Lürssen to Lead Naval Shipbuilding JV With German Naval Yards Kiel

After extended negotiations between the German government and leading German naval shipbuilders, two yards - Lürssen and German Naval Yards Kiel (GNYK) - have agreed to consolidate their military and naval surface shipbuilding activity in a joint venture partnership. 

Lürssen will be building Germany's future MKS 180 frigate class under a contract held by Dutch shipbuilder Damen. The MKS 180 procurement project is controversial in Germany: it is the first German naval shipbuilding contract awarded to a non-German company in recent memory. GNYK immediately filed an official complaint with German defense procurement agency BAAINBw to contest the decision, then appealed to the Federal Public Procurement Chamber in Bonn for further relief, raising the prospect of extended litigation.

Last month, German radio network NDR reported that the government had convened talks between the contract's domestic competitors - Thyssenkrupp Marine Systems, GNYK and Lürssen - in order to broker a consolidation plan. Italy and France each have a single "national champion' dominating naval shipbuilding - Fincantieri and Naval Group, respectively - but in Germany the segment is fragmented, and the talks were aimed at building partnerships that will help German naval shipbuilders compete in a global market. 

The tie-up between German Naval Yards Kiel and Lürssen represents one initial outcome of these talks, and it resolves GNYK's dispute regarding the contract award to Damen. On Friday, GNYK formally withdrew its protest.

“The consolidation in Germany is long overdue. Germany has first-class naval yards and excellent technologies. However, our customers require partners with sufficient scale and capabilities to fulfil large-scale orders of strategic importance. Our customers can be better served if domestic players join forces," said Iskandar Safa, CEO of Privinvest Holding, the Abu Dhabi-based parent company of GNYK. 

Damen also signaled its approval. “We are pleased with the consolidation of the German shipping industry under the leadership of the Bremer Lürssen Group,” Damen said in a statement. “As Damen, we see this consolidation as a positive development.”

Thyssenkrupp Marine Systems has not joined the JV, and it is in separate talks with Fincantieri, according to Fincantieri general manager Alberto Maestrini. The discussion is limited to strategic options for TKMS' submarine unit, not its surface warship unit, Reuters reports.