Hanjin Heavy Industries and Construction Philippines

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Hanjin Heavy Industries and Construction Philippines

Industry	Shipbuilding
Founded	February 2006; 15 years ago (2006-02)
Areas served	Worldwide
Services	Shipbuilding
Number of employees	23,000 (2019[1])
Parent	Hanjin Heavy Industries and Construction
Korean name
Hangul	한진필리핀
Hanja	韓進
Revised Romanization	Hanjin Philippines
McCune–Reischauer	Hanjin Philippines

Hanjin Heavy Industries and Construction Philippines, known as HHIC Phil, was established in February 2006 by Hanjin Heavy Industries and Construction of South Korea. In the same month, the first ship building contract was signed for 4 container ships. In May 2006, the construction of a shipyard began on Redondo Peninsula - on the northern edge of Subic Bay.

The first vessel "Argolikos" was delivered in July 2008 for the Greek ship owner Dioryx.^[2] As of April 2011, the shipyard had delivered 20 ships. In 2013, the shipyard made its first oil tanker and in 2016, it delivered its first gas carrier. Additionally, the shipyard has also built parts of CALM buoys used for the Malampaya offshore project. The shipyard also has two large drydocks.^[3]

In January 2019, the company filed for the biggest bankruptcy in the Philippines with unpaid loan obligations amounting to $412 million.

Background[]

As a part of its expansion process overseas, in 2004, Hanjin Heavy Industries Corporation started construction of a shipyard in Redondo peninsula, north of Subic bay, Zambales, Philippines. As per the HHIC website, this has resulted in the fourth largest shipyard in the world. As of 2011 September, the shipyard employed 21,000 Filipinos. Its workforce was expected to increase to nearly 28,000 in 2016, however a slump in ship building projects has limited the workforce to 20,000 people as of 2017.

As of September 2017, HHIC Phil is the largest shipyard in the Philippines and one of the largest private employers in the country.

According to the New York Times article "Philippines Role May Grow as U.S. Adjusts Asia Strategy" of April 30, 2012: "On April 18, a subsidiary of Huntington Ingalls Industries, a United States defense contractor, announced a deal to work with Hanjin Heavy Industries, which maintains a shipbuilding and repair facility at the former base at Subic Bay. That opens the door to large-scale servicing of United States military ships there for the first time in almost 20 years."

In a news release announcing the deal, Huntington Ingalls said the companies “will work together in providing maintenance, repair and logistics services to the U.S. Navy and other customers in the Western Pacific region.”

Shipyard[]

A 20.766 TEU container ship (CMA CGM Louis Bleriot) and oil tanker (Levantine Sea) being constructed at Dry Dock no. 6

The shipyard is located at the tip of the Redondo peninsula, in sitio Agusuhin, in the province of Zambales, Luzon, Philippines.^[4] A large number of Koreans and Romanians who form the higher level management of the shipyard live inside the shipyard, in baracks accommodations (often jocularly called chicken coops). The land here is owned by SBMA - Subic bay metropolitan authority and leased out to HHIC Phil on a 40 year lease.

Jeepneys and buses hired to HHIC transport workers daily and run between HHIC shipyard and the two close by towns - Castillejos and Subic, with many others staying in the farther towns of Olongapo and Barrio Baretto. Most workers come to work at HHIC from other parts of the Philippines and stay in boarding houses in these towns. A large ferry takes workers to and from Olongapo daily. The company also charters 25 buses to transport its workers to and from Olongapo daily. Additionally, two smaller fast ferries owned by HHIC transport a small number of owners representatives from the Hanjin jetty (near All hands beach - SBMA) to the shipyard. Security to access the shipyard remains tight due to high pilferage by workers during the early years of the shipyard. The area is also strategically important to the Philippines armed forces, hence is protected by both - The HHIC Police as well as Philippines armed forces commandos.

Bankruptcy[]

On 22 November 2018, HHIC Phil delivered two recently completed 114,000 DWT crude oil tankers.^[5] However, with 20 vessels currently in different stages of construction, the shipyard found it difficult to service its high debts or to get further extensions from its lenders. On January 8, 2019, the yard filed for corporate rehabilitation due to default or failure to comply it loan obligation of $412 million to five Philippine banks namely Rizal Commercial Banking Corp., Land Bank, Metrobank, Bank of the Philippine Islands, and Banco de Oro. This became the biggest bankruptcy in the Philippines surpassing $386 million default by Lehman Brothers in the Philippines in 2008. The five bank creditors are working to take over HHIC Phil's shipyard.^[1] On 19 January 2019, it was reported that two Chinese firms had lodged expressions of interest to purchase the shipyard along with its debt.^[6] Subsequently, Trade Winds reported that HHIC Phil and the Philippine government had agreed upon a debt swap deal.^[7]

Labor policy[]

Nationalities employed[]

The managerial staff in the shipyard consists of around 100 Koreans. Mid-manager level staff includes Koreans, Romanians and Filipinos. The foremen for workers include Koreans, Filipinos and Romanians, most of them employed by subsidiary companies of HHIC Phil operated by Filipinos. Most of the approximately 200 Romanian workers are employed in dock 5 and a few in Dock No.6 through the Romanian recruitment company Gateway Trading SRL. The large bulk of workers consists of nearly 19,000 Filipinos as of 2017. The shipyard provides free lunch, dinner and breakfast to all its workers in five large canteens.

Alleged labor violations[]

While HHIC's presence in Subic has brought thousands of jobs to the area, a steady stream of accidental workplace deaths and alleged labor violations has called into question the company's compliance with Philippine labor and occupational safety laws. During a two-month span in 2008, five workers were killed in accidents that may have resulted from unsafe working conditions.^[8] This prompted investigations by the Subic Bay Metropolitan Authority and Philippine Congress, which found violations of safety and labor laws. At the conclusion of the Congressional investigation, legislators required Hanjin to build a medical center and comply with industrial safety laws within six months. Workers have since continued to express complaints of abuse on the part of management; one such incident was caught on camera and distributed to the Filipino news station ABS-CBN.^[9] Many workers have also begun to organize to attain union recognition. According to organizers, who have started a blog to document abuses, 60 employees have been terminated for union-related activity and over 30 have been killed in workplace accidents since the shipyard opened in 2006.^[10] Filipino church groups like the Caritas Filipinas Foundation have also rallied around the workers.^[11] HHIC-Phil general manager Pyeong Jong Yu has expressed commitment to preventing future incidents.^[12]

Since 2011, standards of safety at the shipyard have improved, especially after ship owners introduced their own health and safety teams to augment the shipyard efforts.

Ships built[]

The shipyard builds bulk carriers, container ships and oil tankers. Additionally, it has undertaken offshore construction work such as CALM buoys for offshore projects such as the Malampaya offshore project.^[13]

Types of ship built

• Container ships - Capacity in TEUs - 4,300, 3,600 and 12,800
• Bulk carriers - Capacity 135,000 tonnes, 175,000 tonnes, 205,000 tonnes
• VLCC - capacity 320,000 tonnes

Notable ships[]

The CMA CGM Antoine de Saint Exupery

• M/V Argolikos- container (First container ship built in Philippines, First ship built by HHIC Phil)^[14]
• M/T Leyla K- tanker - Largest oil tanker built in Philippines - as of October 2011^[15][16]
• CMA CGM Antoine de Saint Exupery (2018) - Container, CMA CGM (France)^[15]

References[]

External links[]

• Official website
• SBMA chair cites Korean ship builder’s role in Phl economy, Philippine Information Agency