Davie Shipyard foundering in turbulent economic sea
August 25, 08 by TheFleetIf you're new here, you may want to subscribe to our RSS feed. Thanks for visiting!
ROBERT GIBBENS | Source: Montreal Gazette
The 182-year-old Davie shipyard at Lévis, opposite Quebec City, has hit a financial roadblock again under its latest owner, Teco Management ASA of Norway.
The ramp-up of production to meet orders for offshore oil-service supply vessels worth more than $600 million U.S. has proved more difficult than expected, productivity has lagged, and the cost of steel and other materials has soared.
Productivity has lagged mainly because of vessel construction complexities. Tight delivery times forced Davie to outsource component work to subcontractors, raising costs.
The result is Davie had negative working capital at June 30 and won’t have enough cash to fund operations through the rest of the year.
“Davie’s ability to continue as a going concern depends on raising additional financing and achieving profitability,” he added.
But Davie has a clear cost advantage over competing yards in Europe in building complex offshore supply vessels and drilling rigs once its operating problems are overcome, he said. The market for offshore service ships will be strong for many years.
Leadership changes, longer-term plans and specifics at the Montreal Gazette >>
