09 Juli 2013

[090713.EN.SEA] Shipbuilders Group Says Third of China Shipyards at Risk of Closing

CHINA's 1,600 shipyards are facing a crisis which may lead to a third closing following a five-year slump in orders, said Wang Jinlian, secretary general of the China Association of National Shipbuilding Industry.

Layoffs have begun with China's biggest shipyard, Rongsheng Heavy Industries Group Holdings, culling 8,000 jobs, reports Bloomberg.

Shanghai's Rongsheng yard has reached a critical point with a net loss in first half 2013 with orders down 23 per cent in May year on year. It has slashed rates to as little as 2.5 per cent of contract value in contrast to the rate highs of 20 per cent three years ago.

It has gained an interest-free loan from shareholder Zhang Zhirong of CNY200 million (US$33 million). The shipyard plans to cut production in the short-term, said a company statement.

The boom years of employing 38,000 men are over for Rongsheng, suffering the loss of orders from Brazil and Greece, which accounted for half of its revenue stream.

It will target new ship and offshore orders worth US$2.3 billion following last year's workforce cut of 3,000.

Other yards are to diversify into oil-rig business following last year's contracts for new vessels halved to $84.7 billion compared to 2008's $174.7 billion. Rongsheng has won its first order to build a tender barge and rival Yangzijiang Shipbuilding Holdings Ltd has gained its first rig contract December 2012.

Source : HKSG, 08.07.13.

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