The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Grand Bahama Shipyard was last said to have laid-off a further 65 workers in what sources described as a third round of cuts as Tribune Business went to press.

The company was not available for comment last night, but a well-placed source - speaking on condition of anonymity - confirmed the developments and described them as “a bit devastating” for the Shipyard as well as Grand Bahama’s economy amid the struggles with the latest COVID-19 lockdown.

“I don’t think it’s going to get any better until the cruise industry starts,” they said. “They [the Shipyard] were the ones that kept us together through the hurricane.” The latest cuts come after Tribune Business reported in May that the Shipyard had terminated 27 workers, including several long-serving managerial staff, due to a further slump in business caused by the COVID-19 pandemic.

Another round of lay-offs was said to have occurred before that, although the company was said to be doing everything it can to keep as many Bahamians employed as possible. Another well-placed source, also speaking on condition of anonymity, said of the Shipyard: “They’re doing everything they can to keep as many people employed as they possibly can, and I think they’ll continue to do that.

“The Government has been working with them to keep the ships in. I’m sure they’ll have to do more right-sizing at some point in time until they get the two new docks to come in. They lost two docks, one in the accident involving the Royal Caribbean ship, and Dorian did another one.”

A key player in Freeport’s industrial sector, the Shipyard lost its largest dry docking facility when it collapsed in summer 2019 during repairs. Its major shareholders, Carnival and Royal Caribbean, which each hold a 40 percent equity stake, had been planning to invest up to $100m in a replacement dock that was billed as the “largest” such floating facility to be built anywhere in the world over the past decade.

However, the cruise industry’s COVID-19 enforced shutdown, which has forced Carnival and Royal Caribbean to each raise billions of dollars in additional financing to help them ride out a period in which they are earning zero revenue, is likely to mean fresh investment will be placed on the backburner for a while.

That is likely to include the Shipyard’s new dry dock, which faces being added to a list of planned Bahamian investments - the Grand Lucayan and Freeport Harbour; Carnival’s Grand Port; and other private island destinations - by the cruise lines that will likely be subject to delays once the pandemic is over.

The Grand Bahama Port Authority’s (GBPA) affiliate, Port Group Ltd, owns the remaining 20 percent of the Shipyard. But, with the cruise lines’ balance sheets and financing likely to be strained for some time to come, it is likely that the Shipyard will have to find alternative means of financing a new dry dock.

Giora Israel, Carnival’s senior vice-president of global ports and destination development, told Bahamian media in February 2020 that the accident had reduced the Shipyard to just 25 percent operating capacity. He said the investment in a replacement, which had not been finalised and was in the beginning stages of discussions, would also feature infrastructure development to expand the Shipyard’s capacity.

“We are determined to make this yard again a great yard, possibly bringing it back to the number one cruise ship repair facility in the world,” Mr Israel said. “(The dry dock) will be the biggest floating dock to be built in the last decade anywhere in the world, and it’s likely to be built in China.

“We are now in a situation that is obviously not very welcome in Grand Bahama of having the world’s largest cruise ship repair facility really crippled and its production gone down dramatically.”

“We are just sweating it through until we are able to get the operation back,” Mr Israel said. “We have a lot of pressure from shareholders to support our operating expenses, obviously labour, but also our debt servicing for the loans that are outstanding at the yard. The cruise lines that are 80 percent owners of the Shipyard, Royal Caribbean and Carnival, have not yet taken out one single penny of a dividend.”

The Shipyard, though, as well as retaining strong shareholders also has a location advantage given its proximity to three of the world’s three largest cruise ports in south Florida and multiple shipping lanes.