Cruise Shipbuilder Meyer Turku Announces Layoffs

Due to the COVID-19 headwinds facing the cruise industry, cruise shipbuilder Meyer Turku announced Tuesday that it is in negotiations with workers' representatives over the terms for 450 permanent layoffs and other changes affecting 900 additional workers. The other changes include temporary layoffs of varying length, work time adjustments and other arrangements. All personnel groups and seniority levels are affected by the negotiations.

“The corona pandemic has changed the situation unexpectedly and totally. We are facing the fact that the corona-caused pause in cruising requires to stretch the order book. We are currently discussing the details with our customers. This new situation will force us to take painful adaptation measures to secure a sustainable future for Finnish cruise ship building and the network," said Meyer Turku CEO Jan Meyer in a statement. "Instead of a [planned] ramp-up from one to two large ships delivered per year until 2023, the estimation is now that Turku shipyard will in the future build one large cruise ship per year and not further ramp-up.”

The exact changes to the building and delivery times for the seven ships in Meyer Turku order book are still under negotiations with the shipyard’s customers. Before the shutdown and this renegotiation process, the yard's backlog would have lasted until 2025.

With virtually all cruise ships idled or conducting non-revenue voyages (e.g. repositioning for layup or crew repatriation), the cruise industry is under extreme financial pressure. Each new large ship can cost as much as $1 billion, and with an uncertain market future, cruise operators have a strong fiscal incentive to revisit orders that were made when business was booming. 

Meyer Turku is Finland's largest shipyard, and analysts have warned that the cruise downturn could have an effect on the Finnish economy. "There may be [cruise line] bankruptcies and at worst, cancellations of ship orders," cautioned Markku Lehmus, chief of forecasting at the Research Institute of the Finnish Economy, speaking to YLE. "We'll be wiser next summer. I'm not too gloomy yet, but I'd point out this possible risk."

Meyer Turku also released its (pre-coronavirus) 2019 financial results on Tuesday. The company booked a loss of about $120 million, driven primarily by delays and challenges on the complex Costa Smeralda project.