Long before its dive into disaster with fish farming, Völklingen, a city on the river Saar in Saarland, south-west Germany, was famous for its steelworks. It was awarded UNESCO World Heritage Site status in 1994, as the only intact example, in all of Western Europe and North America, of an ironworks built and equipped in the 19th and 20th centuries.
In 2007, the city’s leaders came up with a daring plan to use the old steel-cooling basins for fish farming. Stocked with a huge selection of high-quality fish, they believed it would be a real money-spinner, and help turn the city from its heavy-industry past to a modern, fish-farming future.
Now, the project that had been such a source of hope for the city has gone rotten. The fish farm has lost millions, civic leaders have gone silent and bankruptcy is at the door. City mayor Wolfgang Bintz, a member of the center-right Christian Democrats and business manager of the public utility running the Meeresfischzucht Völklingen fish farm, has chosen insolvency before things get any uglier.
We intend to acquire a share of Meeresfischzucht Völklingen, and to that effect have already transferred over a seven-digit amount. Dirk van Vliet, Ocean Swiss Alpine Seafood.
The Saarland project is a perfect example of public mismanagement. It was estimated the farm would earn the city over €300,000 ($377,101) in the first year. Everyone expected to make money, instead costs outpaced revenues. Construction alone required €20 million. The farm will lose another €3 million in 2014 while losses could well be more than €5.5 million in 2015. It’s no wonder revenue figures for 2012 and 2013 haven’t been made public, despite promises of financial transparency by the Völklingen politicians. Conveniently, the company’s supervisory board was made up of members of the Völklinger city parliament with Lord Mayor Klaus Lorig in the role of top supervisor. The first business manager, Jochen Dahm, left in mid-October and since then, confusion has reigned.
Despite this, the public is still receiving mixed messages from those involved with the project. According to the Saarbrücker Zeitung newspaper, which cited several city council members, Mr. Bintz “announced to the parliamentary parties in the city council that it was done with fish farming.”
Council members were told of a new plan for filing insolvency this week and were assured not another cent would go to the struggling fish farm. Yet sources within the administration insisted the farm will continue to operate. They said insolvency is necessary to clear the books so the city can aggressively pursue outside investors.
“We can now start to do the homework that wasn’t consistently done till now,” said Stefan Neitz, spokesperson for Völklingen public utilities. He remained optimistic, arguing the farm project could ensure a sustainable supply of fish for Germany – though annual production has averaged only 20 tons per year rather than the original estimate of 500 tons.
Jürgen Barke, a senior official in Saarland's Ministry for Economics, Labor, Energy and Transport, is taking the lead. His office will supervise the municipal works in Völklingen. Mr. Barke wants to mediate between the creditors and debtors. Neomar GnbH built the facility and was to be an investor, but quickly jumped out. It was followed by Sawa GmbH, a company founded in 2012 in Chemnitz in Saxony.
Before Mr. Barke became state secretary in 2012, he was a corporate consultant focused on remedial restructuring. Speaking of the fish farm, he told Handelsblatt, “As I see it, the management was ineffective for years. The concept appears to have never really matured.”
There is one potential savior waiting in the wings – Ocean Swiss Alpine Seafood. Dirk van Vliet, its president, told Handelsblatt, “We intend to acquire a share of Meeresfischzucht Völklingen, and to that effect have already transferred a seven-digit amount. Unfortunately, the events in Völklingen have delayed the whole process, but have in no way stopped it.”
Nena Schink reports on companies and markets for Handelsblatt. To contact the author: [email protected]