HANJIN: BOON OR BANE?

Hanjin Heavy Industries and Construction Philippines (HHIC-Phil) filed in January a petition at the Regional Trial Court in Olongapo City to initiate voluntary rehabilitation under Republic Act 10142 which provides for rehabilitation or liquidation of the financially distressed.

Subic Bay Metropolitan Authority (SBMA) Chairman Wilma T. Eisma says Hanjin officials had revealed the company owes some $400 million in loans from Philippine banks, $900 million with lenders in South Korea.

Hanjin is the biggest foreign investor in the Subic Bay Freeport Zone, building since 2008 some 123 high-value vessels in a 300-hectare shipyard (4 hectares for training, 4 hectares for dormitory). Established in 2006, it is a subsidiary of Hanjin Heavy Industries & Construction, a multi-national conglomerate on shipbuilding, construction, and plant services.

 

Jobs.

Labor Secretary Silvestre Bello III assures displaced workers that “… We will prioritize your re-employment “ since “…You are all highly skilled workers and your expertise are in-demand here in our country,” needed in the Build Build Build infrastructure program of the Administration.

DOLE Region 3 Director Ma. Zenaida Campita showed most Hanjin workers are highly skilled construction workers and welders, age range of 25 to 40 years. Hanjin employed some 30,000 at peak operations but fired 7,000 last December and 3,000 more in the New Year. Just about 300 local workers with seven Korean supervisors would remain by March to do maintenance.

 

Relief.

Aside from re-employment, the labor department will also assist in the facilitation of the workers’ separation pay, a moratorium on their social benefits, and the processing of the refund of the employment bond which the service providers/agencies have deducted on the salaries of the workers.

Bello said he may request funds from the Office of the President to provide emergency employment similar to that given in Boracay when the island underwent rehabilitation. There is also a job caravan where up to 77 companies offer more than 22,000 jobs for welders, carpenters, pipe-fitters, steel men, scaffolders, electricians, painters, masons and laborers.

 

Overseas.

ACTS-OFW PartyList Nominee Aniceto Bertiz III prods government to help displaced Hanjin workers get new jobs in New Zealand where there is a huge demand for skilled labor. Filipino construction workers there are paid 10 times the P537 daily minimum wage in Metro Manila.

Rep. Bertiz claims they “… sent home a record P11.4 billion in cash in the first 11 months of 2018, up 81.5 percent from P6.3 billion in the same period in 2017.”

New Zealand openings may compensate the United States’ ban on temporary work visas to a fuel pipeline project in Houston, Texas.

 

Takeover.

Senate Majority Leader Juan Miguel Zubiri thinks the bankruptcy is a “golden opportunity” to be able to take control of the Hanjin facility for shipbuilding for the Navy, Coast Guard and armed forces modernization.

Defense Secretary Delfin Lorenzana agrees while Finance Secretary Carlos Dominguez is mulling how local banks can recoup investments amounting to $430 million.

Lorenzana notes Navy needs 20 ships in the next five years; Sen. Panfilo M. Lacson thinks of floating bonds of P75-billion in the 2019 natl budget to underwrite the takeover. MARINA OIC Narciso Vingson, Jr. is hesitant with a look-see position on how Hanjin cleans up its affairs.

 

Implications.

Former Navy Chief Alexander Pama believes “… this Hanjin shipyard issue is not just about business, financial and other economic issues”but whoever takes control gets “…unlimited access to one of the Philippines most strategic geographic naval and maritime asset.”

Lorenzana named a Korean automobile maker, Hyundai Motors, as among those eyeing to help HHIC. “If worse comes to worst that we have to take over then the Senate has already allocated money to takeover the facility and then the Navy plus some local shipbuilders also can come in and run the facility.”

 

Numbers.

Top 10 Shipyards in Tonnage Capacity (DWT) are HHIC-Phi,l 34%; Keppel Subic Shipyard, 29%;  Tsuneishi Heavy Industries, 11%; Keppel Batangas Shipyard, 2.03%; Mactan Shipyard, 1.78%; Subic Drydock, 1.12%; Herma Shipyard, 0.84%; PICMW, 0.30%; Gensan Shipyard, 0.20% and Frabelle Shipyard, 0.14%.

The Shipbuilders Association of Japan on a Per World Order Book Share basis places the Philippines fifth on Standing on Global Shipbuilding: China, 32.2%; South Korea, 30.2%; Japan, 28.8%; European Union, 3.0% and the Philippines, 2.9%.

On MARINA’s MC 2018-02, our 118 Shipyards are classified on capability to build and repair:

A Class, 7– 130 meters minimum length overall.

B Class, 14–129 meters maximum length overall.

C Class, 97 –80 meters maximum length overall.

The 119th shipyard is HHIC-Phil but registered by SBMA in the free port zone, under RA 7227, as a large shipyard under SBMA exclusive jurisdiction.

 

Output.

With 20,000 technical and skilled workers, two mega graving docks (up to 450,000 DWT), 600 ton  goliath cranes, has this Yearly Production Output between 2007 to 2017:

Container – 9 Panamax (65,000 DWT)

Oil Tanker – 6 Aframax (80,000-120,000 DWT)

1 VLCC (300,000 DWT)

Bulker – 21 Capsize (150,000 DWT)

LNG Carrier – 2-150,000 DWT

It also manufactured steel and offshore structures, including hatch cover, transmission tower and steel bridge with Export Revenues: 2008 – $0.52B; 2009 – $ 1.23B; 2010 – $1.45B; 2011 – $1.75B; 2012 – $1.81B; 2013 – $1.96B; 2014 – $2.23B; 2015 – $2.41B and 2016 – $2.54B.

 

Extend.

Vingson believes HHIC-Phil privileges should be extended to local builders, guided by MARINA’s 10-year Maritime Industry Development Program (MIDP). He claims Filipinos are by nature shipbuilders, wary on attracting foreigners with incentives who ship-out when the going is rough, dislocating workers, leaving outstanding loans from local and foreign lenders.

Instead, Vingson wants to develop local capacities, prominently in ports, shipping services, manpower development, maritime research, registry. Progress will then cascade to other industries and specialties.

Engr. Ramon Hernandez, MARINA Director of Shipyards Regulations Service, notes a disparity in vessel imports in the last ten years: 1,202 imported versus 720 local. On the average, locals build 500 gt. With MIDP, Hernandez projects we can average 3,000 dwt in five years.

 

ShAP.

MARINA’s MIDP is fully supported by the Shipyard Association of the Phil (ShAP), composed of 97 of the 188 shipyards in the country.

ShAP Chairman Meneleo Carlos III recognizes MARINA’s effort to collaborate with maritime stakeholders, drafting policies and formulating programs to address challenges.

In its 2nd National Convention Nov 15 to 16, 2018 in Cebu City, ShAP presented its agenda on shipbuilding, ship repair, and ship breaking industry to align with MARINA circulars regarding the registration and licensing of shipyards, including afloat ship repairs.

 

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