Charles Wallace and Martin Murphy writing for Berlin, Germany’s Handelsblatt GLOBAL [English for global commerce newspaper] November 22 2017, report.
"German Shipbuilder Rapidly Sinking
...ThyssenKrupp’s Achilles heel is...along the wharves and dry docks in the northern city of Kiel, where the skeletons of dozens of ships and submarines under construction by [TKMS] line the shore. Despite all the evidence of feverish activity, ThyssenKrupp’s shipbuilding division is in a mess. Sources at the company told Handelsblatt that the division suffered an operational loss in the financial year 2016-2017, and that the dire situation is unlikely to change going forward. As a result, company sources told Handelsblatt that division chief financial officer Evelyn Müller will depart the firm by the end of the year.
If every dry dock in Kiel is occupied with a ship or sub[marine] under construction, how could the company be losing money? Because of technical and planning bottlenecks and delays, almost every ship is finished well behind schedule. The company actually loses money every time the Dom Perignon bottle smashes on a hull at launch. “No submarine is delivered on time,” said one source at the company.
This sloppy management convinced the Australian government to award a €34-billion contract for a fleet of new submarines to France’s DCNS shipyards in 2016, a huge blow to ThyssenKrupp’s ambitions. After that fiasco, company management promised a complete overhaul of its business – but nothing much seems to have happened.
One reason for the division’s poor performance is that it was starved [of] new investment by the group’s executives, who hoped to sell the business. But the timing was not right and “now the division is unsellable,” said one source at the company. The lack of investment means the firm is using old equipment. One source said that plans for new ships were sometimes drawn on paper rather than using computer modeling, which is quicker, cheaper and more accurate.
An example is the delays that have beset an order from Turkey for six submarines. The first sub should have been delivered in 2015, but so far none of the subs is even finished. “The order has blown through every cost and time limit,” said one executive. Because of these delays, ThyssenKrupp is contractually obliged to pay the Turkish government a penalty, now thought to be over €100 million, according to the employee. Other delayed projects also have resulted in huge penalty payments.
A bigger headache may be the shipyard’s business with Israel, the company’s largest customer. It is currently building a submarine and four corvettes for the Israeli navy."