keel The submarine builder Thyssen-Krupp Marine Systems (TKMS) is hoping for new orders as a result of the German government’s planned upgrade. The shipyard wants to develop a next generation of submarines that, with their quiet drive and stealth technology, should be virtually undetectable. CEO Oliver Burkhard has already offered this to the federal government. “We have made an offer for six more submarines,” he told Handelsblatt.
A surcharge from the federal government would also send an important signal internally – because TKMS is the unloved child in the group of companies. Although the former Howaldtswerke-Deutsche Werft (HDW) is the world leader in the construction of conventional submarines, more than 20 nations rely on the Kiel-based company’s products. Thyssen-Krupp, however, was strangers to the daughter, since she produces armaments.
For years, the conglomerate tried to sell the offshoot, without success. Most recently, CEO Martina Merz had asked competitors to bid for TKMS at the start of the year. With Russia’s attack on Ukraine, the Chancellery stopped the process – TKMS should remain in German hands. At least until further notice.
With the outbreak of war, the situation changed fundamentally, not only for TKMS, but for the defense industry as a whole. Representatives of the industry and the federal government now meet weekly to discuss equipment for the German armed forces and possible supplies for the Ukrainian armed forces. The Bundeswehr has been kept short over the years and now has to buy new equipment in a hurry.
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One focus is on the navy, which is to be upgraded in the coming years at a cost of 19.3 billion euros. As part of NATO plans, Germany is responsible for securing the North and Baltic Seas. For this purpose, the federal government had already ordered two submarines before the outbreak of war. Now Burkhard would increase the contingent by those six units. These stealth submarines are said to be larger and also able to operate in the Atlantic.
Full order books, no money
Like the Germans, other countries also want to upgrade their naval forces, which is reflected in concrete figures. “The market that we can address has tripled to 30 billion euros for this decade,” says the manager. TKMS boats are specially designed for use in shallower waters such as the North and Baltic Seas or near the coast. India, Indonesia, Poland and the Netherlands, among others, are currently considering the purchase.
Demand is high and TKMS is well positioned technically. But Burkhard is not satisfied. Because society doesn’t make money. The order books are full, but the shipyard has reported losses, he says. “We need to become more efficient and prepare for a growth spurt.”
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During a tour of the shipyard opposite the center of Kiel, Burkhard presents the submarines that are moored close together here. In Hall 9 there are two colossuses standing close together, black, between 60 and 80 meters long and seven meters wide. While the workers are already busy inside one vehicle, the nose with the torpedo compartment has to be welded on to the other.
On average, it takes seven years before a submarine can be handed over, says Burkhard. Too long, he wants to shorten the process by at least a year. The shipyard boss emphasizes that with tighter processes, TKMS will become profitable. Burkhard wants to have the plans for the conversion drawn up in-house. “The employees work in teams to develop measures with which we can increase our efficiency.”
The manager wants to streamline the processes at the Thyssen-Krupp shipyard subsidiary.
(Photo: IMAGO/BildFunkMV)
The submarines are custom-made – with a lot of manual work. “Everything is a prototype that has to be error-free,” says Burkhard. Because defects in the kilometer-long cable layers or lines are an enormous risk that can lead to the loss of a boat. A technician said during the tour that an employee had to be there for five years before he was allowed to braid one of the arm-thick cable strands himself.
Norway, Israel, Egypt and Singapore are building in Kiel
Burkhard does not mention the names of the clients for the two submarines in Hall 9. These insist on confidentiality, he said. The customer list is long. It is known that in addition to Germany, Norway, Israel, Egypt and Singapore have their buildings built in Kiel.
The shipyard is fully utilized until 2034. With the conversion of TKMS, Burkhard wants to create the space to be able to accept new orders. To this end, capacity in Kiel is to be expanded and production modernized. The parent company has approved investments of 250 million euros. Among other things, the money will be used to build a new hall and develop a new, proprietary fuel cell that makes quiet diving possible.
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The Thyssen Krupp offshoot also needs more space to be able to accept new orders. To this end, TKMS acquired the insolvent MV shipyard in Wismar. The company also wants to build submarines at the site. But not only. Burkhard hopes for orders for corvettes and frigates. “We are ready to get more involved in this area.”
If Burkhard’s team manages to turn the tide, it won’t mean a new phase of rest. On the contrary: With a new line-up, the topic of separation from the Thyssen-Krupp Reich should come back to the table. A social integration with a partner company or an IPO, as it is called in industry circles, is conceivable.
From the point of view of market participants, the European marine industry needs consolidation because there are too many shipyards. Before TKMS allies itself with a competitor from Italy, France or Spain, a reorganization on the German coast is due. TKMS, however, would not be the target of a takeover, but would itself be in a strong, acquiring position, explained an industry representative.
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