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Fujian Crown Ocean Shipbuilding leaves workers unpaid, operations stalled

Fujian Crown Ocean Shipbuilding leaves workers unpaid, operations stalled
Cash flow problems at China’s Fujian Crown Ocean Shipbuilding have left approximately 100 of the yard workers unpaid and salary arrears have amounted to nearly RMB10m ($1.6m), local media reported.

The report uncovered that a majority of the yard workers had left since July this year, stalling operations at the shipyard.

Back in January 2012, hundreds of yard workers at Crown Ocean Shipbuilding had protested on the streets over unpaid salaries of up to three months. The repeated problem for the shipbuilder points to the ongoing slump in China’s shipbuilding industry, where yards face tight cash flow amid the oversupply of yard facilities, reduced newbuilding orders and rising costs.

Shipyard workers filed a lawsuit against the company in July this year, with the court ruling that the company needed to cough up the salaries by October, but no payments have yet been made.

Local reports mentioned that between July to September this year, the shipyard resorted to dismantling a 80,500-dwt bulker under construction to sell off the individual ship blocks as scrap metal to generate income.

The bulk carrier was being built for its parent firm Fujian Crown Sea Shipping.

While Crown Ocean Shipbuilding is now unable to continue its operations, it did not file for bankruptcy. Since July 2014, the yard leased part of its shipbuilding facilities to Mawei Shipbuilding to construct ship blocks. And in September 2015, it leased another part of its facilities to a subsidiary of China Railway Engineering to build steel structures. The rental is estimated to rack in at least RMB1m each month.

However, the income from both the sale of ship blocks and the rental was not registered into the company’s accounts, the report said.

Crown Ocean Shipbuilding used to construct dry bulk carriers of 33,000-80,300 dwt in capacity, and 60-70 metres long AHTS vessels.

TAGS: Shipyards