Author Topic: If CN shipbuilders take over Hanjin in Subic, will it really save PH jobs?  (Read 773 times)

adroth

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Administrator's note: Companion threads in the forum's FB extension are available here:

Main discussion


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Korea's Hanjin shipyard in Subic Bay is poised to close as its parent company reels from a multi-year glut in ship construction. Aside from the potential loss of the much touted title of "4th largest shipbuilder in the world" . . .

. . . the PH is also facing the loss of 10,000 jobs.

“However, in face of recent liquidity problem, Hanjin Philippines has laid off more than 7,000 workers last December,” Eisma said.

The firm is about to lay off another 3,000 early this year until its workforce is reduced to just about 300 local workers and as few as seven Korean supervisors by March to do facility maintenance, she added.

Enter the Chinese offer to take over what Hanjin left behind. As SBMA scrambles to look for a replacement for Hanjin, it has opened its doors to all potential takers.

Such a large Chinese presence in a major port frequented by the USN will have implications. While this will not be as significant as China's takeover of Haifa, it remains noteworthy.

The geopolitical motivations for China's move is transparent. Chinese companies, after all, are not purely capitalist ventures.

A decision to accept or reject an offer from an enemy, even in the context of a Kobayashi Maru play, will be difficult for ANY President. The impact on thousands of individuals . . . voters . . . will weigh heavily. Therefore it is critical to assess the supposed benefits of such a deal.

Questions:

Will Chinese shipbuilders REALLY employ the 10,000 workers that a Hanjin closure would displace?

It is important to remember that the more jobs done by Filipino workers will mean fewer jobs done by Chinese workers. Would a 1-to-1 replacement really be on the cards?

Will assurances be made to that effect?

Is China motivated to make this offer to skirt the effects of the US-CN trade war? What happens when that war ends, would jobs just go back to China?

Context is ALWAYS the key to anything. The answers to the questions above should factor into the ultimate question:

If the USN does a "Haifa" on Subic . . . will it be worth it?
« Last Edit: January 13, 2019, 06:48:48 AM by adroth »

adroth

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The fundamental problem with most reactions to China's offer is that people simply stop at the "No, not China!!!" sentiment, and don't even bother to focus on forming an alternative. If we are to say "no" to anything, there needs to be a VIABLE alternative. Time for thinking caps people. Need to use heads . . . not balls.


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It's also worth asking, is it feasible to buttress local shipyards, give them incentives to modernize, thus creating the demand that will allow these yards to absorb highly-skilled workers back into the work force?

Not in one large company, but across the industry and across the country.

That would address the short-term pain of the workers. But about the shipyard itself. How far up the Hanjin chain did Filipino labor REALLY get to? Do we know all the ins-and-outs of actually running a shipyard . . . from conception to launching?
« Last Edit: January 13, 2019, 06:47:22 AM by adroth »

adroth

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From former FOIC Alexander Pama's FB page

https://www.facebook.com/alexander.p.pama/posts/10215553131075968

Alexander P Pama
23 hrs

Mga kababayan, sa aking tantiya itong balita ay nakakabahala at posibleng may kaakibat na panganib sa kalau-nan. Let’s be aware that this Hanjin shipyard issue is not just about business, financial and other economic issues. This is a VERY SIGNIFICANT NATIONAL SECURITY ISSUE! The ownership of Hanjin shipyard in Subic bay will give the owners unlimited access to one of our most strategic geographic Naval and Maritime asset. Although it is a commercial shipyard, nothing can prevent the owners from making it into a de-facto Naval base and a martime facility for other security purposes! Let us all be aware and wary of the serious security and other strategic implications of this issue! I urge our patriotic business community and the government not to allow Hanjin Shipyard to fall into the wrong hands

dr demented

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Difficult to say if anyone would be interested in acquiring Hanjin's Subic shipyards, given the general worldwide downturn in shipbuilding. Ideally, it would be best for a domestic buyer to take over the yards. But a lot of the domestic shipyards are small time players who wouldn't need anything near the 10,000 workers at Subic. Not to mention that they don't have the market clout to attract the kind of orders to keep those workers busy.

Perhaps one of the foreign-owned entities that already have operations in the Philippines could be interested if they are looking to expand. However, it's hard to see that if they are struggling to get orders even in their own home facilities. Ultimately, that is the root cause of Hanjin's issues.

I could see a situation where a Chinese buyer might be interested. It could be that they are trying to do something like Austal is doing with its Cebu shipyards. A Chinese shipyard could seek to use Subic as a hub for its commercial operations (similar to Austal's business plan for Cebu). That would allow for the Chinese to have their domestic shipyards concentrate on warship construction (just as Austal has done with its Australian and American operations), given that the Chinese are still constructing PLA Navy and China Coast Guard vessels at an accelerated pace.

adroth

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DND is weighing in

Filipino firm should take over Hanjin ops: DND
By Priam Nepomuceno  January 15, 2019, 12:02 pm

http://www.pna.gov.ph/articles/1058918

MANILA -- A Filipino company's acquisition of the shipbuilding business of the debt-ridden Hanjin Heavy Industries and Construction Philippines (HHIC-Phil) will be beneficial to the ongoing modernization efforts of the Philippine Navy.

This was disclosed by Defense Secretary Delfin Lorenzana when asked Tuesday if it is possible that HHIC-Phil can be tapped for the ongoing Self-Reliance Project of the country.

"We still lack complete information about it so I will defer any comment. Anyway, our economic managers are looking into it. (It) would be good if a local company would acquire and operate it to support our Navy modernization," Lorenzana added in a message to the Philippine News Agency.

The defense chief, however, said dealing with the matter is still up to the country's economic team.

"It (is) up to them to decide but that is the ideal set up," the defense chief bared.

Lorenzana, earlier, said that the DND will monitor those who have expressed interest to invest in HHIC-Phil as it is near the Philippine Navy's major docking and anchorage area of its large naval vessels.

Hanjin revealed that it has USD1.3 billion outstanding loans -- USD400 million from Philippine banks and USD900 million from South Korean lenders.

According to Subic Bay Metropolitan Authority, HHIC-Phil filed a petition Tuesday last week at the Regional Trial Court in Olongapo City "to initiate voluntary rehabilitation under Republic Act 10142, otherwise known as "An Act Providing for the Rehabilitation or Liquidation of Financially Distressed Enterprises and Individuals".

With this, Hanjin has sought help from the government to find investors that can take over the operation of its shipyard in Subic, as well as to help its employees, who have taken the brunt of the company's financial woes.

In December 2018, the company laid off more than 7,000 workers. (PNA)

adamas

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Hopefully Propmech will take over and  have enough capital to acquire the shipyard

adroth

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Hopefully Propmech will take over and  have enough capital to acquire the shipyard

It’ll be interesting to see if the local shipping industry can come together as a consortium to leverage the facilities and share the load. That way it need not just be one company raising capital.

Challenges of such a venture have already been discussed here:

Frigate project includes provisions for local production

sbhntr

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So you basically have two groups of lien holders, one Filipino, the other Korean with a roughly 1:2 ratio. Who has jurisdiction or final say on things like what an equitable distribution of asset(s) is? can the Korean lenders take equipment out of the country or can the Philippine courts order all assets to stay in situ? Does the filing of bankruptcy protect the equipment, etc., from being liquidated or the outstanding loans from being sold to another party (like if the Korean interests are sold to a Chinese company –just an example)?
Not familiar with Philippine bankruptcy laws or to what extent they are/can be enforced in a place like subic, which I believe is a special economic zone. clarification would be appreciated…

(what I’m driving at is this: can and should the Philippine gov take legal actions to protect its interests first before taking further actions?)

El_Filibusterismo1978

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Who has jurisdiction or final say on things like what an equitable distribution of asset(s) is? -- if under receivership, its the Court who will decide with re to assets of Hanjin.

can the Korean lenders take equipment out of the country or can the Philippine courts order all assets to stay in situ? -- No, unless they file their claim with the local courts to acquire jurisdiction on them. On the same vein, Korean lenders are not allowed to take any equipment of Hanjin out of the country.

Does the filing of bankruptcy protect the equipment, etc., from being liquidated or the outstanding loans from being sold to another party (like if the Korean interests are sold to a Chinese company –just an example)? --- YES, to protect the creditors with re to their claim. Outstanding loans? if someone will invest in Hanjin, they will take the shoe of the former and pay the loan. Payments will depend upon the MOA..

Not familiar with Philippine bankruptcy laws or to what extent they are/can be enforced in a place like subic, which I believe is a special economic zone. clarification would be appreciated… -- its the Regional Trial Court of Zambales which has exclusive jurisdiction on Petition for Rehabilitation cases.. Special economic zones title has no relevance on Petition for Rehabilitation cases..

girder

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The story was on the front page of today's (17th Jan. 2019) Manila Bulletin.

The fact that this option is actually on the table is actually a heartening development with regard to shifting the policy environment of government away from the neoliberal extreme towards more pragmatic developmental policy. A few years ago this proposal would have been unthinkable to people in government.

Gov’t takeover of Hanjin eyed

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The government is mulling the takeover of the collapsed Hanjin Heavy Industries and Construction Corp. in partnership with private companies so the country’s naval forces would no longer need to acquire ships abroad.

Defense Secretary Delfin Lorenzana revealed this plan during the Senate’s plenary delibera­tion Wednesday on the Department of National Defense’s (DND) outlay in the P3.757-trillion proposed national budget for 2019.

But Finance Secretary Carlos G. Dominguez III said the proposal for the government to buy­out Hanjin shipyard is very preliminary. He said Lorenzana’s idea of a government takeover of the Hanjin shipyard in Subic Bay “was [just] mentioned briefly” in a recent meeting.

Dominguez further clarified that there was “no formal request” yet to initialize any plans to acquire the $1.2-billion shipyard owned by the Korean shipbuilder Hanjin. Asked about his initial assess­ment about Lorenzana’s proposal, Dominguez responded, “ don’t have enough information to form an opinion.”

In the wake of Hanjin’s financial woes, the Seante [sic] has convened itself into a Committee of the Whole to be able to take up its bankruptcy and directly ask Lorenzana questions.

Lorenzana said Philippine Navy (PN) flag officer-in-command Vice Admiral Robert Empedrad initially raised the idea of managing the operation of the South Korean shipbuilder after it filed for reha­bilitation due to financial losses.

“While we sympathize with Hanjin for its financial woes, we are excited with this opportunity because we see the possibility of having our own ship-building capacity in the Philippines,” Lorenzana told senators.

The DND chief said he relayed the proposal to President Duterte, who was “very receptive to the idea.”

Lorenzana said the opportunity was “perfect” since the PN is in need of more ships.

The challenge for the government, however, would be to engage private companies and local banks to invest in Hanjin, Lorenzana said.

Gov’t looking to takeover Hanjin shipbuilding operations

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Malacañang is inclined to study the proposed government takeover of debt-ridden Hanjin shipbuilding operations in the country.

After Defense Secretary Delfin Lorenzana proposed the government could take control of the Hanjin shipyard, Presidential Spokesman Salvador Panelo recognized that the shipbuilding operations could potentially generate additional revenues for the government.

“When I asked Secretary Lorenzana, parang sinabi lang ni Presidente, ‘Tingnan natin. Sa madaling sabihin, it is just a proposal, [When I asked Secretary Lorenzana, the President said, Let’s see.’ It means that it is just a proposal],” he said during a Palace press briefing.

“‘Yung kanyang sagot ay ‘tingnan natin. Ibig sabihin siguro na pag-aaralan… Let’s see how it evolves [With his ‘Let’s see’ remark, it means that we will study it…Let’s see how it evolves],” he said.

Asked if Lorenzana’s proposal was a good idea, Panelo said he was personally amenable to letting the government run the shipyard operations to generate income for the government.

“Maganda siguro kung tayo magpapatakbo nun sa akin personally [For me, it is good if we run the operations],” he said.

“Kung kaya natin patakbuhin, bakit naman hindi. ‘Di ba income ‘yun? I understand (the country is) number 4 in the world ranking in shipbuilding. Eh di magandang kita ‘yun [If we can run it, why not? That’s additional income. I understand we are the number 4 in the world ranking in shipbuilding. That’s good profit],” he said.

Lorenzana earlier told the Senate that he raised to the President the proposed government takeover of Hanjin so it could build its own ships than purchase abroad. He claimed that Duterte was receptive to the idea.

Hanjin Heavy Industries and Construction Philippines recently filed for rehabilitation amid ballooning debts from Philippine and Korean lenders. Some foreign entities are reportedly interested in taking over the local operations of Hanjin.
« Last Edit: January 17, 2019, 05:20:08 PM by girder »