Peter Lürssen, CEO and Managing Partner of Lürssen, took the stage during the 2022 Gulf Superyacht Summit, with Merijn de Waard, founder and director of SuperYacht Times, to deliver the keynote interview of the event.
Following the theme of the Summit, the conversation began with a discussion on the Gulf as a growing superyacht destination, more particularly, a winter superyacht destination. Peter Lürssen then went into great detail about the current and future operations at Lürssen, with a strong focus on how the shipyard is championing sustainability. 
I’ve been coming to the region for around four decades now, and during those early days, we were building navy ships for Abu Dhabi. It was a great experience. One of my first jobs with Lürssen, around 1988/1998 was working with our team building defence ships for the UAE.
How important is the Gulf region for Lürssen?
It has shifted; we still do some defence work, but the UAE has been especially good for us as clients. As you know, we’ve built some very prominent yachts, such as Azzam, and we have more under construction. It's a very important region because it has a good demand for large, fast yachts.
It has definitely changed over the years, and this current boom is the result of a number of reasons. But, critically, this region is attractive because it offers a lot of interesting destinations, not only the UAE but Oman, Saudi Arabia and the whole coastline of the Red Sea are beautiful cruising grounds. At the same time, places like the UAE offer a lot of attractions on shore.
The whole region offers a fantastic package: beautiful waters, great diving, stunning museums and outstanding restaurants. It’s got theme parks and anything you could want – and this is what will attract, and has attracted yachts to come here.
The type of yachts that we build requires a lot of infrastructures. For the more traditional yacht builders, it doesn’t matter so much where they build from. For Lürssen, however, we are reliant on a huge number of subcontractors – and we would then have to bring not only the shipyard but also our large network of suppliers. And that is always something that has put an early stop to the ideas of moving up production to the other parts of Germany. With regards to maintenance, it's something that we always look at. But it would only make sense for us as part of a wider network.
Has Lürssen seen an increased interest in fuel cell technology since it announced its first project last year?
There has been a growing interest – but the biggest problem is knowing exactly how reliable these systems are. A lot of the projects and pilot projects I’ve worked on have seen great interest, but there has also been hesitation. I have had a lot of conversations with clients who want to go that way, after they’ve seen the first yacht with the new system in the water.
The real jump in interest will come once people have seen the first yacht with a sustainable system with practical use. We have this fantastic owner who listened to the presentation and is very interested in technology. He proposed that if we can meet the conditions, he’ll share the costs. For a shipyard, this is great, as you have the first installation with an owner partially paying the costs. But like I said, once we see yachts in the water performing, that’s when we’ll see a jumpstart for a lot of this development.
Nobody knows which direction the technology will move; we talk about hydrogen and methanol. But the EU talks about ammonia, which has other problems, and then there’s nuclear, which we can’t exclude at this point in time. It looks as though for the midterm future, methanol will make the race to practical use. A good indicator is the commercial shipping industry; Maersk has just ordered 19 very large container ships based on methanol combustion engines. And it signed a deal in the regions of €10 billion with Spain to produce methodology. Maersk has also signed a similar deal with Egypt.
A combination of a methanol combustion engine and the methanol fuel cell caters for different profiles. If you're able to get green methanol, it's the most likely route if we’re to achieve zero emissions by the end of the decade.
When can we expect to see a zero carbon emission superyacht?
My estimate is by the end of the decade, but things always take longer than we think. We have a delivery for a methanol-powered superyacht at the end of 2024, beginning of 2025. If a client then says they want to go zero emissions based on this technology, then we’re nearly at the end of the decade, purely by delivery. A realistic goal, then, is the end of decade, which is when we should see a sizeable yacht with zero emissions. 
As was highlighted earlier on at the Summit, yachts never have enough space and a methanol propulsion system takes up more space than a traditional system. For bigger yachts, the cost factor to get zero emissions, or very reduced emissions, is possibly, in relative terms less painful. The question of space is a valid one; I think for very small yachts the compromises a client would have to accept are relatively larger than those for a larger yacht.
Do you find that clients and their families are getting more involved in green solutions for their yachts?
Green solutions are demanded from a number of parties: firstly, there are the EU regulations and the bank. If you read the ESG questionnaire from the bank, you think about closing on the shipyard because it's not made for shipyards, it's meant for other businesses.
Then you have the clients that understand that it's not only the yacht, but also the process to build a yacht. This includes their children and grandchildren who, to speak frankly, can ask some quite nasty questions. Over the past few years, the awareness of climate change and the need for a subsequent change of belief – this has spurred my children and grandchildren, as well as those from our employees and clients to ask questions. This is a permanent topic that we need to live with; and we accept the challenge. 
We have a very good order book and we’re planning to deliver, if all things go well for 2023, a 140-metre superyacht and a 90-metre superyacht. It’s been an exciting year for us, and we’ve been able to more or less refill our deliveries.
Is the supply chain still a big challenge or is it already getting better?
The supply chains are getting a bit better, but a lot of the equipment out of China is still very much delayed – and it’s getting complicated. But it is not as bad as it used to be at the peak of the pandemic.
Another issue we hear a lot is inflation, is that something Lürssen has had problems with?
Last month, I think Germany was running at around 10 percent. What helps us to offset that is the dollar has strengthened by 10 to 15 percent, which makes up a lot of the inflationary pressure. But we've seen extraordinary price increases not only in the raw materials, which are coming down now, like steel, but especially in components, systems, and such where we see more than the standard inflation as price increases.
Interestingly enough, in the year with midterm elections, the boat show in Fort Lauderdale is always quiet. But besides the midterms, I think everybody is expecting a recession. The question is, how long will the recession last? One, two or three years, your guess is as good as mine.
We will see a slowdown in inquiries, and we've seen it ourselves. We have some very qualified clients that are still optimistic they still want to move on. But the easy buy of a yacht is getting more complicated, part of this is a result of increasing interest rates. Our clients have the possibility to refinance their yachts at very, very good rates. We are seeing the results in the real estate market already, and I think we will see results in the yacht market soon as well.
Do you think a slowdown could be good so that there’s not so much pressure on the suppliers?
The industry as a whole has not really reset after the pandemic to a normal working mode, in its totality. So maybe a slowdown will help the shipyards, the suppliers and everyone get back into a more normalised rhythm and capacity.