A Baltic Port Hits the Jackpot as Malaysians Gamble on Shipyards

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When East Asia meets the former East Germany, the future can look pretty bright in a once-desperate town.

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Die Wende is what Germans often call the Berlin Wall’s fall 30 years ago: the Turn, or turning point. It was a change Thomas Beyer had rallied for in the waning days of the German Democratic Republic. It was also a painful shift, in some respects, for the East German port of Wismar, as the end of the state-controlled economy led to the evaporation of more than 4,000 jobs at the shipyard. A sugar factory, a furniture plant and other industries closed their gates.   

Now Wismar’s mayor, Beyer lists new businesses that have helped the 44,000-strong town in the northeast state of Mecklenburg-Vorpommern reinvent itself, such as wood stove fuel pellet and laminate makers. Tourism promotion and the refurbishment of its picturesque old city have helped too. But it’s an unlikely new partner that is finally promising to turn the tide in the city’s — and the state’s — economic fortunes: Genting Berhad, a $5 billion casino conglomerate from faraway Malaysia.

It was a big surprise that now an Asian investor is coming over and says he’s building ships here.

Nils Jörn, WISMAR’S ARCHIVIST

The company’s Hong Kong subsidiary, through its local unit MV Werften, bought the state’s three big Baltic Sea shipyards — Wismar, Stralsund and Rostock-Warnemünde — in 2016. It’s building two large cruise ships. In September, it started work on the second of those ships, aptly called Global Dream and touted by MV Werften as the largest ever cruise liner built in Germany.

Designed to carry 9,000 passengers and a crew of 2,200 in Asian waters, the 1,100-foot vessel will be assembled in Wismar from 30 sections built at the Stralsund shipyards some 78 miles to the east. The 208,000-ton ship’s keel was laid at Warnemünde. The three facilities are bustling again, employing nearly 3,000 people, including highly skilled workers, some of whom have returned east from jobs in the former West Germany, say local observers.

The investment marks a dramatic bridge between East Asia and a state in the former East Germany that was closed to the outside world during the Cold War. For an Asian firm to build ships in Europe also represents a break from recent years when advances by China and South Korea in the industry have led to shipbuilding shifting east.

“It was a big surprise,” says Wismar’s archivist, Nils Jörn, “that now an Asian investor is coming over and says he’s building ships here.”

MV Werften GmbH in Stralsund

From left: Stralsund Mayor Alexander Badrow; Colin Au, chairman at Genting Hong Kong; Jarmo Lasko, CEO of MV Werften Stralsund and business secretary of Mecklenburg-Western Pomerania; and Harry Glawe tour the shipyard in Stralsund, Germany.

Source Stefan Sauer/Getty

These seeds of optimism are very different from what followed Germany’s reunification, when as many as a quarter of Wismar’s working-age citizens were unemployed. Restless, unemployed youths got into various forms of trouble — some joining neo-Nazi groups, while many others migrated west to find work. Empty housing blocks fell into disrepair and had to be demolished, says Jörn. A key member of the Medieval Hanseatic League trading bloc that’s often hailed as an inspiration for the European Union, Wismar in the 1990s had to reinvent itself.

Its latest ally on that path is not just any company. With a bargain bid of $126 million, Genting has reportedly acquired Equanimity, the notoriously confiscated gilded 300-foot party yacht equipped with a 20-meter swimming pool and helipad. The previous owner, financier Jho Low, is accused of draining billions from Malaysia’s state development fund — some of which he allegedly sunk into the yacht. From an undisclosed location, he has denied wrongdoing.

And Genting HK’s execs include CEO Lim Kok Thay’s youngest son, Loui Lim, who, according to the glossy Singapore Tatler magazine, is trying to reshape Genting’s cruise business while Instagramming à la Crazy Rich Asians. That reportedly includes exploits like petting tigers displayed at Genting resorts and doing New Year’s in Sydney Harbor, then jetting across the International Date Line to Honolulu for a second rockin’ eve.

For the firm, the investments in Mecklenburg-Vorpommern make sense, says Christophe Tytgat, secretary general of Sea Europe, a Brussels-based shipyards and maritime industry association.

While Europe in recent years has lost “almost all” bulk and container ship business to Asia, as well as offshore platform construction, it cornered the complex shipbuilding market, which includes sophisticated mega-cruise ships, he says. By buying shipyards and building cruise liners on its own in Europe, the firm can get ships faster than if it needed to order them from European facilities. Genting Group declined to be interviewed by OZY for this story.

The other side of that coin is that European shipbuilding may suffer further as a result, Tytgat argues. European builders could risk losing their edge to Asian competitors, even in luxury shipbuilding. Tytgat says he’s hoping to convince European governments to fight back. Unions are also wary of the development, saying the new arrivals are using subcontractors to do work previously done by shipyard workers they represent. A spokesman for IG Metall, Germany’s dominant metal workers union, said in an email that subcontracted workers’ wages and working hours are “usually worse than at the shipyards.” Jörn, Wismar’s archivist, says questions linger over whether MV Werften can match western German wages.

But there’s no denying the new jobs that simply didn’t exist before. And the irony in an Asian firm enabling an economic revival in a part of eastern Germany isn’t lost on Beyer, who laughs when asked about it. “I never thought about it,” he admits. “It’s an interesting historical turn.”

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