of cruise operation in China, i.e. a quite rapid increase of cruises for Chinese passengers from Chinese East Coast cities specifically to Japan and South Korea. COVID-19 and specifically the zero-tolerance strategy of the country has, however, stopped that business segment completely and there does not seem to be any signs of re-opening the business in the way it is happening in North America and Europe.

There are two large cruise vessels under construction in Shanghai with the support of Carnival and Fincantieri. These vessels are intended for serving the Chinese market. The zero-tolerance of COVID-19 may potentially kill Chinese cruising for many years to come and as a consequence also slowing down the entrance of Chinese shipyards to enter the global market of cruise vessel new buildings for a long time.

– There is a pressing need for fair conditions at the global shipbuilding market – towards the so called level playing field. We are the only family owned shipyard company building large cruise ships. Our competition is state-owned or partly state-owned, which makes it even harder for us to compete. However, we are aiming to convince owners with innovative and tailor-made ship concepts, which suit their demands and business needs, describes Tim Meyer.

In the yacht segment, Meyer Group is a newcomer. The market of the construction of super large yachts has been and still is very much in the hands of German and Dutch yards. The key word there is future technology in which area there for sure is room, interest, motivation and funds for technological breakthroughs which luckily will also help the whole world towards decarbonization.

In the segment of governmental new building projects, there is potential both in Germany and Finland. Competition is much more limited than in the commercial part of business and the market will likely expand due to geopolitical challenges like the presently acute Ukranian war.

Attracting professional Labor

Availability of skilled labor has been and is a major challenge for the European shipbuilding industry in general, not only for the Meyer Group. The steadily diminishing volume of shipbuilding industry in Europe since 1980’s is a major factor in this. The European maritime suppliers have been able to maintain their dominant position in the World market albeit the globalization of their operations have meant the emphasis of moving out manufacturing from Europe to Far East. The shipbuilding industry remains to suffer from its old image of hard and dirty jobs which clearly is no longer the reality of the work place today.

– In Germany we have a long term relationship with certain educational institutes through which we have been able to secure the access to highly motivated people who are dedicated to our industry after having had a chance to experience the true operation of our industry.

The availability of skilled shipbuilding people from certain Southern European countries increased a lot after the collapse of the Soviet Union and after a few countries in the Eastern Europe with true shipbuilding skills joined the EU. The positive effects of this will, however, slowly disappear with the increasing wealth in these countries.


There is no question that the overall environmental sustainability and decarbonization are key areas for maritime RDI today and in the future all over the World. There are and will be regulations and programs at various levels to dictate the development targets. The clients of the shipyards will put pressure to shipyards and their suppliers to achieve progress even more than dictated by regulations. Furthermore, there are incentives for shipping companies to enhance their competitive position in the eyes of their customers, i.e. passengers. This is very much the case in the cruise business.

The required technological development can only be achieved through the inventive work by shipyards and their suppliers. Remains to be seen how much the results of this RDI work can be used to enhance the competitive position of a specific shipbuilding company like Meyer Group. The increased sophistication of the products will give a further competitive edge to those shipyards that have a long tradition in the area of development, design and construction of cruise vessels. This makes it ever more difficult for newcomers to enter the field.

– Decarbonization is the major topic and we are as a shipyard already working on future technologies. We have been the first with LNG in the cruise industry and will be the first with fuel cell installation, coming to MS AIDAnova this year and even larger units onboard Silver Nova in 2023. Silver Nova will be able to run completely on fuel cells when in port. Additionally, we are working on retrofit-solutions with our engineering start-up Meyer Neptun Engineering, that is also collaborating with several research institutes. It needs these collaborations and a strong network of partner companies to further streamline the product, the ship.

Changes and challenges

– No question COVID-19 has changed the business environment from quite stabile to extremely challenging. Luckily, our primary clients are nicely recovering. We have realized we need complementing market segments and we have prepared ourselves very quickly for new challenges. We have strong organizations as well as highly motivated and superbly skilled employees both in Germany and Finland. With our subsidiary companies, we complement the contribution of the supplier network. Thus many reasons to be optimistic, concludes Tim Meyer.

Text: Eero Mäkinen
Photos: Meyer Group

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