A consolidation made in TKMS
TKMS is back as a “key-actor” (Schlüsselspieler) on the European naval stage, after many years of disarray, contempt and neglect from both politicians in Germany and other industry players; not only ThyssenKrupp has no intention so far to sell the shipyard, but also has decided to invest €250 million in it, a clear indication of its desire to keep the yards.
TKMS intends to lead the consolidation move in Europe, which is seen as necessary and urgent. TKMS will take the lead in Germany first, Europe being considered as a very difficult way. TKMS is now open to discussions with other German shipyards: Lürssen and German Naval Yards-Kiel (as previously recalled, TK and TKMS had in the past very high demands: in 2014, it was the price – more than €2Bn - given the near-bankruptcy of the holding; in 2020, it was not only the price but also the refuse of including the design office of TK in the surface domain).
Hello #Kiel, my new role as CEO #thyssenkrupp marine sytems starts in 4 days. Today sneak preview visit and preparing for the expected. Unexpected will soon come - I am sure. Looking forward to it together with the team. pic.twitter.com/1zEwtGaCZa— Oliver Burkhard (@oburkhard) April 27, 2022
Today, TKMS is really in a stronger position due to Mr. Rolf Wirtz’s efforts (international sales to Brazil, Egypt, Israel, Norway) than the other shipyards in Germany which have both ended their big contracts and have failed in merging (the merger announced in 2020 failed to materialize due to the absence of TKMS, without which no consolidation can seriously take place in Germany).
The role of Rheinmetall was not mentioned by Mr. Burkhard, but it would be very surprising if Rheinmetall didn’t take time to look at the new situation, given its past interest.
Lürssen and GNK-Y will face tough negotiations to reach an agreement with TKMS. Not only Mr. Burkhard is a hardliner, more political than a naval professional, at the beck and call of TK’s leadership (more value, more money, more attractiveness). The situation is thus fully reversed; in 2014 & 2020, Lürssen and GNK-Y were in a far better shape and were able to dictate their views.
A consolidation in production:
TKMS is on the ranks to buy the MV yards, to add new construction facilities (those of TKMS have been sold to GNK-Y, a move that is now seen as a “profound mistake”). TKMS anticipates a higher volume of naval orders (both submarines and surface Fleet) and needs facilities to produce. But the fact that TKMS refuses to enter into an agreement with GNK-Y on its industrial facilities shows how deep is TKMS’ resentment.
A consolidation of Germany’s industrial strategy:
TKMS intends to recall to the German Government how absurd was the decision of awarding the MKS-180 contract to the Dutch Damen shipyard, and how the so-called ‘ESG’ criteria would damage the defence industry. According to our information, the German MoD plans to award Damen a new batch of 2 F-126 with the money from the Special Fund. TKMS hopes that these both strategic mistakes will not happen again with the F-127 project.
The sole consolidation that Mr Burkhard has not evoked is the export market, which is obviously a sensitive issue.