Lays off 90 per cent of workforce
By MARK CARDWELL
March 8, 2010
Norwegian athletes delivered a sterling performance at the Winter Olympic Games in Vancouver.
But the Norwegian owners of the Davie shipyard have made a far different showing in the east of Canada.
On Feb. 25, Davie Yards Inc. sought protection from its creditors in Quebec Superior Court. The same day it laid off 1,590 workers – or 90 per cent of the workforce – at its shipyard in Lévis, Quebec.
The company’s new chief executive officer, Gustav Nydal, said the company needed a time-out to find the financing needed to build the five ships already on its order book, three of which are under construction and slated for delivery this year and next.
“It’s a tough day for us,” said Mr. Nydal, who took over at the shipyard in January. “But it is important to note that we are not closing. We are keeping the operations going.”
He called the layoffs “temporary,” and said he was convinced the company “will be able to solve this challenge within the coming months.”
News of Davie’s most recent financial troubles sent shock waves through the Canadian shipbuilding industry.
“I was surprised and very disappointed to hear about it,” said Peter Cairns, president of the Shipbuilding Association of Canada.
According to Mr. Cairns, Davie is a key player and component in ongoing efforts between government and industry aimed at developing a strategy to replace Canada’s federal fleet.
He said Davie, which was founded in 1825 and is Canada’s biggest shipyard, is the only one of Canada’s five major yards capable of building big roll-on/roll-off vessels such joint support ships that carry everything from tanks and troops to beans and bullets for Canada’s military.
“These ships are essential for operational carrying capacity,” said Mr. Cairns, a retired admiral. “Without them you must consider whether you want a navy, a less capable navy or no navy at all.”
Davie’s owner – Oslo-based Teco Management ASA – appeared as a white knight four years ago when it made an 11th-hour deal to buy the bankrupt shipyard and save it from liquidation in a dockside auction.
After generating much optimism – notably through the signing of several shipbuilding contracts and its listing on the Toronto Stock Exchange – the company made headlines in 2008 for not paying suppliers.
After suddenly shutting the yard just days before Christmas, Davie landed $380 million in loan guarantees from Export Development Canada 14 months ago.
Those guarantees were intended to help the shipbuilder’s two current clients – Norway’s Cecon ASA, which has three high-tech supply ships for the North Sea oilfields on order, and Cypress-based Ocean Hotels PLC, which is having two cruise ships refurbished – find financing in Europe.
The company has since run help-wanted ads almost non-stop in Quebec City newspapers – right up until two weeks ago.
“No one saw this coming,” Mr. Cairns said. “Hopefully they’ll restructure their business and keep things going. We need Davie.”