The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Grand Bahama Shipyard yesterday said last week's termination of 67 workers was vital to its survival strategy after events over the past 15 months brought it "to the brink of closure".

The major industrial player, in a series of statements, said 164 staff - including 67 Bahamians - have now been made redundant across a series of restructuring exercises as it adjusts to the twin blows delivered by COVID-19 and the loss of 75 percent of its dry dock capacity.

The pandemic, it revealed, had caused its major source of ship repair business - the cruise lines - to "collapse" and "vanish" as the company nevertheless backed its ability to "remain operational" and continue as a key contributor to Grand Bahama's economy as a result of the turnaround plans.

"The fall-out from the COVID-19 pandemic is only part of the reason restructuring has become urgently necessary," the Shipyard said. "The loss of two of our three docks already reduced our operating capacity by 75 percent, even before business from the lucrative cruise industry suddenly dried up due to the pandemic. It was merely the straw that broke the camel’s back."

It added that the cruise lines represented "by far our most lucrative sector". The Shipyard said: "Overnight, our most valuable client base has completely dried up. It is not possible in the current economic climate to expect cash injections from shareholders, or indeed to take bank loans to keep on more staff than are required for the ongoing operations.

"We face these crippling challenges at a time of unprecedented economic uncertainty around the world and intensified competition within the industry for fewer and fewer projects with much tighter budgets.

"Nevertheless, we have continued to provide salaries - albeit at a reduced level - during the lockdown and benefits for our Bahamian workers in accordance with their union agreement, the terms of which are by far superior to the industry standard around the world. The reality, however, is that the Grand Bahama Shipyard must change – and change now – if it is going to survive."

Grand Bahama Shipyard's owners are Carnival and Royal Caribbean, the two major cruise lines, which are among the businesses hit hardest by the COVID-19 pandemic and the industry's worldwide shutdown. Both hold a 40 percent equity stake each, with the Grand Bahama Port Authority's (GBPA's) Port Group Ltd affiliate owning the remaining 20 percent.

Tribune Business exclusively revealed the latest GB Shipyard redundancies, and the factors driving them, on Friday. The company's statement yesterday said the workforce restructuring was one of three critical elements to its survival strategy.

"Unfortunately, our survival will necessitate changes to both the Bahamian and foreign workforce in order to bring down overall numbers," GB Shipyard added. "This is key to making our pricing more competitive and attracting new business. It is also a reflection of the reality that we have only one operational dock and can only take a far reduced number of projects at any one time.

"As a result, 67 of our Bahamian workers have been offered and accepted redundancy packages. This was not an adversarial process as most of our workers appreciate the situation and many welcomed the packages. We have worked closely with union officials during this process.

"All redundancy packages for Bahamians were in line with the most recent union agreement, which – though it is no longer in force – the Shipyard adhered to on the redundancies. These packages are over and above legal minimums."

The Shipyard added that its workforce will increase by "hundreds of Bahamians" as new ships return for repairs, with one source explaining that it had to realign labour costs to account for the fact that much new business will be "lower margin" than what it enjoyed with the cruise lines.;

"The reality is there's a lot of potential business," the source said, speaking on condition of anonymity, "but it's not cruise line-oriented. The cruise line business's greater profit margins allowed for more employees. The commercial vessels, which they couldn't get before, this is an opportunity for them to really shine and show what they can do for commercial ship owners.

"The margins are a lot less which is why the Shipyard needs to be more competitive. It is ideally placed for a lot of commercial ship work as well as cruise ship work. There's a lot of potential work, but to justify the reduced profit margins they have to be competitive, lean and efficient. It's a silver lining to the COVID-19 world."

The source added that GB Shipyard was in the process of sourcing two new dry docks to replace those damaged in last year's ship accident and Hurricane Dorian from China. Their construction and delivery to The Bahamas, which will cost a nine-figure sum, is thought likely to be financed by a combination of vendor and local funding.

The Shipyard, in responding to a social media voice note by Kirkland Russell, the Grand Bahama-based vice-president of the Trades Union Congress, said the workers understood "that if we can avoid going out of business, there will be opportunities for many of them at the Shipyard as the world begins to get back to normal and ships begin coming in for repair and refit jobs once again".

It added that its foreign workforce has been reduced by 86 percent compared to 2019 levels, with almost 100 laid-off and repatriated as part of the latest downsizing exercises. "There are now 82 foreign workers, down from 599 in April last year," the GB Shipyard said. "In the current restructuring exercise, 97 foreign workers were laid-off or made redundant.

"It is false to claim that foreign workers outnumber Bahamians at the Shipyard. Currently, there are nearly double the number of Bahamians as foreign workers. We will always need a mix of skilled local and foreign workers, just like any other Shipyard in the world. We have always worked to ensure that we employ the maximum number of Bahamians possible."

GB Shipyard said the lay-offs were designed to ensure its survival, and "to avoid shutting down and sacrificing the 196 permanent Bahamian jobs that remain". It added: "This number will vary on a daily basis but as we continue to operate we will see up to 150 additional Bahamians employed and up to 70 sub-contract expats where Bahamians cannot fulfill the roles or do not have the required skills.

"We remain a global leader in terms of efficiency and rapid turnaround time, and this gives us significant advantages in bidding for new refit and repair jobs, provided we can also offer a competitive cost base."

The Shipyard added that its proposal on a new industrial agreement was vital to "balance the books", as it said: "Having an efficient right-sized company that works safely and cost competitively, in continuing co-operation with the Government, is an essential element in attracting funding for new replacement docks."