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.

Keppel Cebu rationalizing work force to focus on shipbuilding; workers holed up in shipyard

CEBU CITY — Keppel Cebu Shipyard, Inc. is streamlining its work force as part of its new thrust to focus on shipbuilding and divert all ship repair activities to its shipyards in Batangas and Subic, Zambales.

The job rotation scheme, which started this week, and the voluntary reduction program offered to workers are expected to cut the Cebu shipyard’s 414-strong work force by 70%, union President Roger Igot said.

To protect their jobs, Mr. Igot and other members of the Nagkahiusang Mamumuo sa Baradero at Keppel Cebu have been holed up inside the shipyard in Mactan since Tuesday night.

More union members who reported for work yesterday were also expected to stay inside the compound even after their three-day shift ends.

Under the job rotation scheme, workers were divided and given three-day shifts.

"The management had told us that if we don’t resign voluntarily, our positions will be declared redundant. Any day now, we expect that announcement so we’re not going to leave the shipyard to protect our jobs," Mr. Igot said.

Most of the union’s 279 members were expected to join the group and will stay inside the shipyard, he added.

In a statement, Keppel Cebu said it was rationalizing its work force in preparation for shipbuilding, a thrust announced in the middle of last year because of declining domestic repair demand.

The Keppel Cebu shipyard is being upgraded to prepare it for shipbuilding.

"As certain specialized trades and skills in ship repair are no longer needed for shipbuilding, the company intends to rationalize its work force," the company said.

"Discussions were held with its workers’ union to offer a comprehensive separation package for the affected employees," it added.

Displaced workers will be given the opportunity to join other shipyards under Keppel Philippines Marine, Inc. or Keppel Offshore & Marine.

The workers, however, have not bought the management’s explanation about declining demand for ship repair.

Mr. Igot said there had been ship repair jobs diverted to the Batangas shipyard in January.

Presently, only one ship is drydocked at the Mactan shipyard, which normally can accommodate up to five vessels.

The workers also do not believe that the company is bleeding financially due to the global economic crisis. Mr. Igot said the management had announced the release of their profit-sharing bonuses, an average of P31,000 per employee, on Friday. Their incentive bonuses were also released just recently.

"We have never run out of jobs at the yard. Last year, there was always a ship to work on. We don’t believe there are redundant jobs here," Mr. Igot added.

He accused the management of union busting and of trying to replace regular workers with contractual workers who are paid less.

Regular employees are paid an average of P1,100 daily, including benefits, while contractual workers receive only the daily minimum wage of P250, or less, he added. — Marites S. Villamor - Business World

400 shipyard workers' jobs on the line

Ship repair firm plans to cut jobs

By Cris Evert Lato - Cebu Daily News
About 400 workers of a ship repair company in Lapu-Lapu City are in danger of losing their jobs as the management decides to focus resources on shipbuilding.

Keppel Cebu Shipyard Inc. president David Loh said in a memorandum to the workers that the company has to reduce its workforce due to continuing market decline.

The company offered an early retirement program for the workers on a voluntary basis. The program could be availed from March 2 to March 14.

But Roger Igot, president of the Nagkahiusang Mamumuo sa Baradero (Keppel Shipyard)-Nation Federation of Labor, said yesterday that the company is “using the global crisis as an alibi to destroy the union and replace regular jobs with contractual workers.”

“The real issue is that management wants to squeeze more profit by making labor costs cheaper. Management pays a regular Keppel worker much higher wages and benefits compared to a contractual laborer who makes do with below minimum wages and no benefits,” said Igot.

Igot and about 280 union members stayed inside the shipyard facilities overnight last Tuesday to protest the firm’s work reduction plans.

In a statement sent to , Keppel Cebu said the company's decision to focus on shipbuilding was reached in mid-2008 due to declining domestic repair demand.

Keppel Cebu said substantial investments were made to enhance its shipbuilding facilities. Facility upgrade is expected to be completed within the year which will enable the company “to build specialized ships for both the local and international markets.”

“As certain specialized trades and skills in ship repair are no longer needed for shipbuilding, the compnay needs to rationalize its workforce,” said Keppel Cebu in the statement.

Igot however said the shipyard management told them during their collective bargaining agreement (CBA) negotiations in June 2008 that more workers will be hired as Keppel turns to shipbuilding.

Igot said they do not believe that the company is losing.

He cited the ongoing shipyard development project worth P300 million and the incentive bonus released last February as proof that the company is still earning.

Jennifer Macairan, corporate affairs manager of Keppel Cebu Shipyard Inc., denied accusations that the company is using the crisis as an excuse to remove workers.

Macairan said that the firm has been affected with the global economic crisis.

She said that the company is practicing job rotation and energy conservation as cost cutting measures.

She said the early retirement program offered by the company was triggered by the financial crisis.

Keppel Cebu, formerly the Cebu Shipyard, is a wholly-owned subsidiary of Keppel Philippines Marine Inc. (KPMI). It is also a member of the Keppel Group of Singapore, an international marine and offshore services. /With correspondent Jully Venus Cuizon.