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Flensburger Schiffbau-Gesellschaft (FSG) Shipyard in Serious financial difficulty

Summary: Germany's Flensburger Schiffbau-Gesellschaft (FSG), which last month delivered Irish Ferries W.B. YEATS, is reportedly in serious financial difficulty.
The forward superstructure block is lifted on to Brittany Ferries HONFLEUR at Germany's FSG. Brittany Ferries.
The forward superstructure block is lifted on to Brittany Ferries HONFLEUR at Germany's FSG. Brittany Ferries.

Germany’s Flensburger Schiffbau-Gesellschaft (FSG) shipyard, which last month delivered Irish Ferries W.B. YEATS, is in serious financial difficulty according to German media reports.  Sub-contractors are reported to have left the site, taking their materials with them while invoices from suppliers have apparently not been paid with the company no longer able to service their existing debts.  The company’s own permanent workforce was told during a special meeting on Friday however that their salaries for January would be paid, and some work is still taking place at the yard on Tirrenia’s MARIA GRAZIA ONORATO, Brittany Ferries HONFLEUR, and an un-named Ro-Ro for which the hull is currently being assembled. In a statement, the company directly blamed problems with the construction of W.B. YEATS (new-building 771) for its current financial difficulties:

“The delays in the new 771 building caused substantial losses for FSG. The FSG has developed a plan to finance the shipyard, to which we are currently in intensive talks with the state of Schleswig-Holstein, customers and suppliers as well as the works council and IG Metall, “

(Google Translated) FSG statement

The company are currently working with their customers, suppliers, parent company, and the local state (Schleswig-Holstein) to secure the financial future of the yard. Specifically, the yard needs capital to fund the construction of the vessels on its order book and continue to pay down existing debt – in shipbuilding, the customer only pays the full purchase price once the vessel is delivered. In the case of W.B. YEATS, Irish Ferries owner Irish Continental Group could potentially have been awarded a significant discount of millions of euro on the payment for the vessel as compensation for the late delivery. FSG has had financial problems for a number of years, with losses in 2017 totalling some $7.9m despite an injection of capital from Norwegian owner SIEM. It has been reported that both SIEM and an unnamed second investor are prepared to inject further capital into the business but only if concessions are obtained from customers and suppliers first.

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Irish Ferries W.B. YEATS depart Flensburg for her delivery voyage to Ireland with the FSG shipyard in the background. Irish Ferries.
Irish Ferries W.B. YEATS departs Flensburg for her delivery voyage to Ireland with the FSG shipyard (and the hull of HONFLEUR) in the background. Irish Ferries.

“It is our goal to receive the support of all participants in as short a time as possible,” 

FSG CEO Rüdiger Fuchs (Google Translated)

FSG is currently working on a new LNG fueled Diesel-Electric Ro-Pax for Brittany Ferries named HONFLEUR, as well as two Ro-Ro vessels for their parent company SIEM.  HONFLEUR is scheduled to be delivered during May this year and to enter service in July, though even prior to the yard’s financial difficulties becoming apparent there were rumours that delivery had been pushed back to September or October.  At present, there has been no official confirmation of delayed delivery, but with many of the up to 1,800 workers normally at the FSG site having left it would seem unlikely that the new vessel will conduct sea trials in March as originally scheduled (pdf download) unless there is a very speedy resolution to the yards liquidity problems.  FSG has a healthy order book with a value in excess of €1bn.  In addition to HONFLEUR and the two Ro-Ro ferries, FSG also has confirmed orders for a second as-yet-unnamed Irish Ferries vessel for delivery in 2020 and two new fast Ro-Pax ferries for Australia’s TT-Line Pty.  Until recent years FSG have been known for building Ro-Ro freight vessels, such as SEATRUCK PRECISION and SEATRUCK PERFORMANCE, but branched into the potentially more lucrative but technically challenging passenger ferry market in an apparent bid to improve profitability. Unless millions of euros in additional finance can be found however it would seem that the future of the shipyard established in 1872 is in doubt.

UPDATE: Just as NI Ferry Site published this article, Brittany Ferries released the following statement:

“Brittany Ferries is aware of press reports regarding financial setbacks at FSG, the German shipyard where its next ship is under construction. FSG has made clear that these setbacks are a consequence of financial penalties imposed for late delivery of Irish Ferries newest ship, W.B. Yeats.

Regrettably, it is now clear that Brittany Ferries Honfleur will not be delivered in time for the 2019 summer season, as scheduled. Everyone is disappointed by this news. Brittany Ferries awaits a concrete proposal from FSG to secure the contract to deliver Honfleur. The company hopes this will come in the very near future and will communicate in more detail at that time.

Passengers who have booked travel on Honfleur from 9 July, will automatically be transferred to Brittany Ferries Normandie. The company apologises for any inconvenience and disappointment that this change will cause.”

https://brittanyferriesnewsroom.com/brittany-ferries-statement-on-fsg-honfleur-en-fr/

Sources (in German)

https://www.ndr.de/nachrichten/schleswig-holstein/Flensburger-Werft-in-finanzieller-Schieflage,fsg248.html
https://www.shz.de/lokales/flensburger-tageblatt/zukunft-ungewiss-flensburger-werft-in-finanznot-id22415032.html

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