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Cruise ship industry crisis could hit Finland's biggest shipyard

The coronavirus crisis may spur order cancellations at one of southwest Finland's biggest employers, a think-tank warns.

Rakenteilla oleva Costa Smeralda Turun telalakalla.
The Turku-built Costa Smeralda made headlines in January when 6,000 passengers were quarantined in Italy due to coronavirus suspicions.. Image: Petra Ristola / Yle

Cruise ship lines that have ordered vessels from the Turku Meyer shipyard saw their share prices drop on Monday amid growing fears over passenger ships' apparent role in the spread of the novel coronavirus. Royal Caribbean Cruises and Carnival Cruise Lines saw major sell-offs of their shares.

The Research Institute of the Finnish Economy (Etla) says this could have a knock-on effect on Finland's shipbuilding industry and its overall GDP.

The shipyard is a major player in the economy of southwestern Finland and that of the whole country, as nearly two-thirds of its suppliers are domestic. Meyer Turku and its direct subcontractors had a turnover of nearly two billion euros in 2018. Meyer has some 4,000 employees, with at least as many people employed indirectly.

Markku Lehmus, chief of forecasting at Etla, says that the possible impact on the yard depends on how long the situation drags on.

Wiser by summer

He predicts a significant drop in cruise ship bookings for at least the next six months.

"At the moment we're thinking that we'll gradually get over this epidemic in the second half of this year. In that case the number of cruise ship reservations will also begin to recover. People have short memories. So this may end up being a short-term fluctuation," Lehmus tells Yle.

Lehmus says that an alternative scenario is possible, in which the epidemic may continue or the fear of the virus may keep lurking around so that people change their behaviour in the longer term.

"There may be bankruptcies and at worst, cancellations of ship orders," he says.

"We'll be wiser next summer. I'm not too gloomy yet, but I'd point out this possible risk," adds Lehmus.

Meyer Turku: Work proceeding normally

Meyer Turku's order book looks healthy at the moment. For instance the shipyard is now completing the Mardi Gras luxury liner, due to be handed over to Carnival Cruise Lines in October.

"We have binding contracts through 2025. They will be done normally," says Meyer Turku communications chief Tapani Mylly. He declined to comment further on the business affairs of the yard's clients.

Altogether Royal Caribbean and Carnival Lines have seven cruise ships on order from Turku. Three of them are under construction, while design of a fourth has begun.

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