
In Brazil, Another Shipyard Goes Bust as Work Goes to Asia
By Sabrina Valle
(Bloomberg) — If there’s one trade the place all of Brazil’s political and financial upheavals come collectively, it’s shipbuilding.
A Rio de Janeiro shipyard, the place suspended president Dilma Rousseff as soon as promised to make use of a military of welders, electricians and engineers to make offshore oil platforms, is all however shut. Every different day, 50 employees on common hand of their helmets and are despatched house jobless, based on the yard’s union. More than 5,000 had been on website in late 2014, and by the top of this month they’re all anticipated to be gone.
The Inhauma shipyard is the newest to succumb to a disaster that has worn out practically half of the nation’s naval trade jobs prior to now two years, leaving firms bankrupt and collectors unpaid. It additionally represents the failure of Brazil’s plans to construct nearly from scratch a high-end trade that will compete with Asian yards and provide essentially the most formidable offshore oil growth on Earth.
State-controlled Petroleo Brasileiro SA, which had agreed to pay extra to have platforms constructed at house to assist jump-start the naval trade, is now sending work again to Asia, underscoring the vulnerabilities of an trade that principally depends on a single shopper. Petrobras pumps about 90 p.c of Brazil’s oil, and the yards expanded to fulfill its formidable development targets. Those plans fell aside after the Rio de Janeiro-based producer buried itself underneath the largest debt load within the trade and have become the main target of a sprawling corruption scandal.
“It’s a combination of the economic crisis, the political crisis, lower oil prices, the corruption scandal, just everything together,” union chief Jesus Cardoso, who has been serving to Inhauma employees with their dismissal rights, stated in a cellphone interview.
Four vessels had been alleged to have hulls transformed at Inhauma for $1.7 billion, after which collectively pump 600,000 barrels a day, or about 30 p.c of Brazil’s present oil manufacturing. Two of them had been finished completely by COSCO Shipyard Group in China, and a 3rd was solely despatched to Brazil for last touches. Just one in all them, the hull for the P-74 platform, was transformed in Brazil, and two years not on time.
To meet Petrobras’ growth plans, Inhauma was totally refurbished by Enseada, an engineering firm that has taken collateral injury in an ongoing pay-to-play scandal often called Carwash.
In Rio and the encircling areas alone, round ten shipyards and associated development websites have closed doorways, filed for chapter safety or halted operations as orders dry up, stated Cardoso.
Things seemed totally different on a sizzling and sunny day again in 2013 when Rousseff paid a go to to Inhauma. No longer would Brazil must depend on international yards to ship the advanced offshore gear wanted to extract crude. The jobs and earnings would stay in Brazil as a part of a virtuous cycle of earnings and investments that will populate the shoreline with state-of-the-art industrial facilities.
Almost ten shipyards had been concurrently being constructed from scratch or expanded with assist from backed authorities loans. The new initiatives had been granted multi-billion greenback contracts with Petrobras even when the websites had been nonetheless lined in brush. Employment was rising, and Rousseff’s plan to revive the transport trade with Brazil-made platforms drew cheers each time she talked about job creation.
“They said there was no way, that there wasn’t such a thing as producing platforms in Brazil, to open shipyards, create more jobs,” she stated, sporting an orange Petrobras jacket, to a whole bunch of employees in blue jumpsuits. “They said it was a dream, and that we were completely crazy.”
Then oil costs plunged, the corruption scandal exploded, driving Petrobras to chop investments by greater than half and cancel orders throughout its provide chain.
The chief executives of Odebrecht SA, OAS SA and UTC Engenharia SA — firms who collectively management 70 p.c of Enseada — have been convicted of crimes together with corruption and forming a cartel. Enseada declined to touch upon the contract with Petrobras for works at Inhauma as a consequence of a confidentiality settlement. Petrobras didn’t reply to a request for remark.
“We don’t know what is going to happen next,” union chief Alex Santos stated by cellphone, including that the dearth of contracts have a domino impact for the entire oil provide chain. “We’re loosing jobs and are expecting that it will get worse.”
–With help from Jonathan Levin.
© 2016 Bloomberg L.P