Friday, June 05, 2009

Keppel Cebu labor woes affect group performance

Written by VG Cabuag - Business Mirror Reporter

SHIPYARD operator Keppel Philippines Marine Inc. said its labor problem in Cebu is affecting the entire company as customers are reportedly canceling their orders for new ships to be built in the facility.

Yeo Chien Sheng Nelson, the company’s chairman, said they have temporarily stopped operations in the Cebu facility, forcing the remaining workers to go on leave until such time a new ship order has been secured.

“It’s not a big order, but it is an order to keep the company going and wait for better times. The current market is terrible. The current [economic situation] also [affected] ship building. Every shipyard is hungry to win [new] projecst,” he told the BusinessMirror at the sidelines of the company’s stockholder’s meeting on Tuesday.

Nelson, however, was stopped short of blaming the labor problem as the main cause of the closure but he said it has made the situation worse in the light of the global economic downturn.

“If you are ship owner with so many yards to choose [from] and you have a one that everyday you read on the newspaper that there’s going to be an impending [labor] strike, would you want to keep the job to the yard when you have such a choice?,” Nelson said.

As of May, the company has 146 senior management officers, 118 management staff, and 558 industrial workers. Both the senior officers and industrial workers are unionized.

In April, Keppel’s subsidiary in Cebu announced redundancy of positions for 70 workers after the company decided to turn its facility from a ship repair to a ship building early in the year.

In its report, Keppel said its net income for last year increased by 78 percent to P908 million from the previous year’s income of P508.57 million.

The subsidiary, Keppel Cebu Shipyard Inc. (KCSI) repaired 69 vessels—40 local and 29 foreign—during the year, from the 77 recorded in 2007.

“The jobs secured were of lower value, thus, resulting in an 18-percent drop in revenue to P563 million. With this, KCSI’s total revenue decreased by 24 percent or about P258 million,” the company said, adding that the subsidiary has shipbuilding projects, which yielded earnings of P255 million.

For the first three months of the year, however, the company reported a lower operating profit of P82.33 million from the previous year’s P87.11 million.

It posted a revenue of P590.1 million for the first quarter, 11-percent lower compared with last year. This was due mainly to lower revenue from shipbuilding and fabrication activities. Ship repair revenues

contributed 63 percent of the total sales earnings while shipbuilding and fabrication contributed 37 percent of the total sales revenues for the period.

Keppel Philippines is 95.79-percent owned by KS Investments Pte. Ltd., a company based in Singapore, and 4.21-percent owned by noncontrolling shareholders, including those held by the public.

Keppel Philippines in its earlier report said its Batangas facility will support the operations of Keppel Group in Singapore, while the Cebu shipyard will serve the international shipping industry.

Subic Shipyard, which Keppel has majority ownership, is expected to be active on ship repair and conversion works for international vessels.

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