No ship, so no money: shipbuilder Damen in the corner due to delay German frigates

The market conditions are excellent: war on the European border, conflicts worldwide, countries that greatly increase their defense favors and four major customers – the Marines of the Netherlands, Germany, Belgium and Colombia – who want to use their new warships as quickly as possible.

Nevertheless, director Roland Briene van Damen Naval from Vlissingen, the largest navy yard in the Netherlands, looks back on the most difficult two months of his long career. The reason: his employer experiences « serious operational challenges » in the construction of six German frigates, he tells his staff in a monthly catch -up session at the end of May, and that leads to financial problems.

The ‘challenges’ for the navy branch of the large Damen Shipyards come from all sides, according to a video recording of the internal ‘Town Hall’ In Vlissingen of 28 May and from conversations with various stakeholders. The German navy does not want to pay because Damen does not get crucial deadlines.

The billion -dollar project – which should be finished first – is seriously delayed, there are stubborn software problems and complex negotiations with banks, real estate parties and governments. And then the Dutch Public Prosecution Service Damen also took off court for corruptions and possible violations of the sanctions against Russia.

If you add everything together, it seems like a perfect storm. The last eight weeks were really not fun

The order book of Damen Naval may be well -filled after decades, the problems are no less, Briene tells about two hundred engineers, technicians and managers. He stands for a projection screen in a room of the monumental Damen office De Schelde in Vlissingen. Materials are expensive and scarce, staff is hard to find and, moreover, the Royal Scheldt – as the Navywerf was called before Damen who took over in 2000 – has not built frigates for twenty years. The moment the shipbuilder has to make a temp, things get stuck.

He understands their concerns and all questions, Briene tells his audience. He puts his glasses up and down, confuses the names of two colleagues. « If you add everything together, it seems like a perfect storm. I also have worries – the last eight weeks were really not fun ».

German frigates

A year ago it looked rosy for the outsider. In June of 2024, during a photo moment, Briene sits broadly at one table with Annette Lehnigk-Emden, the woman who is for the German Bundeswehr New weapons and ships must purchase. Lehnigk-Emden has just signed contracts to purchase not four but six so-called F126-fregates at Damen, with a length of 166 meters the largest warships that the Germans have ordered since the Second World War. With the mega order, Damen, with more than twelve thousand employees and three billion turnover in 2023, strengthens his position in the rapidly blossoming Western European defense industry.

For the construction of a total of six frigates in the ‘Niedersachsen-class’, the Germans will pay around 7 billion euros to Damen, main contractor of the project. Thales Nederland, which, together with the shipbuilder, supplies the list of largest Dutch defense companies, supplies the radar and weapon systems. It has been agreed that 80 percent of construction takes place on German yards, in the Northern German towns of Hamburg, Kiel and Wolgast.

Briene mentions the addition of number five and six ‘great news’ and has it noted that he is honored that the ‘German customer’ came to Damen to ‘expand and modernize the surface fleet as quickly as possible’. Extra festive is that Germany is also prepared to increase the purchase price agreed in 2020 for the first four ships by 323 million, due to the inflation sustained.

The German Minister of Defense Boris Pistorius emphasizes that the deal is « essential » for credible deterrence, « certainly when it comes to protecting our north flank. » In the Baltic Sea, Russia ways a hybrid war, with so -called shadow ships that spy and sabotage sea cables. The frigates are desperately needed, the current fleet is outdated.

Stubborn software problems

But just after the order of the two extra German ships, it appears that Damen is not in order for the design of the frigates. Although the Kiel was festively laid on the yard in Wolgast, there is no construction, reports the local newspaper Kieler Nachrichten. The yards in Kiel and Wolgast are forced to take other building assignments to keep their staff at work.

The cause of the problems lies in Vlissingen, those involved say. Damen Naval has joined forces with the construction of the six frigates with The French software supplier Dassaultthat the 3DExperience design program delivers. More than eight hundred IT people and engineers at Damen now work with the French program, which the more than two hundred computer systems and databases that the shipbuilder uses to design boats must make superfluous.

Damen has not mastered the software, say sources in the Netherlands and Germany. The company is unable to finish the right set of building plans for the F126-fregates on time, so that the German yards cannot start construction of the boats. The problems are persistent – various crisis teams and external consultants have not been able to solve the problems so far. The German press speculates in one and a half to three years of delay. Damen does not want to say anything to NRC about that.

Missed ‘milestones’

Damen gets the milestones Not and it is « completely clear » that this leads to follow -up damage. Briene says it in the room in the room in Vlissingen, but those present know exactly what he means. Germany has stipulated a payment schedule for the F126s based on milestones. Every time Damen completes part of the construction process, the Germans transfers the corresponding part of the purchase price. Damen misses a deadline, then the Germans do not pay, while the costs go through. That always concerns many millions. Briene: « Then other challenges follow on operational problems. »

The German Minister of Defense called the frigate deal with Damen « essential » for a credible deterioration

In one word: liquidity problems. To improve the financial position and to control the risks, Damen has been trying to restructure the company for two years. For example, the naval branch with the head office in Vlissingen was split off from Damen in Gorinchem in 2023 and placed in its own BV. Damen has also collected a number of buildings and ships to ABN AMRO since the end of last year for a new credit facility of 1 billion euros, according to data from the Land Registry.

The rest of the Dutch real estate, including the yards in Gorinchem and Vlissingen, have recently been sold through so-called Sale and Leaseback constructions to the investment company Reggeborgh, established in Switzerland, of the family of the deceased building magnate Dik Wessels. NRC outdated three deals between Damen and Reggeborgh, the last of March of this year, for a total of 130 million euros. By selling buildings and recruiting and renting them back, Damen immediately releases money, but on the other hand the company now has to pay rent or leasehold annually.

In his speech to the staff, Briene gives other explanation to the shift with real estate. In the press it was read that Damen did this because of financial problems, he says. « That is not true. We did this to improve our financial position. That was necessary for the refinancing that we ended last year. »

Mind

The question is whether the IT problems are limited to the delayed German order. In 2023, the Belgian and Dutch Navy together ordered four ‘ASW frigates’ from Damen, which from 2029 should be used, among other things, to detect and combat hostile submarines. These frigates are also designed with the Dassault software package. A Damen spokesperson does not want to say anything about possible delays. Briene, against his staff during the Town Hall-Meeting: « The Dutch and the Germans both need their ships, keep that in mind with everything you do. »

The chagrin in Germany about the delay is great, all the more so since German yards went to the order for the construction of the F126-fregates for the Bundeswehr during the European tender in 2020. German Naval Yards in Kiel, which, together with the shipbuilding branch of the German Thyssenkrupp, lost to Damen and threatened with legal steps because the award would not have expired. Now Germany may have to wait a long time for the new frigates, contrary to NATO ambitions. « It shows once again that the Dutch could not be better than we, » grumbled Ingo Gädechens, until recently CDU-Bondsdag member and defense expert in the German press.

Damen will also be prosecuted for bribery, forgery and money laundering, the Public Prosecution Service announced in May

And then there are the problems with the Dutch Public Prosecution Service, which announced in May that Damen and a number of (former) board members will continue. The OM suspects Damen Shipyards in Gorinchem and Damen Naval in Vlissingen of bribery, forgery and money laundering in the sale of ships in Africa, Asia and South America, and the violation of the Sanction Act after the outbreak between Russia and Ukraine. A possible conviction can have major financial consequences. There is a chance that Damen will be excluded from European tenders for four years.

A spokesperson for Damen Naval does not want to say anything about the German frigates, « from a contractual point of view and safety and rubrication reasons »- or the duty of confidentiality. He also gives no answer to questions about the extent of financial need, the software problems, the Dutch frigates and the sale of the real estate to an investment company. A spokesperson for the German military purchasing organization BaainBW informs NRC that Damen « has reported a delay in delivering the first ship » and that the Dutch « together with their subcontractors are currently working on a revised and reliable planning of the entire project ».

‘Consultants who help us’

Briene holds the courage in the catch -up session with the staff. He will receive a ‘large group’ people from the German customer in the very short term, who will take ‘consultants who will help us’. He says he sees « something of progress » in the various headache files and shows an understanding of the « impact » that the dormant crisis has on staff. Keep talking, is his motto. « Don’t make it your own story, but come to me or my colleagues if you have any questions. »

After all the acid, the Damen Naval director wants to share something positive at the end of his speech. He will participate in the Alpe d’HuZes with cycling colleagues, to contribute to the fight against cancer. That is why he will leave the beer and the bitterballen on the monthly drink. « Shall we close? » He finally asks. The Scheldtwerf has been in existence for 150 years, in June there will be a party with dance acts « from my youth »-2 Brothers on the 4th Floor and an ABBA cover band. « Have you registered? »

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