Vinashin works way out of trouble

Troubled state-owned shipbuilder Vinashin is rushing to resume production plans to cover its huge debts.

Since early November, Nam Trieu Shipbuilding Industry Corporation, a wholly owned subsidiary of Vinashin in northern Haiphong City, has resumed long-delayed plans for building 53,000 dead weight tonnage (dwt) vessels, 56,000dwt vessels and 750 twenty-foot equivalent unit vessels.

Truong Thanh Hung, head of the corporation’s Production Planning Department, said two, 53,000dwt vessels could be handed over to Vietnam National Shipping Lines by the end of this month.

“In February 2011, we will start building a car carrier, which can transport 6,900 cars, for a Norwegian company. The situation was better than two months ago,” said Hung.

Due to the financial trouble, Nam Trieu Shipbuilding Industry Corporation almost closed its factories for nearly two years, from early 2009 to November, 2010 and most of its shipbuilding contracts were delayed.

Hung said the corporation had now found new partners to restart the delayed contracts.

Nguyen Van Canh, chairman of the corporation’s Trade Union, said the resumption of production plans created jobs for about 3,000 out of 5,000 workers at Nam Trieu.

The production plans are not only being resumed at Nam Trieu but also at other Vinashin shipyards like Bach Dang Shipbuilding Industry Corporation, Halong Shipbuilding Company and Song Cam Shipbuilding Company. Bach Dang Shipbuilding Industry Corporation, for example, is building 14 vessels for domestic and foreign shipping lines.

Vu Van Xo, deputy general director at Bach Dang Shipbuilding Industry Corporation, said the production operations were restarted two months after Vinashin received the first financial support from the government in October.

The current existing contracts would ensure enough jobs for 2,800 workers at the shipyard till 2012.

“We do not face a shortage of jobs for workers, but we did not have funds for buying materials and equipment for finishing contracts. But now, we have financial support to continue building those vessels,” said Xo.

In July, the government announced Vinashin had come close to collapse after amassing debts of VND86,600 billion ($4.4 billion). Vinashin confirmed that it did not have financial ability to repay debts and continue production plans, asking financial support from the government.

Xo said there were a lot of changes at Vinashin since the government unveiled a restructuring plan for the group.

He said the main reason for Vinashin’s trouble was its management weaknesses.

“Now, under the restructuring plan we have power to take initiative in finance and developing production plan. This is a key for ensuring the effectiveness of Vinashin’s shipyards,” said Xo.

However, the production resumption at Vinashin’s shipyards does not mean this group can repay its debt on December 20, 2010 as foreign lenders, led by Credit Suisse, required.

Vinashin’s new board chairman Nguyen Ngoc Su, who replaced discredited Pham Thanh Binh who was arrested for violating management regulations, said Vinashin could not repay $60 million out of $600 million debts on this Monday, December 20. The government has indicated its unwillingness to assist Vinashin in paying the debt while international lenders have not yet announced if they agreed to extent the deadline for Vinashin.

Su said international lenders should extend debt repayment deadlines for Vinashin, adding that if lenders pushed Vinashin to bankruptcy, they would get nothing back. – VIR

Tags: Vinashin