Harbour Grace shipyard owners try to assure creditors, customers as workers brace for the worst

The owners of a busy shipyard in Harbour Grace are trying to assure creditors as they scramble to save a big employer in Conception Bay North.

Meanwhile, dozens of workers are bracing as their jobs hang in the balance.

"I got a mortgage. I got vehicle payments. I got two small children at home. A wife. There's a lot at stake," electrician's helper Jake St. George said this week during his lunch break at Harbour Grace Ocean Enterprises.

The shipyard has fallen on hard financial times, and a list of creditors owed nearly $16 million have been demanding their money.

So in a bid to salvage the business and restructure the operation in order to avoid bankruptcy, the company was granted temporary protection from its creditors last week by the Supreme Court of Newfoundland and Labrador.

The owners of the Harbour Grace shipyard say the contract to build the aquaculture barge pictured here is one of the reason the business has fallen on hard times. Harbour Grace Ocean Enterprises lost millions on the contract, say the owners. (Harbour Grace Ocean Enterprises)

And a majority shareholder, Kevin English, is injecting the money needed to keep the operation going while new investors — perhaps even a new owner — are pursued.

General manager Paul Lannon and operations manager Wayne Reid spoke with CBC News on Thursday. They admitted the situation is bleak but believe they can save the yard if the banks are patient, customers remain loyal and workers continue to uphold the high standards that helped the yard establish a good reputation throughout Atlantic Canada and parts of Quebec.

"[Creditor protection] gives us a chance to organize, talk to our suppliers, talk to our customers and also … prove to the court that we can cash-flow the operation," said Lannon.

Four new vessels are under construction at the shipyard, including the 24-metre Petten's Legacy. (Terry Roberts/CBC)

There were 56 people on the payroll this week at Harbour Grace Ocean Enterprises, and to the casual observer, it looks like business as usual.

The yard is crammed with vessels of all shapes, colours and sizes, and workers were busy welding, grinding, installing and painting.

But workers like Brandon Slade are also very nervous. Slade has worked at the yard for nine years. He feels privileged to be working close to his home in Salmon Cove, so he can return to his baby boy every evening.

"No one wants to go away. Everyone wants to be local. Stay local. And we do great quality work here," said Slade, referring to the likelihood that he'll have to take on a rotational job outside of the province if the yard closes.

He admitted there's a feeling of uneasiness throughout the shipyard.

"Everyone here puts in an honest day's work. But it's kind of difficult when you don't really know if it's enough," he said.

Four new vessels under construction

Four new vessels are under construction, including a state-of-the-art, 24-metre steel-hulled fishing vessel called Petten's Legacy. The vessel has a price tag that's north of $6 million, is owned by the Petten family of Port de Grave, and is 90 per cent complete.

With the vessel just weeks away from being slipped into the water, the Petten family — like all customers at the shipyard — is nervous about the uncertainty hanging over Harbour Grace Ocean Enterprises.

The yard's operations manager, Wayne Reid, has been offering assurances to customers like the Petten family, and says they've been supportive of efforts to save the business. But Reid stressed "the banks have to stick with us."

Harbour Grace Ocean Enterprises casts a big economic footprint throughout Conception Bay and Trinity Bay, with an annual payroll of $5 million, and millions more paid out to local suppliers.

But the owners have had to face a tough reality following several very challenging years, starting with the COVID-19 pandemic.

"Priority No. 1 is to save the jobs here in the yard for the 56 people and 56 families that are here and to keep contributing to the local economy," said Lannon.

So what went wrong? Lannon blamed the fallout from the pandemic, including a surge in the cost of doing business, supply-chain problems, and a serious downturn this year in the Newfoundland and Labrador fishing industry that pinched off the company's cash flow.

But a major contract to build an aquaculture barge for a Norwegian company was the decisive blow, said Lannon, with the shipyard losing millions on the project, and both sides now locked in a dispute over money.

It's been a perfect storm, said Lannon, but he doesn't believe bankruptcy is inevitable. Potential investors are showing and interest, he said, and he believes customers will continue to support the shipyard if it can emerge through the current uncertainty.

"The last three years, with these factors that complicated things, our cash flow disappearing, we couldn't answer the call. So if we can get back on our feet, we can carry that debt and move forward," he said.

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